Income-splitting changes to be announced

[opendoor]

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.

You don't need to make similar salaries to see no benefit. A couple with one person earning $85K and the other $45K wouldn't get any reduction in taxes because of how wide the tax brackets are.

[ken0042]

Originally Posted by opendoor

You don't need to make similar salaries to see no benefit. A couple with one person earning $85K and the other $45K wouldn't get any reduction in taxes because of how wide the tax brackets are.

Sure, but a couple making $65K and $30K would see the benefit. And at those rates one could argue the household income of $95K could use the benefit more than the household income of $130K.

You are right, if each person in the household makes over $43K then the benefit is minimal. And I do see how this could benefit the family where the wife makes $250K and the husband makes nothing. However I do also see where it can benefit a family where one person sacrificed their career to a certain extent to take care of the kids.

[edslunch]

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.

I see #2 quoted a lot and I don't get it. Each individual gets taxed on how much they make. People throw out the example of single earner making $150k vs two earners making $75k each to show that it's unfair. Thats disingenuous in my opinion. Why does the single earner always make more?

Why not compare with everyone making $150k or $75k or one partner making $150 and one $75. Now how does it look? Just fine - everyone pays tax according to how much they make i.e. A progressive tax system. Single earner feeling hard done by?Tell your partner to get a job. Problem solved.

[opendoor]

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.

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.

[Locke]

Originally Posted by opendoor

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.

The cap on the benefit limits the effects of any incentive and makes this legislation just a shiny bauble of little real value.

[edslunch]

Originally Posted by Locke

The cap on the benefit limits the effects of any incentive and makes this legislation just a shiny bauble of little real value.

It's valuable to Harper as it benefits his Alberta base and targets conservative swing voters in the 905

[chemgear]

Originally Posted by Locke

The cap on the benefit limits the effects of any incentive and makes this legislation just a shiny bauble of little real value.

That potential $2,000 would have gone a long way to helping people that could have actually used the tax break (single parent or low income families).

I agree though, the cap doesn't do as much relatively speaking for the already well off that are fully realizing the tax break. It's just extra gravy at that point.

[mrkajz44]

Originally Posted by opendoor

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?

I am of the view that a family unit should be one taxable entity. Lots of life decisions are made as a family, including earnings, and therefore to recognize a family unit as a single taxpayer is much more accurate.

I agree that this does make the system completely "fair" as it excludes people without children. I would benefit from this if not for the children part, so that is not "fair" in my eyes. But, it is more fair than it was before, so a step in the right direction is better than nothing.

As I said earlier in this thread, I think this is the first step towards taxing families as a unit, which I think would be the most fair system considering how families operate as an economic unit.

[cracher]

I tend to disagree with trying to make anything "more fair" based on the concept of "family unit". IMO in this day and age, this concept is becoming increasingly vague. Making hard rules on a dynamic concept will always leave people in the cold.

I have friends in a wholesome polyamorous relationship. I'm not talking a drug n' alcohol fuelled orgy.. I'm talking 3 mid-30s (2 OG professionals, 1 accountant) people who genuinely love each other, have a communal bank account, etc and have been together for 5 years now.

I think if you want to achieve "more fair", you can't include "family unit" in the process... I mean, how long did it take same-sex couples to barge into this game?

[#-3]

Originally Posted by Bunk

Here's who gets what:


https://pbs.twimg.com/media/B1XpXV7CEAAIjmd.png:large

And the top Left Corner of that graph illustrates the real problem here,

Those are the people who really needed a family tax break.
The Families with 2 mid - low income earns.
They are under so many stresses trying to both maintain full time employment while providing good enough care, diet, education, and activities......

[Rathji]

As I will likely benefit from this change, I don't mind so much, however it doesn't seem like the best way to do a tax cut.

[FlamesAddiction]

Originally Posted by #-3

And the top Left Corner of that graph illustrates the real problem here,

Those are the people who really needed a family tax break.
The Families with 2 mid - low income earns.
They are under so many stresses trying to both maintain full time employment while providing good enough care, diet, education, and activities......

But they are probably mostly in a demographic that isn't going to vote for Harper no matter what, so why would he try to win them over?

The Conservatives are obviously going for that upper-middle class swing vote.