Income Splitting for Single Income Families

[Bubbachuk]

We are a single income family (by choice). We have 4 children under the age of 6 and we struggle each and every day to make ends meet with my wife working (unpaid) as a full time stay-at home mom. Even though we only make a modest single income, the Canadian government still takes 30% of our family income to spend as they see fit. I would like to see income splitting extended to single income families so that we, as Canadians, are not social engineered to have 1.5 kids or less. Income splitting, and giving OUR hard earned money back to spend as WE see fit, would do more for our family situation than ANY of the suggested tax cut or social programs. The government would not be giving single income families a hand out, as this money was earned by the families themselves. How can it be that big corporations are worth giving $5 billion dollars to without so much as a bat of an eye, but to give Canadians their hard earned money back in difficult inflationary times appears to be blasphemy?

Why is the Canadian government against the idea of income splitting for TODAY’s families? Why are only pensioners worthy of this designation and privilege? Would the money not go to further stimulate the economy without the need for a bundle of red tape? This could help A LOT of families in the here and now… how can you NOT do it?

[Bubbachuk]

Just adding a poll.

[August1991]

We are a single income family (by choice). We have 4 children under the age of 6 and we struggle each and every day to make ends meet with my wife working (unpaid) as a full time stay-at home mom.

In effect, your wife is working under the table and not declaring her income to the CRA. In addition, because of your four kids under the age of six, you receive $400/month as well other refundable tax credits.

And you want more? And incidentally, I find amusing how you portray your own greed as something noble and good for society at large.

The solution is not to make Group A pay higher taxes so that we can cut the taxes of Group B. The solution is to cut government spending so that we don't have such high taxes in the first place.

[Bubbachuk]

In effect, your wife is working under the table and not declaring her income to the CRA. In addition, because of your four kids under the age of six, you receive $400/month as well other refundable tax credits.

And you want more? And incidentally, I find amusing how you portray your own greed as something noble and good for society at large.

The solution is not to make Group A pay higher taxes so that we can cut the taxes of Group B. The solution is to cut government spending so that we don't have such high taxes in the first place.

How do you figure that my wife is working under the table? If she does not make an income for being a stay at home mom, then what income would you be speaking of?

The $400 per month is NOT tax free, therefore it does not represent $400 as Harper might have you believe. It counts as income to the family and is taxed at the same rate back to the government. Here in Alberta, inflation has gone through the roof, and that $400 does not amount to a hill of beans in the real world.

I simply believe that if you are not using the farm-your-kids system (eg. daycare/dayhome), then you should be able to get tax credits/writeoffs that are enjoyed by those offereing the same service. A stay at home parent household should be able to write off the same costs that the other care systems do. There is NO difference between the two therefore it is prejudice not to allow one to claim but not the other.

Greed? Seriously.. you need help dude.

Being that you are from Montreal one should not even bring up the topic of greed. The other provinces are still waiting on transfer payments from Quebec Hydro... it appears that dollars only flow one way alot like the rivers

Edited October 6, 2008 by Bubbachuk

[M.Dancer]

In effect, your wife is working under the table and not declaring her income to the CRA. In addition, because of your four kids under the age of six, you receive $400/month as well other refundable tax credits.

He said she works at home (unpaid) ....

[August1991]

He said she works at home (unpaid) ....

If I hire cleaners/cooks to provide domestic services, then they have to declare this income and pay tax on it.

If I "pay" my spouse to provide the same services, he/she does not declare anything to the CRA. It amounts to a huge tax break for stay-at-home spouses.

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Bubbachuk just wants to lower his taxes and raise the taxes of other people. He is dressing this up as something "good for society" when in fact it's good for him.

In my naively idealistic moments, I like to think that our tax system has some sort of coherent basis. I have to admit though that the Conservatives are edging to income-splitting for the simple reason that more Conservative voters are married with differing incomes. Among potential Conservative voters, income splitting is popular. The end result is to lower taxes among Group A (couples with stay-at-home spouses) and raise them among Group B (everyone else) because Group A tend to vote Conservative.

Greed? Seriously.. you need help dude.

