Renegade

Maybe this will help: marriage

Saturn, while to a certain extent you fund personal choices others make, others are also funding personal choices that you make. As a two income household you are the beneficiary of a tiered progressive taxation system which shifts wealth to you. Let me give you an example. You, your wife, and Bob all work for a company and make the same hourly rate. Bob puts in 70 hours a week. You and your wife put in 35 hours a week. Even though the net number of hours put in by Bob as compared to you and your wife is the same, he will contribute more in taxes because of the tiered tax system. In essence, Bob is funding a choice you and your wife have made.

Doubtful. Many would just be two miserable people forced together. I fail to see how having two miserable adults together creates a benefit for the kids.

The example was not to address income splitting. It was to illustrate that taxing based upon family income does not necessarily need to generate a windfall for the government.

If more people felt that way, there would also be a hell of a lot more miserable people in the country.

Huh?? I have no spouse. I don't stand to gain in any income splitting proposal. I have no idea what you are talking about. Saturn, I don't know who you are addressing your comments at, but it can't be me as none of what you are saying applies to my situation. I'll comment anyway. Whether you like it or not you DO fund choices that other people make. People have kids, and thus incur childcare costs, and get a tax deduction. This means you pay relatively more because of a choice they made. From a tax perspective, this proposal breaks no new ground. Just because we simplify the income tax system doesn't mean we need to get rid of other taxes. In fact if any tax needs to be eliminated it shoudl be income taxes and consumption taxes should be raised to accomodate the difference. That unfortunately won't happen, so I'd settle for a simpler and in my view fairer tax system

If the JP doesn't give a hoot that two homosexuals marry, why would you? It would seem you have a very restrictive view of marriage. Are there any conditions under which you see that a marriage shoudl be dissolved? Adultry? Spouse Abuse? Or do you think a marriage should be forced to withstand that?

Ok but then you have to agree that getting divorced also comes with all kinds of financial implicaitons as well, such as the implications for support payments, pension plans, inheritances, etc. In either case there are implications and any couple considering changing their family status would need to weigh the benifits vs the consequences.

Agreed that the "family" doesn't generate income, individuals do. But you are presuming that we need to tax income in the same way that it is generated. This is not true even today without income splitting or considering family income. For example two people making exactly the same income may pay different amounts of tax. One may be a single parent and is able to claim the "Amount for Eligible Dependant" which the other cannot. Of course, what is a "family" is very much up for debate. Even what "marriage" is is up for debate, so naturally it is not clear what a family is. However, tax law very much does factor family into tax law. Certain tax arrangements are not allowed if they are not done at "arm's lenght" (ie not within family members). Further many deductions are dependant upon family income, or are transferable between family members (eg tution). In short, I don't think you can clearly point to tax legislation as using individuals as the "fundamental unit", since the tax paid by the individual varies based upon the income and deductions of other family members At least for the purposes of taxation and benefit calculation, I agree and that is what I am advocating. I guess it depends upon what you think is a reasonable presumption. I think it is unreasonable to assume that you control the actions of other family members, so it is therefore unreasonable to throw you in jail for whatever crime your wife does (assuming you had no role in it). It is however reasonable to presume that a family will pool income and share the proceeds, so it may be fair to tax on that basis. Of course this may not be true in all families. In my view both models should be accomodated, or better still, make the distinction moot by adopting a flat tax model.

But such a system would provide a financial incentive for couples to divorce because of the potential for tax savings (and this would happen - I know of elderly people who have divorced because they wanted to qualify for benefit programs that they could qualify for as a family). Possibly, but there are already tax rules in place on what the CCRA considers married for the purposes of calculating family income. For example if the elderly couple divorced but still lived in a the same residence in a conjugal relationship, I'm pretty sure that CCRA woudl still consder them "married" under the GAAR if nothing else. The opposite incentive exist under the income-splitting proposal. There is an incentive to masquarade as married in order to take advantage of income splitting. If two roommates live together howver are not in a conjugal relationship, and there is a disparity in their income, by "marrying", even if in name only, they can get a substantial tax subsidy. As your example illustrates, no matter what categorization you use, there will be people who will try and reclassify themselves if it is to their advantage.

Why does it matter to you if there are two, three, or more in a "marriage"? What's the distinction?

Yes, you are right. It would generate a tax cut to single people, but I would argue that such a cut is warranted. The government should at least be consistent in what it considers an income generating unit. If it considers the "family" the basic income generating unit, for purposes of determination of beneift eligiblity, then it is fair for it to do so for the purposes of income taxation. However, there is no reason that a single individual should not also be consider a "famiy" in the same context. As it currently stands, for the puroses of benefit eligibility, a single person's income is considered one and the same as their family income. In fact they are considered a family of one.

If you had a flat tax, to be trully flat it would have to be levied across all income without exemptions or deductions. Personally I'd be ok with a flat tax. I think it would be fairer and simpler.

Let's use a hypothetical example to illustrate what I mean. Lets say husband and wife each have taxible income of $60,000. Assume that the threshold for the taxing at the highest rates starts at $50,000 (ie each of them have $10,000 which is taxed at the highest marginal rate). What I'm saying is that if the threshold was changed to $100,000 but the income taxed was family income (ie $120,000) it is revenue neutral to the government. I think the government would need to look at the broad consequences and could adust rates and tiers so it did not overall raise taxes.

Its only a windfall if the tax rates and tiers levels stay the same. The government can adjust those so that it is revenue neutral.

