Beyond The Commons

Aaron Wherry covers all the goings-on in and around Parliament Hill. Follow Aaron on Twitter: @aaronwherry

Categories: Beyond The Commons, Capital Read

Policy alert

by Aaron Wherry on Monday, March 28, 2011 1:05pm - 155 Comments

Stephen Harper promises to allow income-splitting for families with children. So long as he’s Prime Minister in 2016.

Writing Monday on The Globe’s Economy Lab blog, Carleton University professor Frances Wooley said the policy risks triggering a “Mommy War.” “People sometimes think ‘the work done by parents who stay home looking after their children is valuable, therefore those people deserve a tax break.’ They’re already getting an enormous tax break. They’re getting thousands of dollars worth of in-kind income – the value of the work that is being in the home – and not being taxed on it,” the professor writes. “Mommy Wars, that pit at-home mothers against working mothers, women against women, are bitter and destructive,” she adds. “If we want to support families with children, then we can just introduce tax measures that support families with children, for example, an enhanced child tax amount. It’s that simple.”

Tags: election, Election 2011, Frances Wooley, income splitting, Stephen Harper, tax, taxation, taxes

More by Aaron Wherry

http://dougsamu.wordpress.com dougrogers

A chicken in every pot! A pie in every sky!

McC_

i like pie.

http://dougsamu.wordpress.com dougrogers

Chicken pot pie in every eye!

McC_

nooo, my eyes aren't sufficiently covered by provincial health insurance!

Dot

Garth Turner, when sitting as a Liberal (pre 2008 election) , proposed this to Jim Flaherty. Flaherty considered it, and concluded it was too costly at the time.

Three years later, what's changed?

Jan

The implemention date. Everything is affordable on the never never plan. It's genius.

auntie-em-m

This plan reminds me of mega prisons needed for "unreported crimes".
Two parent families have to make lots babies in the next five years to qualify to offset the many kids who will grow too old for families to qualify.

Conservatives looking towards the future; counting on all sorts of activity to justify policy. Hmm…
madeyoulook

why the heck should we allow income duly earned by the wage-earning spouse to be transferred and taxed in the hands of the non-income producing spouse at home.

It's called income splitting. This is nowhere near the first example of it. Are you suggesting spousal RRSPs and the recent pension splitting need to be repealed? Maybe we should stop pooling family medical expenses and charitable contributions while we are at it? Go for it, and good luck.

I am saying single-income, two-parent families have been paying an income tax penalty for YEARS. You are cool with that penalty, it seems, arguing that correcting that penalty is an unfair "gift" that will have to be paid for by others, failing to recognize that those others have long unfairly benefited from the gift of that extra penalty imposed on these particular families. You are entitled to that peculiar moral stance. But I would ask that you avoid the despicable resort to pathetic "women-hating" barbs in your attempts to defend your peculiar moral stance.

Andrew (notPorC)

This move will make it so a single income couple pays less tax than a single parent (who is either divorced or widowed) with the same income. Please explain to me how this is fair.

madeyoulook

Answer the First:
Super. The Flat Tax Party meets the day after tomorrow. I guess I will see you there?

Answer the Second:
Hmm. A marginal incentive for people not to become or remain single parents. What an awful concept!

Answer the Third:
Childcare expenses deduction (obviously higher). Credit for "eligible dependant" only available to persons not living with a spouse or common-law partner. Possibly other measures, I am no tax lawyer. We have offsetting tax measures for single parents. What we have never had, was a measure to make caregiving at home a slightly marginally more attractive choice.

Andrew (notPorC)

Your first answer is to tax the poor (which is what a flat tax is).

Your second answer is a widow tax. Classy. Those silly parents whose spouse dies or divorces them and irresponsibly don't go and get hitched for financial reasons. This is truly disgusting, not to mention craven social engineering.

Your third answer suggests we should instead, as I've already suggested, increase the National Child Benefit.

madeyoulook

The "rational economic decision" is influenced by enough non-economic factors, too, I trust you would admit.

If a couple of parents chooses to:
(A) unburden the state by caring for their own preschool kids;
(B) forgo the additional second income because that additional income barely measures up, after taxes and additional expenses;
(C) temporarily remove one participant from the pool of job-seekers, reducing overall unemployment in a marketplace not presently suffering from a labour shortage (by any stretch of the imagination);

I personally see no problem with the state deciding to remove the ADDITIONAL burden of higher-bracket marginal-rate taxation of the income of the spouse who is working, and who may be able to work at a more demanding job, or do more overtime, or whatever, secure in the knowledge that the family is in good hands at home. I fully realize many will call these people evil "anti-women" citizens because they do not adhere to the new religion calling for the schleppage of tots off to daycare. I will do my best to shoulder that burden.

You may call rendering such a choice less punishing as a disincentive to the alternative. But that requires the same false logic as calling a tax cut a "gift."

Andrew (notPorC)

You seem to be mistaking the choice here.

