Income-splitting changes to be announced

[Locke]

Originally Posted by bubbsy

stupid question....

was there ever any income splitting or refund splitting concepts prior to this? I typically do my taxes using software, and it simply asks if i want the tool to optimize our inputs across both our tax returns.

i also don't see what this policy change is intending to reward/punish (or help). Why would a family with X kids where both parents earn 75k/year garner less of a reward than a like sized family where 1 parent is a stay at home parent and the other earns 150k?

Yes, but only really for people who are retired with private pensions. And its a good system for that generation, but private pensions have gone the way of the Dinosaurs for this generation outside of Unionized or Government work.

Originally Posted by MarchHare

The Harper Government believes that the best way to raise a child is to have one parent (typically the mother) stay at home while the other is the sole breadwinner. Income-splitting provides a financial incentive for this type of family, or conversely, it provides a financial disincentive for families where both parents participate in the workforce.

Thats one way of looking at it, the other way is that they're providing some relief on an overworked, understaffed and overly expensive daycare system.

For many people its actually cheaper to sacrifice an income in order to avoid daycare costs.

And remember, taking care of your kids is not the Government's job.

[crazy_eoj]

Originally Posted by MarchHare

The Harper Government believes that the best way to raise a child is to have one parent (typically the mother) stay at home while the other is the sole breadwinner. Income-splitting provides a financial incentive for this type of family, or conversely, it provides a financial disincentive for families where both parents participate in the workforce.

Actually, the current policy provides a disincentive for families to have one parent stay at home. This new policy is aimed at fixing this problem and providing some fairness to a situation where a stay at home parent's or family member's labour is viewed as having zero economic value compared to 'professional care-givers'.

How exactly does income splitting provide a disincentive for dual income families in your mind?

[GGG]

Originally Posted by crazy_eoj

Actually, the current policy provides a disincentive for families to have one parent stay at home. This new policy is aimed at fixing this problem and providing some fairness to a situation where a stay at home parent's or family member's labour is viewed as having zero economic value compared to 'professional care-givers'.

How exactly does income splitting provide a disincentive for dual income families in your mind?

You can re-arrange the words incentive and disincentive for both cases. If something incentivises one it disincentivises the other provided they are exclusive choices. In this case the average tax of non-income splitting families is increased to subsidize those who benefit from income splitting.

The policy provides percieved fairness. Its what makes it so easy to sell. A mothers work in the home as real monatary value and we are going to allow you to pay your spouse for it. Why should a dual income family get to have a tax deduction for day care when a single income family doesn't. Its not fair.

And I would agree it isn't "fair" but it is asking the wrong question. Any government targeted subsidies should be designed to help someone who has a need.

Do single income two parent families have need of a subsidy compared with single income single parent families or dual income families. The answer in my opinon is no. The money the government spends on subsidizing families should be targeted in places of need.

Instead the conservative government targets their spending in areas of percieved fairness. Raising the athletic benefit to $1k per child benefits families who can afford athletic programs. It makes great copy but all of these benefits target the upper middle class. And as a group I don't think we need it at the expense of others.

[darklord700]

Originally Posted by GGG

Instead the conservative government targets their spending in areas of percieved fairness. Raising the athletic benefit to $1k per child benefits families who can afford athletic programs. It makes great copy but all of these benefits target the upper middle class. And as a group I don't think we need it at the expense of others.

I'm not a fan of boutiquet tax credits. Increase child activitie benefit form $500 to $1K will give families a whopping $75 more tax benefit. It hard will make or break the decision for you to send your kid to hockey camp or not.

[crazy_eoj]

Originally Posted by GGG

You can re-arrange the words incentive and disincentive for both cases. If something incentivises one it disincentivises the other provided they are exclusive choices. In this case the average tax of non-income splitting families is increased to subsidize those who benefit from income splitting.

The policy provides percieved fairness. Its what makes it so easy to sell. A mothers work in the home as real monatary value and we are going to allow you to pay your spouse for it. Why should a dual income family get to have a tax deduction for day care when a single income family doesn't. Its not fair.

And I would agree it isn't "fair" but it is asking the wrong question. Any government targeted subsidies should be designed to help someone who has a need.

Do single income two parent families have need of a subsidy compared with single income single parent families or dual income families. The answer in my opinon is no. The money the government spends on subsidizing families should be targeted in places of need.

Instead the conservative government targets their spending in areas of percieved fairness. Raising the athletic benefit to $1k per child benefits families who can afford athletic programs. It makes great copy but all of these benefits target the upper middle class. And as a group I don't think we need it at the expense of others.

Aligning taxes or incentives in order of those who 'need' them simply creates a value judgement. The athletic benefit also increases the incentive for children to be involved in sport, but your argument would suggest if it is disproportionately beneficial towards the middle class that you disagree that it is 'needed' regardless of general children s physical activity levels or health care costs, etc.

So really we just see a situation where some would deem any tax break or incentive not disproportionately aimed at the lower class as wasteful or unneeded. Simple enough I guess but generally not the same opinion as many Canadians. I guess telling one group of society their labor should be valued at zero because they (or their spouse/family) have a certain level of income makes sense to some, but not to me.

[edslunch]

The conservatives believe this will get them votes, full stop. It's the only reason they implement any policy

[darklord700]

Nm.

[GGG]

Originally Posted by crazy_eoj

Aligning taxes or incentives in order of those who 'need' them simply creates a value judgement. The athletic benefit also increases the incentive for children to be involved in sport, but your argument would suggest if it is disproportionately beneficial towards the middle class that you disagree that it is 'needed' regardless of general children s physical activity levels or health care costs, etc.

