Tax *reform*, a la joint tax return

[punked]

You were whining about the huge burden we put on our poor with a 10% flat tax. Also you were tring to call Sask marginal tax rate the same as Alberta flat tax system.

It is pretty close 80% pay the same 10% pay 5% more and according to you 10% pay 3.3% less.

For someone who earns 24 000 dollars 800 bucks is still over two weeks salary. While someone who earns 100 000 pays close to a weeks.

[Alta4ever]

It is pretty close 80% pay the same 10% pay 5% more and according to you 10% pay 3.3% less.

For someone who earns 24 000 dollars 800 bucks is still over two weeks salary. While someone who earns 100 000 pays close to a weeks.

So what I pay a hell of a lot more then 2 weeks salary in taxes. They need ot pay something for the services they receive everybody has some responsibility in society.

Thats 15.38 a week. They can pay that for free healthcare, a social safety net, policing, free schooling, and all the other services that are provided.

Life isn't suppose to be a free ride, and may others pay a lot more to cover their short fall for services rendered.

In fact according to the Alberta gov website

http://www.gov.ab.ca/home/NewsFrame.cfm?Re...102C038CFA.html

"A typical family of four can now earn up to $40,900 with the Alberta Family Employment Tax Credit before paying any provincial income tax. An estimated 37,200 fewer Albertans will pay provincial income tax in 2008."

Sounds like the poor have a heavy burden in this province doesn't it.

But you leftist socialist things will never beleive that will you.

Alberta's flat tax should look pretty appealing given the info above. I get so sick of the incesant whining about heavy burdens. give up you socialist ways, flat taxes work, and are most advantageous to everybody.

[Renegade]

I wouldn't treat the single parent the *same* as a 2-parent family with the same aggregate income. You couldn't anyway, given all the other variables (alimony, child support etc.). That's for another discussion. I would like to see all 2-parent families with the same total income have the same tax liability.

Of course you would Pat because presumably it is in your self-interest to do so. The point is that you have a very narrow view of what constitutes families in "similar situations". That view is biased toward supporting a change in tax law which would benefit your personal situation. You lose creditibility for your position when you say in one breath that all households making the same income should be treated the same, and in a second breath have a narrow definition of the circumstances under which households should be treatd the same. The only criteria you wish to use in a test for similar circumstances is the presence of a second spouse.

Perhaps one way to handle it is as I've said before - there should be only 2 tax brackets per family class (single, single-parent, two-parent, couples etc.). If there were only 2 tax brackets, much of the unfairness that you are concerned about would vanish.

It would just add a whole new level of unwarrented discrimmination based upon family situation. Why stop there? Why not introduce a set of tax rates based upon age? We could have one set of brackets for those under 20, those 20-30, those 30-40, etc. Why even stop there? Let's introduce one set of tax-rates for men, and another for women?

IMV, the tax code should minimize discrimminatory treatment. If we want to switch from taxing on an individual basis to taxing on a family basis, I see some argument for that. But all credibility is lost when you then start discrimminating between family types.

[Pat Coghlan]

Of course you would Pat because presumably it is in your self-interest to do so. The point is that you have a very narrow view of what constitutes families in "similar situations". That view is biased toward supporting a change in tax law which would benefit your personal situation. You lose creditibility for your position when you say in one breath that all households making the same income should be treated the same, and in a second breath have a narrow definition of the circumstances under which households should be treatd the same. The only criteria you wish to use in a test for similar circumstances is the presence of a second spouse.

It would just add a whole new level of unwarrented discrimmination based upon family situation. Why stop there? Why not introduce a set of tax rates based upon age? We could have one set of brackets for those under 20, those 20-30, those 30-40, etc. Why even stop there? Let's introduce one set of tax-rates for men, and another for women?

IMV, the tax code should minimize discrimminatory treatment. If we want to switch from taxing on an individual basis to taxing on a family basis, I see some argument for that. But all credibility is lost when you then start discrimminating between family types.

I am not motivated purely by self interest. I will benefit a lot LESS today from such a change, than 8 years ago. Back then, my wife was at home with our 5 kids (all under-16), I had a 6-figure salary, I paid virtually the same taxes as a single person with zero dependents and $8,000 MORE in taxes than families with the same income but split between both spouses.

Today, my eldest is in 2nd year at Queens and working to pay much of her own way, my 2nd oldest just started her first part-time job, my wife works 20 hours per week and our youngest (twins) will be 9 this year. Our tax *penalty* vs families with a 50/50 income split is has dropped by about 50%. So, we managed to raise our kids without daycare. We could not do it now on my (lower) salary, but I would like to see as many families as possible have the same opportunity.

