Calgarypuck Forums - The Unofficial Calgary Flames Fan Community - View Single Post - Income-splitting changes to be announced

bizaro86 · 10-30-2014, 10:29 AM

I like this, since I'm newly a one-income family. The 2k cap is too bad (from my perspective) but probably understandable. I wonder how that will be implemented, seems like it would be complicated to administer. It will be interesting to see if you can transfer tax-at-source payments or not. Because otherwise I'll get a ~20k refund and my wife will need to make a ~$18k payment, which seems a bit silly.

Also, I think there's a bit of an economic efficiency argument that can be made. For round math, say you have a higher income earner making $100/hr, and the second spouse who could earn $65/hr. If the first spouse is paying 40% taxes, and the second spouse stays home with the kids (and has no income so 0% marginal tax rate), the marginal family earnings from an extra hours work is $60 for the higher income earner and $65 for the stay-at-home parent.

So in that situation the right family choice would be for the higher income earner (presumably more productive) to stay home part-time and for the second spouse to work a few hours to burn up their low tax bracket. That's an economically inefficient outcome that this should prevent.

10-30-2014, 10:29 AM	#7
bizaro86 Franchise Player Join Date: Sep 2008 Exp:	I like this, since I'm newly a one-income family. The 2k cap is too bad (from my perspective) but probably understandable. I wonder how that will be implemented, seems like it would be complicated to administer. It will be interesting to see if you can transfer tax-at-source payments or not. Because otherwise I'll get a ~20k refund and my wife will need to make a ~$18k payment, which seems a bit silly. Also, I think there's a bit of an economic efficiency argument that can be made. For round math, say you have a higher income earner making $100/hr, and the second spouse who could earn $65/hr. If the first spouse is paying 40% taxes, and the second spouse stays home with the kids (and has no income so 0% marginal tax rate), the marginal family earnings from an extra hours work is $60 for the higher income earner and $65 for the stay-at-home parent. So in that situation the right family choice would be for the higher income earner (presumably more productive) to stay home part-time and for the second spouse to work a few hours to burn up their low tax bracket. That's an economically inefficient outcome that this should prevent.