So really we just see a situation where some would deem any tax break or incentive not disproportionately aimed at the lower class as wasteful or unneeded. Simple enough I guess but generally not the same opinion as many Canadians. I guess telling one group of society their labor should be valued at zero because they (or their spouse/family) have a certain level of income makes sense to some, but not to me.

You are trying to right a wrong that was created by a tax incentive.

The only reason that the work of a spouse becomes zero value is because if you pay a third party you get a tax deduction for raising kids. If you didn't get that tax deduction for raising kids then people with 2 incomes and 1 income would be being treated the same way. The concept of not paying your spouse to do work you would pay other for would disappear.

So this proposal provides another targeted benefit to right a percieved wrong caused by a previously targetted benefit. You are right that any targeted benefit (like income splitting) provides a value judgment. In general the government should avoid these types of incentives and go for lower overall levels of taxation. And only have incentives where in benefits Canada or where there are low income needs. (as an aside all the low income subsidies should be rolled into one program)

So something like the daycare benefit makes sense because it encourages increased labour participation which is good for the Canadian economy which benefits Canada as a whole. Its not a value judgement its a simple economic arguement.

Something like income splitting does not pass the benefit to Canada argument therefore the group it benefits should not be incentivised.

[crazy_eoj]

Originally Posted by GGG

You are trying to right a wrong that was created by a tax incentive.

The only reason that the work of a spouse becomes zero value is because if you pay a third party you get a tax deduction for raising kids. If you didn't get that tax deduction for raising kids then people with 2 incomes and 1 income would be being treated the same way. The concept of not paying your spouse to do work you would pay other for would disappear.

So this proposal provides another targeted benefit to right a percieved wrong caused by a previously targetted benefit. You are right that any targeted benefit (like income splitting) provides a value judgment. In general the government should avoid these types of incentives and go for lower overall levels of taxation. And only have incentives where in benefits Canada or where there are low income needs. (as an aside all the low income subsidies should be rolled into one program)

So something like the daycare benefit makes sense because it encourages increased labour participation which is good for the Canadian economy which benefits Canada as a whole. Its not a value judgement its a simple economic arguement.

Something like income splitting does not pass the benefit to Canada argument therefore the group it benefits should not be incentivised.

If you define spousal work as participation in the economy your point is null. That's the whole idea, isn't it? You're simply arguing the opposite side of the coin; that is, that daycare is preferential to home care thus we should provide incentives to families to prompt them away from taking care of their own children and provide other services to the economy.

I'm totally onside with the idea that we should be removing all of these ridiculous targeting spending and tax incentive programs and simply reduce taxes overall.

[MarchHare]

Originally Posted by crazy_eoj

You're simply arguing the opposite side of the coin; that is, that daycare is preferential to home care thus we should provide incentives to families to prompt them away from taking care of their own children and provide other services to the economy.

He's not arguing that daycare is preferential to home care. He's arguing that increased workforce participation is better for the economy, and subsidized daycare enables increased workforce participation. From an economic perspective, it's absolutely true that households with two working parents are preferable to single-income households. Whether it's also true from a child-raising perspective, and if having a stay-at-home parent provides enough benefit to society that it outweighs the economic penalty of having a smaller workforce (and therefore justifies this tax break), I cannot say.

[FlamesFanStrandedInEDM]

So....Being a single guy, no tax break for me?

I already have to put IKEA furniture together by myself, cant I get a tax break?



Anyone want to form a civil union for some tax fraud?

[bizaro86]

You need one of these:

http://www.qp.alberta.ca/documents/Acts/A04P5.pdf

[Fire]

Originally Posted by MarchHare

It was already linked previously in this thread.

That article linked previously was about households and not families with children to support. Big difference. If they give the income tax splitting to childless couples or random people in the same household that would be idiotic. While selfishly I would want a tax break that would benefit me personally at least with this tax break I can say it helping people raising our future contributors to society. Though It does ignore single parents. The government should have given them some sort of break as well.

[ikaris]

I applaud this change. This is from a household with dual incomes that will see a benefit.

The previous taxation methodology where one household that brought in 150k (for example) was taxed more than another household that brought in the exact same amount was completely unfair.

This helps bring some equalization into the total tax contribution situation.

[MarchHare]

Originally Posted by Fire

at least with this tax break I can say it helping people raising our future contributors to society. Though It does ignore single parents. The government should have given them some sort of break as well.

As you noted, it does nothing for single-parent households. It also does nothing for families where both parents work, which (as of 2009) was 82% of all (edit: two-parent) households with children (source).

If you subtract single-parent and double-worker families, what percentage of Canadian parents will even qualify for this? Saying that it helps people raising future contributors to society is disingenuous at best since the overwhelming majority of parents will not benefit from this tax break.

[ikaris]

Originally Posted by MarchHare

It also does nothing for families where both parents work, which (as of 2009) was [b]82% of all (edit: two-parent) households with children

This is simply not true as seen in the visualization earlier in this thread.

[calculoso]

Tax change aside, there is an obvious bend by the "progressive" to get every kid into daycare... Errr... Have as many people working as possible. This was essentially said as much in a recent Obama speech.
http://www.livingwhole.org/staying-a...icans-to-make/

[ken0042]

Originally Posted by MarchHare

It also does nothing for families where both parents work, which (as of 2009) was 82% of all (edit: two-parent) households with children (source).

You mean it does nothing for families where both parents work and both parents make similar salaries. I know I'm not alone where in my situation there is a significant difference between what my wife and I earn.

[Street Pharmacist]

Originally Posted by ken0042

You mean it does nothing for families where both parents work and both parents make similar salaries. I know I'm not alone where in my situation there is a significant difference between what my wife and I earn.

Definitely helps me. My wife only works 2-3 days a week and I make a lot more

[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.