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INCOME SPLITTING FOR TAX FAIRNESS TO FAMILIES
One of the major failures of Canadian governments over the
years has been the refusal to implement tax policies beneficial
to the family unit. Enamoured with expensive top down social
engineering, governments have left Canada with high taxation
which has crippled family formation and brought into play
more control by the government in what should be strictly
family only decisions.
Status of Women Canada has also failed to represent family
oriented women, leading to women’s loss of freedom to
choose full time homemaking and child rearing. Instead, every
effort has been made to draw women into the paid workforce,
according to feminism’s simplistic measure of “equality.”
That is, hundreds of millions of tax dollars have been spent
chasing the failed feminist dream of female independence from
family, and this has exacerbated Canada’s problems,
since we can no longer replace our population, a basic requirement
for economic viability. This loss in population is due in
part to high taxation requiring women to forsake any career
but that of one in the paid workforce.
Ironically, women’s full employment is both a symptom
of unbridled capitalism and radical socialist ideology. See:
Desperate
Swedish Socialist Housewives at www.profam.org
for an expose of the ideological battle over family economics
raging internationally for over a century.
REAL Women has repeatedly called for family oriented taxation
because the family is the basic unit of society. (See REAL
Women Makes a Presentation to the Subcommittee on Finance,
REALity Nov/Dec 2005.) The great majority of Canadians place
a high value on family life and young Canadians still hope
to live happy married lives with spouse, children and grandchildren.
(See “The Misrepresentation of Family Statistics,”
of this issue.) The government should be encouraging these
views by making it easier for families to give birth to and
raise their children – not to punish them for doing
so.
Conservative Government Initiatives
The present Conservative government, however, has in fact
taken some commendable initiatives to recognize the family
unit:
It has returned tax dollars to Canadian families via the
popular $1,200 a year Universal Child Care Benefit. This was
instrumental in shifting votes to the Conservative Party in
the last election. This policy sensibly supports Canadian
parents, the primary caregivers and early childhood educators
par excellence. The UCCB treats all children equally without
favoring children of dual income families.
Other Family Initiatives by the Conservatives
The last Conservative budget (March, 2007) announced a new
$2,000 child tax credit for parents with children under 18
years of age, providing up to $310 per child in tax relief.
The budget also provided that the value of the spousal tax
deduction be made equal to that of the principal earner, a
gender equality measure not hostile to the family unit. Pension
splitting for retired Canadians was announced in October 2006,
which recognized that spouses work together as a unit –
with pensions being deferred family income, not just monies
allotted to the bread winning spouse.
The October 31, 2007 Economic Statement (mini-budget) announced
long overdue broad-based personal income and corporate tax
deductions. It raised the basic personal deduction from $8,929
to $9,600 for 2007 and 2008, and to $10,100 for 2009. Some
analysts have recommended raising it further to $15,000.
Still Work To Do:
Even with all these welcome changes, there is still something
very important left yet undone. Pension splitting has highlighted
the fact that it is unfair that family income itself cannot
also be split for couples for taxation purposes. That is,
a single family income should be split between the couple,
both paying separate taxes on it, thus reducing the amount
paid.
Income Splitting
Currently, in households where one parent, usually the mother,
chooses to care for the children at home, the tax burden is
significantly higher than for the household which chooses
to go the dual income route. [See: Tax
Penalty of Single-Income Families, REALity May/June 2005]
This drives mothers into the workforce and children into substitute
institutional care, which is an unacceptable interference
in the autonomy of the family. Public policy should be neutral
on issues of career choice for women, and should treat women
at home and in the workplace with equal regard.
Further inequity exists in that some provinces offer income
splitting opportunities to some professionals, for example
doctors and dentists in Ontario, through incorporation of
their practices, opportunities which are not available to
all Canadians in all provinces. See: Splitting
the Difference is Easy for Some: Ontario doctors, dentists
can flow income to families
Commenting on income splitting through incorporation and pension
splitting, the financial analyst who authored the above-referenced
article concluded:
…unfairness seems to be the norm when
it comes to uneven taxation on split incomes. Just ask Ontario
lawyers and accountants who are helping medical professionals
enjoy a tax benefit they themselves are denied.
Government Surplus Offers Opportunity
The present Conservative government should be commended for
a significant reversal toward more conscientious taxation
of Canadian families announced in its mini budget this fall
by returning tax dollars to needy families. Huge recurring
federal surpluses, obviously a result of excessive taxation
and expanding government power, offer an excellent opportunity,
however, to finally take measures to make Canadian taxation
further family friendly by income splitting for married couples.
This would recognize the contribution that parents make to
society when they sacrifice to give birth to and pursue the
formation of the next generation of Canadians.
Library of Parliament research estimates that the cost to
the federal treasury of income splitting for all Canadians
would be $1.5 billion annually. This is a fraction of the
projected government surplus for this year which some analysts
predict is headed toward $23 billion, making it the highest
on record. (Mounting Surplus Spurs Calls for Tax Cuts, Canwest
News Service, Sept 29, 2007)
Feminist Objections
It is interesting that whenever the issue of income splitting
has come up over the years, strong objections to it has been
made by feminists -- objections to which the Liberals always
listened. Feminists see women as perpetual victims. They fear
that income splitting will inhibit equality between men and
women by requiring women to reveal their income to their husbands,
and that it would serve as a disincentive to the employment
of mothers. But Statistics Canada informs us that women are
primary wage earners in 29% of dual-earner couples and studies
show that women outnumber men in universities in North America
3 to 2. Women cannot always be viewed as economically unequal
to men and would benefit equally from tax relief. In addition,
feminists, who claim to speak for all women, ignore the fact
that when the family unit benefits from lower taxes through
income splitting or tax deductions, women also benefit. When
the male family wage earner keeps more earned money in his
pocket, his entire family benefits, including women. This
is not according to the strict feminist dogma aimed at controlling
women’s choices, hence the noisy feminist opposition
to income splitting.
Conclusion
While special interest groups were pampered during Canada’s
infatuation with liberalism, the family suffered severe blows
to its autonomy. Bureaucratic concern for the family wage
is almost non existent as even Statistics Canada now focuses
on “household income”, assuming that a family
can no longer be supported by one income, but must have at
least two workers earning salaries in order to function.
A nation cannot thrive without strong families. Liberals
try to belittle this fact as a mere whim of “social
conservatives” or the “religious right.”
Objective analysis however, clearly proves that nothing could
be more dangerous to the collective future of Canadians than
continued neglect of family oriented economic and social policy.
Please contact the Prime Minister, the Minister of Finance
and your MP, thanking them for advances made in developing
a more family friendly taxation system and encourage them
to include income-splitting in the spring budget of 2008:
Their addresses are as follows:
The Right Honourable Stephen Harper
Office of the Prime Minister
Langevin Building
80 Wellington Street
Ottawa, Ontario K1A 0A2
Fax: 613 941-6900
The Honourable James M. Flaherty
Minister of Finance
Department of Finance Canada
140 O'Connor Street
Ottawa, Ontario K1A 0G5
Fax: (613) 992-8320
Your MP
House of Commons
Ottawa, Ontario K1A 0A6
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