One of my favourite topics to discuss with anyone political is: why is it that the Canadian Tax system seems to be skewed against the single income family?
Most of the time the response I get back is a lot of “baffle gab” about supporting families through social programs, etc., however that is not what I am saying.
If you gave a couple (be they married or not) an ability to pool their income and income split (as they currently can with pension income after age 55), you might be surprised at what comes of this. If I was able to income split with my spouse (when I was employed at least) the amount of tax I would have paid would have been staggeringly less than I did as a single income earner, even with the paltry tax credit for the “Married tax credit”.
I have done numerous articles on this one (and have caused some interesting discussions in the comments as well), so I won’t rehash the numbers, but I think if the government gave families or couples the capability to income split or income balance (if that made sense) and had the concept of the Household Income, I think they might see:
- More single income families, since it would make more sense for a spouse to stay home instead of taking a lower paying job.
- Higher employment numbers, since there would be many people who would stop looking for work, as they are more of a family asset as a tax shelter.
Haven’t had any politicos appear on my doorstep yet, but given I am home all day long, I feel sorry for the first one to show up on my doorstep.
I find it interesting that traciatim says that children would complicate the argument. I think children are a large part of the equation, it’s ususally the number one reason one parent is not workng and why some families are looking for a shared family income. Single income families (by choice) do not get any concideration for not making demands on things such as: daycare spaces or infrastructure such as roads and transit. I think the statistic that we have 45% percent more spare time highly over exagerated. Are you presuming that all your working people are working 37.5 hour weeks? That too maybe an over simplification for fit the argument.
BigCajunWife
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Hi Traciatim,
I would love to see you write a blog. You don’t happen to have one do you?
Anyway, I think it’s clear from the Elizabeth Warren video you referenced (I watched it a few months ago), that families are worse off now than 30 years ago, and with both adults working, there is bound to be more marital and family strife. Mothers tend to do more of the child care duties and household duties, so I’m sure mothers that work outside the home are feeling pretty stretched.
It would be hard to say that having both adults work causes more divorce, but I would bet there are more divorces nowadays than 30 years ago. This may be partly due to each partner being more economically self-sufficient. A marriage would have to be really bad for a person with very poor work prospects to choose separation. This doesn’t really help with the stats you’re looking for though.
I think I recall Elizabeth Warren’s speech saying that marital separation is a leading cause of financial hardship, along with serious family illness.
It’s probably a net positive that people are more free to separate from a bad or abusive relationship. There are some negatives, too.
The percentage argument is pointing out that they are working twice as hard to make ends meet, so they get a tax advantage.
What would happen if suddenly the government decided that income splitting is the way to go for couples and suddenly the labour force decreases by 10%? I would think the economy would be in pretty rough shape at that point. Though wages would increase as the demand for warm able bodies rises.
I would also argue that the single income couple can use their 45% more free time to comparison shop, shop sales, find bargains, and otherwise smoothly run their household to make for a much better life overall than the hectic stressed out dual working couple.
@Gene: I would think that the government would cost it out and just price the tax brackets at a point that there would be the same level of funds coming in from income taxes anyway, so I doubt it would cost much of anything at all except for the form changes.
Say . . . does anyone have stats on marriage failures of single vs dual income households over the past few decades, or stats on reported happiness levels of dual income vs single income households, or maybe stats on anti-depressant or blood pressure prescriptions of dual vs single income households? Stuff like that would be really neat to see.
I’m all for income splitting too. It would be a family-values platform, since it would also encourage marriage. Like you mention, it may encourage people to try to stay at home with their kids, reducing the stress on the day care system.
Did I hear it would only cost about as much as a 1% cut in the GST?
You wouldn’t get higher employment numbers, just lower unemployment numbers.
“more single income families, since it would make more sense for a spouse to stay home instead of taking a lower paying job.” . . . If Harper did that he would be a sexist anti-woman scum . . . Though I’m sure if Dion did it it would be all over the news that he is a family loving leader.
Lets say for instance in Ontario for tax year 2008 there are two couples making $50000. They don’t have kids yet to avoid complications so far. Couple one has a single income worker that makes 50000, and couple two both work, one makes 30K and the other 20K.
Couple one spend 23.8% of their person hours working. They take home (After Federal, Provincial [Ontario], EI and CPP) $39419 per year.
Couple two spend 47.6% of their person hours working. They take home $41047, a 4.1% increase in their take home pay.
I think you should probably read ‘The two income trap’ by Elizabeth Warren, and/or listen to her ‘Coming Collapse of the Middle Class’ found here:
http://www.youtube.com/watch?v=akVL7QY0S8A
Some really good info there.
Agreed on the EMPLOYMEnT numbers.
Not sure what your percentage agument is pointing out though.