Pat Coghlan

Well, promising meaningful tax reform along the lines of a joint return or income splitting might have provided a lifeline, but I'm happy to watch them go down.

There was not as *much* exposure to sub-prime property, but the Canadian banks are exposed to some degree...to the extent that they invested in the bonds of those failed banks or purchased CDOs (collateralized debt obligations), which are backed by mortgages on the US sub-prime properties. Anyway, the Liberals are a complete write off, but I do like what I read re: the Green Party plan to support income splitting (actually, just a joint tax return would do fine...complete splitting isn't required to make things fair).

The only thing the Liberals are more aggressive on is getting elected at any cost: http://www.thestar.com/FederalElection/article/498945 Families are living on home equity and debt to survive. I think that needs to take centre stage in the election. As we are speaking, yet another money centre bank (Lehman Bros.) is on the ropes and poised to fail. Things are going to get a lot worse before they get better.

Hey, I just checked their website and you're right! I'll do some more checking, but if I like what I see I will give them my vote, just because of their view on tax reform.

You're unclear because the example is utterly ridiculous. Should the spouse who works outside the home be taxed when she gets home and cleans *her* house? After all, that's untaxed labour as well, isn't it? Or, do you just want to go after the at-home spouse because she's (usually it's a she) chosen the *job* of being an at-home spouse. The at-home spouse doesn't do anything most people/have to do to maintain their homes. Some choose to employ someone to do it, and someone *else* will only do it if they're paid. If you can show me a government in the entire world that levies a tax on someone doing their own laundry or looking after their own kids, maybe we can start to have a debate. Can I assume that you're not married (and perhaps vote NDP)? I can't think of any other explanation for the view that someone would equate doing household domestic work with paid maid service.

I don't think society places the same value on sports cars and children. Do you? The government can't talk out of both sides of its mouth on this issue. Either we want to encourage larger families (to sustain our economy, create some mild inflation etc.) or we don't. If we don't, then scrap subsidies for things like daycare etc. At least people will know the government's position and can oblige them.

I agree with this. There should be only 2 tax brackets to distinguish between income needed for food and shelter and income which can be used for discretionary spending.

What you are referring to here is vertical equity. As one's income rises, so does the tax burden. There is also horizontal equity, which means that those in similar circumstances and income level should pay similar amounts of tax. This breaks down in the Canadian system, since tax breaks for kids are removed if your income is high, resulting in there being almost no difference between someone supporting a family and a single person.

I believe the Cdn tax system is supposed to be based on ability to pay (horizontal equity, see http://books.google.ca/books?id=myG38h5oIv...&ct=result). If you accept horizontal equity as an objective of the tax system, then you must accept that families in similar circumstances (e.g. family size and income) should pay similar amounts of tax. If you study our tax system, it becomes clear that we don't put horizontal equity in practice.

I'm using the basic tenet that our tax system is based on ability to pay (and, in the case of benefits, need). The latter is certainly true, given that most benefits are income-tested (against family income). However, with 5 kids I remember comparing my tax liability to a single person circa 2000 and saw that there was very little difference between my tax liability and a single person with zero dependents. If this is the way that things are supposed to operate, then the government needs to post a NO KIDS REQUIRED IN CANADA sign somewhere...which would also mean the elimination of deductions for things like daycare.

Well, the system is supposed to be based on ability to pay. You either subscribe to this idea or you don't. The benefit system certainly seems to be based on *need*, based on family income, which is why your benefits can be 100% clawed back if your family income is high enough. So do the aging parents that we allow to immigrate into Canada. The question is, do we want/need more of either (aging immigrants or children born in Canada). I'll accept the answer, whatever it is, but I'd like to hear it at least. Canada *pretends* that it wants more children, but few seem willing to support the kind of families that will allow 3+ kids. If the system is based on ability to pay, then yes, it does.

We tax *incomes*. That's why it's called *income* tax, not an *effort* tax. Employment income is taxed when it is receive...which is why you pay 2 weeks worth of CPP/EI when you get paid on Jan 2nd of a new year, rather than just 2 days worth. There is no *income* to tax when a spouse does work in the home. The whole concept is nonsense. The maid is paid for labour which she makes available at an agreed upon rate which she would not otherwise want (or need) to provide to a stranger. If she doesn't get her wages, she can sue for them. Child support payments are not taxable (or deductible), thanks to Ms. Thibodeau. Spousal support (alimony) payments are considered income, like any other, and factor in to the recipient's tax liability as well as the family's benefit eligibility. If we based tax liability on family income, they would be added to the total (and deducted from the payee family's total). I guess we'd have to see how the US treats support payments in the case of remarriage/change in income. We support children based on the total amount of family income, without regard for any differences in after-tax income...which can be large. I can't tell you exactly how our system will evolve; only that it must evolve in order to become sustainable. Families are increasingly turning to credit to survive - both in Canada and the US. Savings rates have dropped to negative values. The global financial system is on the brink of a disaster. Families want daycare subsidies so both spouses can have jobs outside the home. We have inflated our way into a financial mess which will take the next 20 years to climb out of...while *someone* pays to look after millions of seniors in their retirement years. We are going to have to take a good hard look at the kind of population growth that we need/want to stabilize the job market and our economy. I believe that children cannot be excluded from that discussion, and governments will have to decide what birthrate is needed for a stable economy. If the answer is a low birthrate, then stop the subsidies...especially for daycare expenses. If the answer is a medium-to-higher birthrate, then you have to make it possible for more families to have a spouse stay home and look after the kids. As a minimum, that will mean not taxing families in which one spouse earns most or all of the family income at (much) higher rates than families which can split their incomes. In the meantime, I hope you have a stable job, as the next 20 years are going to get pretty rough.

