We continue to try to figure out how much a spouse is worth in the eyes of the CRA. So the Publics (Jane and her spouse John Q.) have a good life and an above average household income of $100,000.00 per year.
Single Income model:
- Income tax paid would be $27,661.98
- They would pay a total of $2640.00 in CPP and EI payments
- Final score around $30K in taxes and payments.
Dual Income model:
- Income tax paid would be $20,561.46 (paid by both)
- They would together pay $5280 in CPP and EI payments
- Final score around $26K in taxes and payments
Interesting so the gap for this family as laid out is about $4000.00 or so. Now this is after tax money, so the single income earner model would need to may about $7000 more gross income to be the same net income.Now I have had some very good comments from various readers (I am impressed that this has caused such discussion), commenting that I am not taking into consideration the high costs of day care and such. Those are good points, but remember that the dual income family also gets to write $7000 worth of that from their income, and no I am not saying it is a “wash” but that needs to be considered. There are other points as well that can be made, but it makes the argument quite complicated.
My conclusions and final comments how much my spouse is worth will be posted tomorrow.For those of you who agree or disagree, I open my forum to you, if you wish to write a rebuttal or supportive article, I am willing to post it (after reviewing it myself, it is my blog, after all). Leave a comment, I will contact you.
I think that is part of my argument, WHY is it required that a family have two incomes to be able to live a “comfortable” (a relative statement) life?
Rich people get richer? Maybe, but I think the point is these “rich” people aren’t “richer” per say, if they are competing with dual income families, are they?
I do agree the HUGE losers in the system is lower income single income families, they are getting the dirtiest end of the stick, and there needs to be more help for them to be able to have a more “comfortable” life.
The clothing statement is interesting, does that mean the spouse at home runs around naked and bare foot (ok, bad joke, and yes “business” attire is more expensive).
As I said, if you want to put together a posting about this, send me an e-mail bigcajunman at gmail.com
I still stand behind my original argument that the tax system is set up in a way to help ‘normal’ dual income families compete with single income higher paid families.
According to the OREB website the average sale price of homes in 2005 was $244,531. For ease I’ll jut say 245K. I used this date because I found the 2005 median income stats at http://www.statcan.ca/Daily/English/070529/d070529e.htm for both dual and single income families. The median income of dual families was $86,100, and single was 36,100.
The payment on a 245K mortgage with 24500 down over 25 years at 5.75% would be 1,378 per month (using the OREB calculator). In order for that to be affordable at 32% for just the mortgage cost alone you would need a gross income of around 4300/month, or 51600 per year. This means that the median single income family in order to buy a median home will have to have both people work just to buy the place. This doesn’t even take in to consideration that they will now need to pay for daycare costs, extra transportation, an extra work wardrobe, and the list goes on and on and on.
The reality is that dual incomes is required to live in todays age, unless you have a single income WELL above the median. The tax rules are set up in such a way as to help people live, not rich people be more rich.