Quote:
Originally Posted by mrkajz44
I am torn on this policy. There are two sides to this:
1) This policy will benefit high-income earners the most. An argument can be made that the high-income earners do not need any extra tax help
2) The old policy did not have equality. Single income families were generally taxed at a greater rate than dual income families in the past. This policy makes the system more fair from that perspective.
I guess in my eyes, number 2 is more important. One of the key ideals of a taxation system is to be fair. The tax system is more fair (as in a family unit will not need to make working decisions based on taxes) with this new policy, so I think it's a good idea.
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Why is a tax system that taxes individuals less "fair" than one that allows income splitting? And if the issue is fairness, then why shouldn't it extend to people without children?
And how does a tax break with an upper limit of $2K eliminate families making working decisions based on taxes? Pretty much anyone who benefits from this pays many, many times that in taxes already, so a $2K reduction isn't going to turn everything on its head.
And even if you accept that the $2K will provide a huge incentive one way or another, it has simply moved from encouraging lower earning spouses to work (in order to take advantage of their lower tax rate) to discouraging that work, which is awful for the economy. Right now a stay at home parent with a higher earning spouse could pick up a part time job when their children are school aged and pay a fairly low tax rate. But with income splitting, there's a disincentive because all of the sudden they're going to be in a higher tax bracket before they even start working.