If the government doesn't want to treat all *families* the same for tax purposes, then do the complete job and let each spouse claim 50% of available benefit payments.

They can't just sit there and maintain the status quo. Well, they can, but any party that does so cannot expect any support from me, financial or otherwise.

[Renegade]

I am not motivated purely by self interest. I will benefit a lot LESS today from such a change, than 8 years ago. Back then, my wife was at home with our 5 kids (all under-16), I had a 6-figure salary, I paid virtually the same taxes as a single person with zero dependents and $8,000 MORE in taxes than families with the same income but split between both spouses.

Today, my eldest is in 2nd year at Queens and working to pay much of her own way, my 2nd oldest just started her first part-time job, my wife works 20 hours per week and our youngest (twins) will be 9 this year. Our tax *penalty* vs families with a 50/50 income split is has dropped by about 50%. So, we managed to raise our kids without daycare. We could not do it now on my (lower) salary, but I would like to see as many families as possible have the same opportunity.

That you benefit LESS doesn't change the fact that you still benefit substantially. My guess is that you've been advocating for such a change for at least 8 years, so the only real difference between then an now is that you didn't happen to get the change passed that you advocated for.

You are very selective in your comparison points when you compare to a family with a 50/50 income split. Would a family with 50/50 income split have zero daycare costs? Would a family with 50/50 income split not faced increased costs of having two people in the labour force? What you are looking for is for the rest of the taxpayers to subsidize those couples who have a single-high income and choose to have a stay at home spouse. If you want to have the same tax burden as the family with a 50/50 split of income between spouses, then arrange to have your wife work and earn as much as you. If you do not do so, it is because there are other advantages to having a stay-at-home spouse which you value more than the tax break.

If the government doesn't want to treat all *families* the same for tax purposes, then do the complete job and let each spouse claim 50% of available benefit payments.

They can't just sit there and maintain the status quo. Well, they can, but any party that does so cannot expect any support from me, financial or otherwise.

You repeatedly come back to this point, and I have repeatedly told you that I agree with you that the treatment of income for both benefit calculation and taxation should be uniform. How many times must we agree on the same point

[Pat Coghlan]

You are very selective in your comparison points when you compare to a family with a 50/50 income split. Would a family with 50/50 income split have zero daycare costs? Would a family with 50/50 income split not faced increased costs of having two people in the labour force? What you are looking for is for the rest of the taxpayers to subsidize those couples who have a single-high income and choose to have a stay at home spouse. If you want to have the same tax burden as the family with a 50/50 split of income between spouses, then arrange to have your wife work and earn as much as you. If you do not do so, it is because there are other advantages to having a stay-at-home spouse which you value more than the tax break.

You repeatedly come back to this point, and I have repeatedly told you that I agree with you that the treatment of income for both benefit calculation and taxation should be uniform. How many times must we agree on the same point

While families with a 50/50 split pay the *least* taxes, your split doesn't have to be 100/0 to be disadvantaged. You pay more taxes if your split is *anything* other than a nice 50/50. A family with a $80K and a $20K income pays a lot more tax than a family with two $50K ones, yet they incur all the additional (non-deductible) expenses as the dual-$50K income family.

I will make a note of the fact that you agree that treatment of income for benefit and taxation purposes should be the same but, as per the title of this thread, this is not achievable without significant tax reform.

[Renegade]

While families with a 50/50 split pay the *least* taxes, your split doesn't have to be 100/0 to be disadvantaged. You pay more taxes if your split is *anything* other than a nice 50/50. A family with a $80K and a $20K income pays a lot more tax than a family with two $50K ones, yet they incur all the additional (non-deductible) expenses as the dual-$50K income family.

It is really hard to know if they share the same additional expenses or not. Does earning $20K imply that one spouse works at a low pay job, or does it mean that the spouse works part time and thus the family may avoid additional childcare costs. In general, our system of taxation is not based upon how much disposable income a family has. Maybe it should.

BTW, why should a family earning $100K split 50/50 between two spouses, pay the same taxes than two individuals earning 50K each since those two individuals incur higher costs because each individual has to maintain his own household?

I am in agreement that there there should be significant tax reform. I disagree that it should be skewed toward giving two-parent families tax advantages.

Any tax-scheme, short of a no-deduction flat-tax scheme, will always find some situations where some families or individuals when compared to others they consider in a "similar" situation, will consider themselves tax-disadvantaged.

[Pat Coghlan]

It is really hard to know if they share the same additional expenses or not. Does earning $20K imply that one spouse works at a low pay job, or does it mean that the spouse works part time and thus the family may avoid additional childcare costs. In general, our system of taxation is not based upon how much disposable income a family has. Maybe it should.