Being that you are from Montreal one should not even bring up the topic of greed. The other provinces are still waiting on transfer payments from Quebec Hydro... it appears that dollars only flow one way alot like the rivers

Greed? Well, you don't want more money so I reckon that's a fair description of greed.

But your reference to Quebec provides an example of what I mean. People in Group A (ie. Alberta) pay a different tax rate than people in Group B (ie. Quebec). Why? Heck, I don't know.

Edited October 6, 2008 by August1991

[M.Dancer]

If I hire cleaners/cooks to provide domestic services, then they have to declare this income and pay tax on it.

If I "pay" my spouse to provide the same services, he/she does not declare anything to the CRA. It amounts to a huge tax break for stay-at-home spouses..

Ummm yeah....whatever. I p[aid my wife a while back for her book keeping services. It was a huge tax break for me as I was able to deduct that from my earnings and she was taxed little because the amount I paid her was near the minimum income level. Everyone in a single income household should do that.

Personally I think households should be taxed, not individuals.

[Pat Coghlan]

If I hire cleaners/cooks to provide domestic services, then they have to declare this income and pay tax on it.

If I "pay" my spouse to provide the same services, he/she does not declare anything to the CRA. It amounts to a huge tax break for stay-at-home spouses.

Exactly whose cooking and cleaning are you going to tax? When your cleaner/cook goes home and cleans her own house, is this *income* that needs to be taxed too?

I'll give you this: I think brute-force income splitting does give too much of an advantage to couples vs singles. However, if you're going to treat everyone as an individual for tax purposes, shouldn't that mean that each spouse must be allowed to claim 50% of child benefit payments based only on his/her (vs the family) income?

Doing nothing isn't an option either...at least one that I would support. Either go the whole route and treat EVERYONE as an individual, regardless of marital status, complete with benefit sharing with the other spouse, or introduce a US-style joint tax return which lumps together the incomes of both spouses and taxes them as a unit.

In the mean time, I'm voting Green, since they are the only party supporting income-splitting.

[Topaz]

I understand were you are coming from but until someone does changes the rules and they will sometime down the road. I stayed home with my kids too while my hubby brought the bacon home. By the time I paid for gas, clothes, babysitting, it was cheaper to stay home and this was back in the 70-80's. We did alright, budget was tight but we had to make choices and you can't give your kids something their friends have, just because they want it. I am listening to the financial news of today and they are saying Canada is going into a recession that could last until early 2010 and when there's only one income, you will feel it first. If people are smart they will pay off their credit cards and any loans they have as fast as they can.

[August1991]

Ummm yeah....whatever. I p[aid my wife a while back for her book keeping services. It was a huge tax break for me as I was able to deduct that from my earnings and she was taxed little because the amount I paid her was near the minimum income level. Everyone in a single income household should do that.

That's a little different Morris. I assume that your small business hired her so her fee was a legitimate business expense.

If I hire a cleaner for my house, that's not a business expense and I can't declare it to lower my taxable income. The cleaners do have to declare the income and pay tax on it.

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I tend to agree that income tax (and all transfers including EI and CPP) should be based on household and not individual income. This should also apply in the calculation for support payments too. The difficulty would be in defining "household". Would it include adult children living in their mother's basement?

[Bubbachuk]

I don't think that one will ever develop a "fair" method of taxation that will make everyone involved happy. Also, I do not think that it is fair that the government collect a huge surpluss of taxes (like the Alberta Provincial government) to put into "savings" for a rainy day. I think the government should create a budget before an election that is fully disclosed to the public, then that COMPLETE package is avaliable to be voted upon at election time. The government should also be held accountable for running that budget over. That way, when they collect taxes, they have an idea of how much is needed from the rest of us to run the country, and not a penny more. But we do not live in a dream world. The fact remains that the government has X amount of dollars to spend, and I think that the money is better spent on improving the situation in the lower and middle classes, than it is spent on corperations. Income splitting can help a family like mine overnight. It's really a no brainer. It's not about greed, it's about having the money to heat our home over the winter, paying for electricity, and gas to get to work. I don't think many families will be buying luxury items with this extra cash in their pockets. I can only speak for myself, but this money will simply allow us to push our monthly expenses further than paycheck to paycheck.