The single income couple isn't choosing between one spouse earning $100k and the other 0 and earning $50k and $50k. The choice is $100k and $0k labour income vs. $100k and $50k labour income. The couple that makes the second decision pays more tax and ends up with roughly the same standard of living as the family with $100k and $0k with one spouse at home generating $50k in pretax value through child-rearing.

You're making a blatant error in assuming the total household income doesn't increase if both spouses work.

The families that are getting screwed are the poor widows and single parents. They don't have someone at home to handle child care AND they pay full freight tax. To give a break to two parent families and leave single parents in the cold is absurd.

madeyoulook

Well, I am not the one who started this one-earner at $100K vs. two at $50K per. So take your "blatant error" charge elsewhere, like to the fool who first made it up there. Oh. Sorry about that.

I am the one saying that if the second earner can make so much additional income for the family that it overcomes the taxes and the expenses and the pain of not spending as much valuable time with your toddlers, then GO FOR THE JOB already. Nothing announced today changes that. Choice is preserved. Hooray!

But if these measures allow the odd family to decide maybe it would be best for the family to have one of the parents at home with the kids instead, this cannot possibly be the evil that some around here are making it out to be. And to throw up "anti-women" (when it isn't) and "anti-choice" (when it opens up choices) and "single parent" (when assistance measures already exist) whines are just a little much.

So thumbdown away, all you obviously better and enlightened people. Thumbdown away…

Andrew (not PorC)

This tax break for staying at home effectively increases the marginal taxes a spouse (and generally women in the majority of cases) faces when deciding whether to return to the labour force. So, it clearly increases the disincentive to work.

"But if these measures allow the odd family to decide maybe it would be best for the family to have one of the parents at home with the kids instead, this cannot possibly be the evil that some around here are making it out to be."

Well, it pays them to stay home, and taxes them if they don't.

What it boils down to is that the present state of affairs is largely fair/equitable, this would make things less fair, and that if you want to help families, increase the National Child Benefit. This is effectively a targeted tax cut for upper-middle class earners.

madeyoulook

Well, if you want to help families that are this close to opting to have a parent stay home for the kids, this is the sort of thing you do. But you're right, much might be achieved by additional support through the NCB. And it would keep from complicating our tax code yet some more (although I would love to see more income splitting generally and less of the ridiculous minicredits specifically).

And thank you for honing down your argument to the final reasoned paragraph in the comment immediately above. It sure beats the Harper-hates-women crap flying around elsewhere on this page.
Andrew (not PorC)

Well, I'll agree that Harper-hates-women rhetoric is about as helpful as the permanent-tax-on-everything smokescreen from the last election.

Mike T.

Only the Harper policy room could look at two people struggling to support a child on $18,000 each, then look at a family where one spouse makes $100,000 and the other is homebound, and say "OMG, we must help the second family! But not for five years! "

Not a conservative policy room. A Harper policy room.
s_c_f

I'm not a fan of these kinds of selective tax cuts. Cut income taxes or cut sales taxes, but don't cut some of these taxes for some people and not for others. I suppose it's not shocking they've proposed this since they did it for seniors pension income.

madeyoulook

Fair point, but this is more of a family income pooling, and strikes me as a better idea than all the silly micro-credits they have thrown at us already.

s_c_f

I don't like them either, to me they were a gimmick to win elections.

With the income pooling, the obvious dilemma becomes, who gets to share income? If you care for a senior parent, should you be allowed to pool with his/her income? If you are a single parent with one child working, should you get to pool income? The government ends up deciding winners and losers. I really don't like that. The only fair system is a simple one.

Yanni

I could go along with income pooling in general though. A sort of domestic corporation, to encourage investment in a household. So if (for example) you had two sisters who were single parents, they would be allowed to split income and duties in running a household.

s_c_f

Yes, but then things get very complicated establishing residence. How much of the year would they need to reside in the same house? How would you be able to confirm their residence? Do half-sisters count? Step-sisters? Seems to me it would be a) really complicated and b) easy to game the system. I reallly don't like this sort of thing, government attempting to keep tabs on peoples' individual lives and behaviour.

Mike T.

family pooling would be counting two incomes as one, rather than taking one income and allowing it to be counted separately. It's the exact opposite.

Mike T.

There's nothing wrong with targetted tax cuts, but if you're going to target them you should be clear about the recipients and why they're being favoured above other very similar groups.

come again

You can't believe Canadians are smart and think this will work.
auntie-em-m

This 'policy' reveal reminds me of that great Robert Mitchum quote:
"Stick with me girl and you'll be farting through silk".

Stephen Harper could not pull that off, though.
http://secondthots.blogspot.com Dennis_F

You're somehow the judge of how "smart" Canadians are, are you?
OriginalEmily1

Cash is what makes it work, Dennis….or is this Bolshie stuff again?
John D

Man, if you vote for ME, I swear I will make your dreams come true. But not until 2016.
http://secondthots.blogspot.com Dennis_F

Throwing more money at existing provincial structures is hardly the national daycare program the Liberals had promised for over 13 years, just as the Tories doing one-off deals with the provinces to cut down wait times for various specific procedures is hardly a fulfillment of their fifth 2006 campaign priority, which was supposed to be a full-fledged wait times guarantee.
AT1

Thanks Wherry, for posting economically illiterate arguments:

"They’re already getting an enormous tax break. They’re getting thousands of dollars worth of in-kind income – the value of the work that is being in the home – and not being taxed on it,” the professor writes."