Now you're thinking like me. I'd like to see just 2 tax brackets. All income below a certain threshold (varies, depending on number of family members) would be deemed non-discretionary (needed for food/shelter/clothing) and taxed at one rate, while all income above the threshold would be taxed at a slightly higher rate. Period. Very little wiggle room for politicians to fiddle with rates, but then, they might not like this plan for exactly that reason.

BTW, why should a family earning $100K split 50/50 between two spouses, pay the same taxes than two individuals earning 50K each since those two individuals incur higher costs because each individual has to maintain his own household?

I am in agreement that there there should be significant tax reform. I disagree that it should be skewed toward giving two-parent families tax advantages.

Any tax-scheme, short of a no-deduction flat-tax scheme, will always find some situations where some families or individuals when compared to others they consider in a "similar" situation, will consider themselves tax-disadvantaged.

There are reasons, but I'm not sure if you'd agree with them (encourage formation of family units etc., occupy 1 residence vs 2, produce children etc.).

[Renegade]

There are reasons, but I'm not sure if you'd agree with them (encourage formation of family units etc., occupy 1 residence vs 2, produce children etc.).

You're right, I probably wouldn't. In the end what you are saying is not that you want tax reform to get an unbiased tax system, but rather you want a BIASED system and you want to change the bias to situations, you believe should be favoured. Not concidentially they happen to favour your personal circumstances.

Even if I supported tax reform, (and I do) why would I want to support a tax reform which simply changed biases rather than eliminate them?

Since you acknowledge that there are reasons why the tax system is discrimminatory, than perhaps you can also acknowledge that there may be reasons why the taxation is different between families with different distributions of income (for example to encourage both spouses to be in the workforce).

Edited January 27, 2009 by Renegade

[Pat Coghlan]

You're right, I probably wouldn't. In the end what you are saying is not that you want tax reform to get an unbiased tax system, but rather you want a BIASED system and you want to change the bias to situations, you believe should be favoured. Not concidentially they happen to favour your personal circumstances.

Even if I supported tax reform, (and I do) why would I want to support a tax reform which simply changed biases rather than eliminate them?

Since you acknowledge that there are reasons why the tax system is discrimminatory, than perhaps you can also acknowledge that there may be reasons why the taxation is different between families with different distributions of income (for example to encourage both spouses to be in the workforce).

The only reason families are taxed differently is because family income isn't taxed, only individual income. If the government doesn't want to recognize family income for tax purposes, then stop recognizing it for benefit calculations.

If the government WANTS both spouses in the workforce, they should state that as an objective somewhere.

[Renegade]

The only reason families are taxed differently is because family income isn't taxed, only individual income.

Mostly but not completely true. Family income is somewhat factored in the spousal amounts, and equivalent-to-spouse amount, and there may be otehrs.

If the government doesn't want to recognize family income for tax purposes, then stop recognizing it for benefit calculations.

Here we go yet again!

If the government WANTS both spouses in the workforce, they should state that as an objective somewhere.

It would be great if the government stated every objective somewhere and only allowed tax policy that met those objectives. Sadly they don't. There are deductions to favour seniors, Nothern Residents, students, overseas workers, shareholders, etc. I haven't found a document anywhere which specificly outlines the objectives of tax policy, so you are not alone in this stuation in trying to understand what the purpose of a specifc tax rule is.

[Pat Coghlan]

Mostly but not completely true. Family income is somewhat factored in the spousal amounts, and equivalent-to-spouse amount, and there may be otehrs.

The spousal amount is constant, regardless of family income. The credit is not affected by family income...unless you don't have enough taxable income to use the entire credit.

Ditto for equivalent-to-spouse credit, which creates a virtual spouse where none exists.

What you *will* hear from Flaherty is that it's fair to tax individuals but provide tax credits to families, based on their combined incomes. Total BS. That's why I no longer care WHO wins elections any more. Doesn't make a bit of difference to the average family.

[August1991]

We have discussed this issue before.

For example here: Income Splitting for Single Income Families

And in particular here: Family Tax Splitting

-----

My general opinion is that stay-at-home spouses (usually Moms) already receive a huge tax break. Their work is tax free. If a taxi driver takes you somewhere, he pays income tax. If a Mom drives a kid somewhere, the trip is tax-free.

Joint tax returns create distortions and amount to social-engineering. The government is encouraging certain behaviour. If you are married, you may favour this tax break but then what happens if a single gay father is elected? Should our tax policy have such a moral basis?

I prefer a tax policy that reduces waste. That is, I prefer taxes that are more costly to avoid than they are to pay.

I don't want people wastefully tying the knot or shacking up merely to avoid a tax.