The Green party is the only party that has even brought this idea to the table. There is no other party that has even considered single income families in their platform (Nataional Daycare? Give me a break!).

It is for that reason that the Greens will likely get my vote. I know they have no chance to win here in Alberta, but there is no other party platform that addresses the needs of a family like ours. We are in desparate need of a viable opposition party in Canada. It is for that reason that I believe that the PQs are actually a detriment to our Canadian political system, and should be ousted from federal elections. Specific provincial interests have no place in a national forum. All provinces should have an equal voice in Parliment. But that is a rant I will save for another day.

[unspoken]

The solution is not to make Group A pay higher taxes so that we can cut the taxes of Group B. The solution is to cut government spending so that we don't have such high taxes in the first place.

Round of applause for this statement.

I'm sorry that you're having difficulties, but the reality is that all of the things that you listed as the causes of your struggles (single income, four kids, etc.) are choices that you made on your own free will. You shouldn't expect to reap all of the benefits while accepting none of the repercussions of those choices.

[unspoken]

The $400 per month is NOT tax free, therefore it does not represent $400 as Harper might have you believe. It counts as income to the family and is taxed at the same rate back to the government. Here in Alberta, inflation has gone through the roof, and that $400 does not amount to a hill of beans in the real world.

You are correct, however, I'd assume you have it set up so it comes in your wife's name. You'd be collecting 4800/yr total. If she's not earning any self-employed/T4/interest/dividend income from somewhere, she's still not paying any taxes because the BPE is almost double that amount. The amount that does end up getting deducted in tax from the UCCB is also more than covered by the CCTB and the numerous programs for kids (sports, etc.) which the gov't chips in a lot of money for.

[Bryan]

You are correct, however, I'd assume you have it set up so it comes in your wife's name. You'd be collecting 4800/yr total. If she's not earning any self-employed/T4/interest/dividend income from somewhere, she's still not paying any taxes because the BPE is almost double that amount. The amount that does end up getting deducted in tax from the UCCB is also more than covered by the CCTB and the numerous programs for kids (sports, etc.) which the gov't chips in a lot of money for.

The new tax deductions for children under 18 far exceed what you'd otherwise pay on the UCCB anyway. No matter how you slice it, you're still more than $1200 per child to the plus. I don't see how anyone can complain.

[Pat Coghlan]

I understand were you are coming from but until someone does changes the rules and they will sometime down the road. I stayed home with my kids too while my hubby brought the bacon home. By the time I paid for gas, clothes, babysitting, it was cheaper to stay home and this was back in the 70-80's. We did alright, budget was tight but we had to make choices and you can't give your kids something their friends have, just because they want it. I am listening to the financial news of today and they are saying Canada is going into a recession that could last until early 2010 and when there's only one income, you will feel it first. If people are smart they will pay off their credit cards and any loans they have as fast as they can.

In the 70s/80s you did all right because prices - including home prices - were in step with the salary of the major breadwinner. For example, I bought my first home for $71,400 on a $33K salary. Today, that same home costs $280,000, while the same job pays $66K (home price increased 4x, while the salary increased 2x). My point is that it is even MORE of a struggle today for a family to get by on one salary. Still, they receive much less assistance than families who put kids in daycare.

The current recession is more likely to last until 2030, rather than 2010.

[Pat Coghlan]

As discussion in the other thread, http://www.mapleleafweb.com/forums//index....showtopic=11820, this might have been the only chance Dion had at coming close to beating Harper, assuming Liberals don't have a problem with charging all families with the same total income the same amount of taxes.

[Pat Coghlan]

The new tax deductions for children under 18 far exceed what you'd otherwise pay on the UCCB anyway. No matter how you slice it, you're still more than $1200 per child to the plus. I don't see how anyone can complain.

What new deductions?

There only deductions available for kids are related to daycare expenses. In fact, I think the only place children show up on a tax return as a line item is the Equivalent To Married exemption (a form of income-splitting for single parents).

You can thank Mulroney for essentially removing children from the tax system.