Election: Income Splitting

So every election I complain and lobby for Income Splitting or Family Income or Household income, to allow single income families to be able to compete in this economy. This is from 2005, back when my style was a little more, um, brusque.

Remember when I first started this blog, I ranted about Single Income families and how they get screwed by the existing tax system. Well, the Conservatives seem to think the same way, now whether this is simply rhetoric or not, I cannot say (I am skeptical, just on the basis of how much this might cost the government in lost taxes).

Have a read, or look at the original post here Canadian Financial Stuff: Canadian Government Hates Single Income Families (Final Analysis)

So what have we learned?

1. In our specific scenario (read all of my disclaimers in my previous posts) a Single Income Family as compared to a Dual Income Family, pays:
   $7424.00
   
   Approximately MORE in taxes (that is Provincial and Federal taxes combined).
2. This means that the Single income family to NET the same would have to make over $12,000.00 GROSS more to bring home the same amount (that is just unfair). Remember the single income earner at that level is taxed at the HIGHEST level on that extra income.
3. The Dual Income family is MORE likely to be eligible for:
   1. Family allowance cheques
   2. Provincial tax credits
   3. Pay less for the Ontario OHIP TAX
4. The Dual income family gets to write off a great deal on Daycare including:
   1. Daycare costs
   2. Summer Day Camps costs

If this doesn’t convince you that the Taxman HATES Single Income families, I don’t know what would.

If you agree or disagree comment on this, I am willing to dialogue with folks on this, but if you agree that this is UNFAIR, contact your member of Parliament. Remember an election is just around the corner, and they MOST LIKELY will return your calls (as opposed to afterwards when they kind of forget you exist (IMHO)).

What can we do to fix this?

1. Introduce a FAMILY or HOUSEHOLD income concept, where spouses or live-in folk can split the income (or even level the taxes) of the house and NOT get taxed at such a high level.
   • Might promote more folks to stay at home with kids (thus not as much daycare)?
2. Overhaul the whole tax system, so that everyone pays the same thing. Here I should be careful, because they’ll just end up making dual income folks pay as much as Single income folks!
3. National Daycare moneys should go directly to the families, (ALL OF THEM) and let THEM figure out what to do with the money (ok, now I sound like Ralph Klein).

The previous points are MY Opinion only, but maybe it’s time to get more than just crazy crackpots like ME thinking about this?

If you want to compare this and have Quicktax, it’s dead easy, just create an extra return in it, and compare what you might pay if you were a Single Income earner!