[Riverwind]

My general opinion is that stay-at-home spouses (usually Moms) already receive a huge tax break. Their work is tax free.

Only because the government does not give them a choice. I think it is rediculous to allow deductions if you pay someone else to care for your children but you are not allowed to pay your spouse and claim the same deduction.

[Riverwind]

I don't want people wastefully tying the knot or shacking up merely to avoid a tax.

It would never happen in practice because the higher income earner would liable for spousal support if the relationship broke down.

[August1991]

It would never happen in practice because the higher income earner would liable for spousal support if the relationship broke down.

Riverwind, it's a question of degree. How much is a "higher income"? What straw broke the camel's back?

Only because the government does not give them a choice. I think it is rediculous to allow deductions if you pay someone else to care for your children but you are not allowed to pay your spouse and claim the same deduction.

I posted this elsewhere:

Here's my view on income splitting in general.

If a spouse stays at home and performs tasks, that housework is exempt from taxation since it is outside of the organized labour market. That is a large tax gift to stay-at-home spouses. (Household work is like working under the table.) Ideally, we should put a value on this unpaid housework and then those families should pay income tax on that value.

We partly correct for the tax-exempt status of stay-at-home spouses by taxing the other, working spouse at a higher rate.

Hence, we should not allow family tax splitting.

In the case of seniors, both spouses (and indeed most seniors) are stay-at-homes and my argument doesn't apply. Most families can avoid the need for tax splitting by the simple expedient of registering RRSPs in the correct name. This might be a good thing since it means that family savings are not concentrated in one spouse's name alone. Wives would have some financial power.

With all of that said, taxes are political. Seniors have time to read newspapers and decide who to vote for. By and large, seniors pay less taxes and enjoy more government benefits than any other single group in society.

In a Confucian sense, that may be a good thing. Being a senior with all the benefits is reward for good behaviour when you are younger.

Link Edited January 29, 2009 by August1991

[Riverwind]

If a spouse stays at home and performs tasks, that housework is exempt from taxation since it is outside of the organized labour market. That is a large tax gift to stay-at-home spouses.

This argument makes no sense because you are implying that all unpaid labour should be taxed at 'fair-value' so people should be grateful that the government does not tax them on the difference between what they should be making and what they actually make. If I follow your logic I can argue that two income households are also getting a 'huge tax gift' too because they are not being paid for the housework they do so there is no net advantage granted to single income households.

We have a system where taxes are paid as individuals but benefits are granted based on family income. The use of family income for benefits testing demonstrates that it is family income that matters when deciding how to share burdens amoung members of society. There is no rational reason for not applying the same standard to the calculation of taxes. i.e. a family with one spouse making 50K should not pay more tax than a family with two spouses making 25K. Just like a family with two spouses making 25K is not entitled to more benefits than a family with one spouse making 50K.

That said, I am not in favour of a massive shift of taxes from one income families to two income families (which would be the consequence of any change since government spending is not decreasing). A compromise position would allow single income families to claim the tax deductions that already exist for things like daycare by paying the stay-at-home spouse.

[Renegade]

The spousal amount is constant, regardless of family income. The credit is not affected by family income...unless you don't have enough taxable income to use the entire credit.

Ditto for equivalent-to-spouse credit, which creates a virtual spouse where none exists.

Yes, but what this does is allow families to pool the basic exemption, something individuals are not allowed to take advantage of. You complain that you are taxed as an indiviual, and largely that is true, however you neglect that there are some cases where families benefit where individuals cannot.

What you *will* hear from Flaherty is that it's fair to tax individuals but provide tax credits to families, based on their combined incomes. Total BS. That's why I no longer care WHO wins elections any more. Doesn't make a bit of difference to the average family.

How Flaherty defines what is "fair" is irrlevant. Each person has their own definition of "fairness" including you, who has a definition of fairness which says it is ok to discrimminate based upon family status.

I look to the tax code to be unbiased and consistent. Something I agree that it lacks.

[Pat Coghlan]

My general opinion is that stay-at-home spouses (usually Moms) already receive a huge tax break. Their work is tax free. If a taxi driver takes you somewhere, he pays income tax. If a Mom drives a kid somewhere, the trip is tax-free.

Joint tax returns create distortions and amount to social-engineering. The government is encouraging certain behaviour. If you are married, you may favour this tax break but then what happens if a single gay father is elected? Should our tax policy have such a moral basis?

Hey, if the government wants to ignore family status and simply treat everyone as an individual, then simply allow each spouse to claim 50% of the benefits. That's fine too.

What's not fine is to force families to pool their incomes so that eligibility for benefits can be determined, yet prevent income from being pooled for tax purposes.

Which is it going to be?