Brilliant, Professor Wooley! By extension, if everyone stops working, we'll all get massive taxes breaks! Why didn't we think of it before. We'll get to keep 100% of the money we don't earn!
Mike T.

Youc an criticise the program, you can criticize the lateness of the program, you just can't say the program never happened.
OriginalEmily1

You do what you can at the time to implement a program. You forget we were just coming off paying down a massive deficit.

It could have been upgraded later during all those years of massive surpluses, but at least it would have been underway.
Jan

Actually the money goes to private day care operators to produce more spaces and to subsidize low income parents. There is no provincial structure. Why do you pretend to know about something you obviously haven't got a clue about?
Mike T.

Sometimes it's easier to make an educated guess than others….
lgarvin

Congratulations on your purchase of a brand new, 2018 model, BMW Roadster. Monthly payments of $600 are due the first of each month (starting May 2011) and you can take delivery of your beautiful BMW in just a few short years. (while supplies last, delivery date not guaranteed, other model may be substituted, additional charges may apply, see pages 14 through 45 for additional terms and conditions.)

Please sign here… and here… and here… and initial here and here and here… I'll need a void blank cheque from a Canadian chartered bank and a copy of your most recent tax returns. Aaand we're done. Thanks very much for your business Mr. D. Here's a card with our website and our 800 number and have a good day… Oh. wait, wait, WAIT! You almost forgot your free ballon. Here you go. Congratulations again on a great purchase!
Thwim

Read what he wrote.

He wasn't passing judgement on how smart Canadians are.
He's passing judgement on whether any person who believes this will work thinks Canadians are smart.
tedbetts

Correction: if you vote for me TWICE. It will take at least two elections before we get there and more if the last few years are anything to go by.
http://secondthots.blogspot.com Dennis_F

It wasn't a national daycare program.
http://secondthots.blogspot.com Dennis_F

Or it was a one-time cash giveaway to the provinces on the eve of an election where the Liberals were clinging to dear life.
http://secondthots.blogspot.com Dennis_F

Jan, I suggest you stop pretending to be smarter than you are. It doesn't suit you. You can't pull it off.

Daycare is a provincial jurisdiction. Each province deals with it in its own way. The Liberals did not create one uniform program like was done with health care. Instead, separate cash deals were made with the provinces.

So, unless you're going to deny these facts, please stop pretending. You've always been nothing more than a knee-jerk leftist troll who resents people who dare disagree with you.

Thank you. Next.
noob_goldberg

Speaking of Stephen Harper's girls (terrible segue, I know) I wonder if Jenni Byrne is having fun running her first campaign? It's tough to know if Finley would have handled the first couple of days better, but it's definitely been a bit of a rocky ride for the CPC. Much rockier than I anticipated.
Jan

Eerily similar to the F 35 purchase.
http://secondthots.blogspot.com Dennis_F

I must have missed something. Are Canadians being asked to pay for this program in advance? If not, then your analogy is totally off, isn't it?
http://secondthots.blogspot.com Dennis_F

lol, in what way?
Mike T.

yawn.
lgarvin

I must have missed something.

Yes, and I am sorry about that.
http://dougsamu.wordpress.com dougrogers

Just when you think we've run out of tax cuts to giveaway, well, won't you be surprised to learn we've got something extra special for you, you middle income Canadian families, Yes we have a a tax cut especially for you! When we can afford it, you get to share!
Jan

Healthcare is one uniform program? I will add that to the list of things you are clueless about.
McC_

but only if there's a wide disparity in your incomes!
http://dougsamu.wordpress.com dougrogers

That means it's good for Women!
http://secondthots.blogspot.com Dennis_F

So then the Tories are asking Canadians to pay for this program well before it is implemented? If so, can you please provide the source? If not, then please stop engaging in analogies that don't hold water. Thanks.
http://halooverride.blogspot.com/ Halo_Override

Careful, that road leads to permanent misery.
http://secondthots.blogspot.com Dennis_F

It's called the Canada Health Act. Are you saying we don't have national healthcare in Canada? Seriously, Jan, stay on the amateur sites. Then again, you have no shame, so you won't. lol. Next.
Thwim

Learn the difference between unemployed and not working
http://halooverride.blogspot.com/ Halo_Override

Spoken like someone who's never left their home province.
http://secondthots.blogspot.com Dennis_F

So we don't have a national health care act or national health care program? lol

I don't understand some of you knee-jerk posters, especially those who are clearly not as intelligent as you pretend to be. But if you want to take the punishment, I'll keep obliging. I guess you do it out of ideology. You can't stand to be in the wrong, regardless of facts or reason. Hmmm.
McC_

point!
burlivespipe

And don't forget, if your neighbours don't vote for me you lose it all… Well, unless you're a CEO and you're laughing, especially if its big oil…. so get on your neighbours right now and egg their house!