Simple income-splitting is not the answer, but we should handle tax liability the same way that family benefits are handled. Either tax individuals, and allow each spouse to claim 50% of available benefits based solely on his/her own income, or tax family income. What is NOT acceptable is to force families to pool income for benefit calculations while preventing income pooling for tax purposes.

Excellent question. My preference for the longest time is to define tax brackets for a few family *classes* (singles, single parents, couples, couples with children) and tax the family income. All families in the same class with the same income should pay the same amount of taxes. My answer to your question, though, is no. While I would levy the same amount of taxes on all families with 2 kids and $X of income, I would not tax a couple with 1 child the same as a couple with several children.

It has always fascinated me how some people feel that labour in the home should be taxed. In order to have income, there also has to be an expense incurred by someone, no? Is it possible to recognize income without someone *paying* you (wages, interest, dividends etc.)? Would you tax the unpaid labour of a single person when he/she does housework, laundry, cooking etc., or just in cases where another spouse is involved? Depending on how you answer the above, we can decide if the spouse that works outside of the home will be allowed a deduction equivalent to the unpaid labour *income* of the at-home spouse, which to me is simply income-splitting and I see no problem with it.

You'll agree then that it lacks consistency, and it would be more consistent to treat both spouses (and their incomes) individually for benefit purposes as well as for tax purposes. Getting back to the topic of this thread, there is an opportunity for Dion to either level the tax playing field for all families, or introduce some much-needed consistency by treating everyone as individuals for benefit purposes. If he does neither, he goes down. Suits me just fine.

How about this compromise. If the gov't is unwilling to tie the incomes of both spouses together for tax purposes, then untie them for benefit calculations as well. Allow each spouse to claim 50% of available benefits based solely on his/her own income...which may be zero. For example, basic CCTB is something like $1,200/year for 1 child, subject to a 4% (?) clawback for *family* income above $40K. Change this so that each spouse can apply for $600 of the per-child benefit, with the clawback based only on the income of the individual spouse.

I would like to see all couples with the same combined incomes have identical tax liability, just as they have identical benefit eligibility based on their family income. Funny you should bring up single parents. I presume you're familiar with the equivalent-to-married exemption, which treats one child as a virtual (zero-income) spouse for tax purposes. I presume you don't have an issue with leveling the tax playing field between these two family classes. Yes, I am married and have kids (5). Our financial situation has changed a lot in recent years, but for a long time when our family had one (high) income we were treated essentially like a single person with zero dependents, since all our CTB payments were essentially clawed back, which is a totally *&^%$#@!ed up way to run a tax system.

Not as major as you might think. Income-splitting for retirees was achieved with something like one new line on the tax form (income transferred to spouse). Also, over the next couple of decades retirees will represent something like 25% of the population. By then, income-splitting will be widespread. Will singles complain any more than they do now (i.e. not at all)? I predict it is going to happen, and predicted long ago that it would be seniors that would be the first to lobby for such change. It's just a matter of time. Getting back to the title of this thread, though, this is the only kind of policy shift (forget the carbon tax nonsense) that could get Dion elected. More and more former 2-income families are finding themselves in the 1-income group due to all the layoffs that are going on, and starting to realize that perhaps taxation of family income is a fairer method.

That's why instead of a simple-minded split as has been implemented for retirees, there should simply be a set of tax brackets for families which are somewhat wider than for singles (in the US, they are 75% wider, rather than 100% wider).

Well, I know the CPC won't go that way. I wrote to Flaherty a while back pointing out that: a) retirees can income split and all families already have their incomes pooled by CRA to determine benefit eligibility. He replied that it's still fair to tax individuals, as far as his government is concerned.

The only way Dion has a hope in hell of winning the next election is to make a radical break from the status quo and reform the tax system along the lines of taxation of family income, i.e., enable all families to income-split...not just retirees. If he did that, I'd even vote for him.

http://www.canada.com/ottawacitizen/news/s...577&k=19900

Yes, and when your parents came here there wasn't free (expensive) health care. I really don't see why the doors are open to the parents and grandparent (!) of recent immigrants, especially when we are entering a period when the boomers are going to retire and we are going to enter a severe economic downturn for close to a generation.

Just 2 of us. My mother was in the minority in the 60s, in that she worked outside the home. She was able to hire sitters to come to the house all day (we went home for lunch from school). It was difficult enough for her to manage a job and raise 2 kids. I doubt she could have managed any more kids, although she would have liked to. BTW, even though my mother was out of the house pretty much from when we got up until after 4 p.m., it was great being able to be at home in the morning, at lunch and after school, just like all the other kids (in the 60s).