Adelle, personally I agree with your definition as a good basis for a legal definition of marriage. Would you consider a brother and sister living together in a "socially symbiotic relationship" married?

RW, you hit a key point. If the family is the basic unit which is used to measure income, then everyone should basically be required to file a "family" tax return instead of individual tax return. Tax rates should be then tiered based upon family income not individual income. I'm not sure why you feel that this is a political non-starter. The current splitting proposal discriminates against single-adult, single-earner families. To be truly fair and consider family income, a family made up of one adult and zero or more kids, shoudl be given the same personal deductions and tier levels as 2-adult families. The current proposal shifts the tax burden to the single-adult families.

I doubt it. There is already a huge fiancial benefit to married couples staying together, and the tax benefit provided by income splitting is pretty insignificant by comparison. Yet, despite these beneifts, couples still split. I doubt that the benefit provided by income splitting will sway them to stay together.

EI was intended as insurance against unforseeable and unintended job loss. It woudl seem that in this case the unemployment is forseeable and intended. In my view this kind of EI claim is fradulent and should be disallowed. I suggest that these workers stop abusing the EI system. If there no longer jobs where they live, I suggest they move to where the jobs are.

The question asked is not whether schooling is useful. I'm sure at some point it was useful. The question is whether I would pay to replace it if the government didn't fund it. If I didn't directly use the schooling facilities (ie if I wasn't going to school or have my kids going to school) I wouldn't bother replacing the service, despite the indirect benefits.

True, that is an argument why is should be considered a "tax". The only real distinction is that the benefits are not paid now, but later. Sure health care is important, but it is still an insurance. The point is that if funds used for health insurnace is a tax, then so is EI. The importance of it doesn't change the nature of if it is a tax or not. You should include both the employer and employee contributions of EI and CPP in your calculations as they are nothing but a form of employee compensation which would otherwise be paid directly to the employee, but instead is redirected as a tax.

I have friends who have had to purchase healthcare insurance in the US and the cost is in the $1200-$1500/month range for a family. I have also heard that the cost of to US employers is in a similar range. One half of the property taxes I pay goes to pay the RCMP and the Fire Department the other half goes to paying for roads and community buildings/parks. Private schools start at $1000/month (after deducting the gov't private school subsidy). Many seniors collect $500-1000/month in retirement benefits. That is a short list of benefits that already add up to at $2000/month which exceeds the direct tax bill of the majority of families in the country.I agree that the gov't could save some money eliminating wasteful pork barrel projects but I seriously doubt the savings would be much more that 10%. IOW: taxes are not dumped into a pit an burned - a large percentage of the taxes we pay does come back in the form of essential services which we have to pay for no matter what. It is important to keep those facts in mind when asking whether we pay too much tax. I grant you that there are many essential services. I also agree that some services like healthcare are provided more efficiently by the government. However, I may be single and don't need to purchase schooling or healthcare for an entire family. I may not be a senior and thus do not collect $1000/month in retirement benefits. In short I'm skeptical how many "essential" services would truly been replaced if taxpayers had the option.

I'm not sure what you mean. Why would I return CPP or EI beneifts? You don't factor in the benefits for any of the other services my taxes pay for, so why shoudl CPP or EI be any different. I'll grant you that my figures are not accurate, I just did it from the top of my head. However, even if you look at Riverwind's figures CPP + EI is $2928 on an income of $60,000. That works out to 5% of income Actually, EI = $729 and CPP=$1911 for total=$2640. That's 4.4%. The thing here is that these are not really taxes. Paying CPP means that you will get a pension (so it's saving for retirement, like RRSPs) and EI is insurance on employment and you will get EI benefits if you lose your job. Of course, there are certain similarities to taxes but that's a whole other debate. The main difference between CPP and EI and taxes is that you pay the same amount of taxes whether you get services or not. You may never go to the doctor or you can spend all your free time at his office, but you still pay the same. With CPP and EI, the benefits you get are directly related to how much you CPP and EI premiums you pay. It's like life insurance - you get the benefit only if and depending on the premium you pay. But you wouldn't say that life insurance is a tax, would you? For CPP it has some similarity to both a tax and to a savings plan, so I can go either way on it. It is like a savings plan in that I contribute to it and expect my contributions to be held "in trust" for me, and paid out with investment gains upon retirements. It is also like a tax in that the government unilaterally sets payment rates and payout rates and there doesn't necessarily need to be a relationship between the two. For example the government could decide, that by the time I retire, it doesn't have enough to pay out all retirees, and can unilaterally cut payment rates, or hike contributions as they did in the 90s. As for EI, it is pretty much the same concept as health insurance. Even if I don't use the benefit, I still pay EI just as I do health insurance. And yes I do consider my tax contributrion to health insurance a tax, so why wouldn't I consider the same for EI? BTW, the $729 figure for EI, is that the employee portion only or does it include the amount the employer contributes on my behalf?

Maybe, maybe not. The government spends on a lot of things which if we had a choice as individuals we may not buy. I wonder how much money the government actually spends on truly "essential" services, which an individual taxpayer would have to replace if not provided by the government.

I'm not sure what you mean. Why would I return CPP or EI beneifts? You don't factor in the benefits for any of the other services my taxes pay for, so why shoudl CPP or EI be any different. I'll grant you that my figures are not accurate, I just did it from the top of my head. However, even if you look at Riverwind's figures CPP + EI is $2928 on an income of $60,000. That works out to 5% of income