So, John and Jane Q. Public both have successful careers at Generic Co. and are both pulling down the same salary, here is what Quicktax‘s Tax Summary report says about how much tax they will owe this year.
If you click on this you can see the full size version of the image. The final income tax they both owe is $20,561,46 (in this specific scenario with the parameters that I have set, total tax for both John and Jane). Now to me that sounds like a whack load of money to pay, but surprisingly this is lower than what they would have paid a few years ago.
Remember these numbers come from Quicktax so if the math is wrong, don’t blame me.
Tomorrow, what if Jane wasn’t working, wouldn’t they pay about the same taxes if their family income was the same? In a word, No.
Excellent, I was going to ask about the cost of daycare (although my wife did work in Daycare for a while herself).
Interesting argument, glad to see folks are reading and want to put their two cents worth into it.
If anyone cares to write a rebutal to my article, I will gladly think about posting it on this same blog.
–C8j
We’ve been on both sides of the story (both of us working and only one of us working) and I can assure you that even with the tax break day care is very expensive.
Good quality day care in the Ottawa area costs about $950/month for a child under 30 months and $750 for a child over 30 months. You can only deduct the first $7,000 per child, not the entire amount. My guess is David’s numbers overstate the working couple’s adjusted take home amount by quite a bit.
Then the point is moot. The tax system is set up so that working class people that make 30-50K a piece in dual income scenarios just to survive and own a home do as well as an individual making a similar amount as the two of them.
What I’m inferring you’re arguing is that the rich need more help to be even that much more rich.
For instance I ran through the same scenario in New Brunswick using cutetax.ca and you end up:
50K each, 9K for 2 kids (4500 each)
Family total balance owing = 21, 193. 12
100000.00
( 21193.12)
( 9000.00)
Take Home = 69806.88
100K One Partner, No Deductions
Family total balance owing = 30, 324. 73
100000.00
( 30324.73)
Take Home = 69675.27
Looks pretty close to me.
Also, the single income family has the option of lending money from one spouse to the other for investment purposes don’t they? Say the non-income spouse borrows money from the income spouse and invests for the family. The interest will be tax deductable for the non-income spouse and taxed in the higher income earners hands. Though then almost all of their investment income will be non-taxable unless it’s > 8K or so.
I still think the whole discussion is irrelevant. How many families get the choice of living fairly well at 100K of income of one person, or 100K at two people. It’s more like we can either scrimp and get by at 50K, or both can work and get 100K. After all the extra expenses you have far less family life, your kids get their upbringing from understaffed daycares and TV, your house will live the majority of it’s time empty and unused; All for the tune of a take-home of about 20-25K.
Why shouldn’t they get a little tax break. It’s the only break they are going to get.
Careful now, let’s not jump the gun on this. After school charges I have left aside for now, since the point I am trying to make is how the tax system isn’t helping single income families, not how much it costs for day care (which I may do a piece on soon).
Excellent point about the children however! Misplayed that part of the scenario, so I will fix that part.
I’ll need to change the scenario and have Mary be 4 years old (then you need full care daycare).
–C8j
Why do they receive UUCB if their kids are 8 and 10?
Where is the 10K they had to pay out to a after school program to take care of their kids when they aren’t home?
Hi Cajun,
I appreciate the comparison you’re working on.
For those of us who have made this family choice for reasons of child reaering, it’s interesting to know the dollar cost.
Hank
OK, here is what I will do, I will show the numbers with daycare (after I have finished this chain of story), and we can discuss further then (because your numbers aren’t taking into consideration the tax break given for the day care).
Good points, not disagreeing or saying either argument is null or moot, just interesting points.
–C8j
This is mostly cathartic for me.
–C8j
PS: I howl at the moon at times too