Jump to content

Family Tax Splitting


Recommended Posts

It really depends on what the incomes are. If bothe spouses make over $60,000.00 then there would be little difference for them. But if one spouse has little or know income and the other has high income then yes it will benefit that couple. The biggest case would be the family with $80,000.00 income with the wife a stay at home mom. She could declare $40,000 and so could he. This way they would pay tax at a lower tax rate plus the wife would also have her basic personal exemption. The husband would lose the wife as a dependent, but the gain on her basic exemption would be greater then that. The lower you can drop your tax rate to the more it would benefit, but yes there would be a point where it would still be better to make more money if possible. If your wife works and is in a low paying job then it still will be ok. But if both work and make pretty much the same then it really is not a saving.

I would call this a tax benefit for the mid to lower income earners and stay at home moms families.

And then the wife dies in a car accident. The husband's taxes triple as a result. Explain to the guy why you are punishing him tripling his taxes on top of the fact that he just lost his partner and the mother of his kids.

Link to comment
Share on other sites

  • Replies 191
  • Created
  • Last Reply

Top Posters In This Topic

Tom, Bill and Jane are work the same jobs at company A and receive $35K each on a 40hr workweek.
You logic is flawed. Bill and Jane have a total income of 70K. Tom and his wife have a total income of 35K. Two people making twice as much income should pay more income tax. That is common sense. To make your comparison valid you have to compare two families with the same total income. In your example, you would have to assume that Tom worked extra overtime and boosted his income to 70K if you want to compare his taxes to Bill and Jane. In that situtation, Tom would have a much higher tax bill. That is why the current system is unfair to couples that would rather choose to have one spouse work more so the other can stay at home.
Link to comment
Share on other sites

Tom, Bill and Jane are work the same jobs at company A and receive $35K each on a 40hr workweek.
You logic is flawed. Bill and Jane have a total income of 70K. Tom and his wife have a total income of 35K. Two people making twice as much income should pay more income tax. That is common sense. To make your comparison valid you have to compare two families with the same total income. In your example, you would have to assume that Tom worked extra overtime and boosted his income to 70K if you want to compare his taxes to Bill and Jane. In that situtation, Tom would have a much higher tax bill. That is why the current system is unfair to couples that would rather choose to have one spouse work more so the other can stay at home.

My logic is not flawed. Individuals are the units of society, all laws apply to individuals and all work is provided by workers, ie individuals, not by couples. A couple is an arbitrary unit that you choose to define as the basic unit to use in taxation because that is more beneficial to you than any other unit. But why a couple? Why not the whole family, kids included. Why not the whole household or individuals living in the same home? Why not everyone in the neighbourhood? Or the city? If you define couples as the basic unit of society, so that they can share income, how about couples sharing jail sentences? How about university degrees? If you can get half of your spouse's income, why not get half of your spouses jail sentence? Or half of your spouse's traffic ticket? Or half of your spouse's university degree? Sounds ridiculous, doesn't it? Well, sharing income is just as ridiculous. Your spouse doesn't share your work, so why would s/he share your income for tax purposes?

Link to comment
Share on other sites

Your spouse doesn't share your work, so why would s/he share your income for tax purposes?
Because a stay at home spouse is not allowed to collect GST and other gov't benefits without reporting their total family income. IOW - the gov't has already decided that families must share their income. For that reason gov't should either use total family income as a way to calculate how much tax they pay or allow people to collect benefits as individuals. The current system discriminates against single income families. Allowing income splitting is not the perfect way to resolve this discrimination but it does help. The bottom line: you are wrong when you say the current system is baised in favour of single income families.
Link to comment
Share on other sites

My logic is not flawed. Individuals are the units of society, all laws apply to individuals and all work is provided by workers, ie individuals, not by couples.
That statement is simply false.

A married couple assume joint responsibility for debts. Property taxes are in effect assessed on the family. If one member of a family goes to prison, the other obviously suffers. A marriage creates contractual obligations that last a lifetime. It is a family, not an individual, that buys a home, a cottage, a car, a fridge, a stove and so on. It is families that have children.

There is no obvious reason the government must tax individuals and not a family.

----

Let's ignore fairness and just consider what incentives income splitting would have.

Some people would have an incentive to marry and to stay married. Is that a bad thing in society?

Some people would have an incentive to work at home rather than work in the paid labour market. Here too, is that a bad thing?

Income-splitting is nothing but vote-buying.
And that's bad? Should the government propose policies that are unpopular?
Link to comment
Share on other sites

It really depends on what the incomes are. If bothe spouses make over $60,000.00 then there would be little difference for them. But if one spouse has little or know income and the other has high income then yes it will benefit that couple. The biggest case would be the family with $80,000.00 income with the wife a stay at home mom. She could declare $40,000 and so could he. This way they would pay tax at a lower tax rate plus the wife would also have her basic personal exemption. The husband would lose the wife as a dependent, but the gain on her basic exemption would be greater then that. The lower you can drop your tax rate to the more it would benefit, but yes there would be a point where it would still be better to make more money if possible. If your wife works and is in a low paying job then it still will be ok. But if both work and make pretty much the same then it really is not a saving.

I would call this a tax benefit for the mid to lower income earners and stay at home moms families.

At the moment, my wife and I have an unequal income. It will probably be more even by time this new financial arrangement comes to the fore. Probably won't help me all that much but maybe later in life when one of us retires earlier than the other.

Still, I am concerned that this is a costly promise to make. Has anyone costed it out?

Link to comment
Share on other sites

You want a fair tax - go flat rate - works in Hong Kong.

It happens on a daily basis.

Hong Kong is about to initiate a GST.

Statistics Canada doesn't really confirm your assertion that there is a mass of people leaving Canada over taxes.

Link to comment
Share on other sites

You want a fair tax - go flat rate - works in Hong Kong.

It happens on a daily basis.

Hong Kong is about to initiate a GST.

Statistics Canada doesn't really confirm your assertion that there is a mass of people leaving Canada over taxes.

A GST is a flat tax, the rate is the same for everyone.

Link to comment
Share on other sites

Your spouse doesn't share your work, so why would s/he share your income for tax purposes?
Because a stay at home spouse is not allowed to collect GST and other gov't benefits without reporting their total family income. IOW - the gov't has already decided that families must share their income. For that reason gov't should either use total family income as a way to calculate how much tax they pay or allow people to collect benefits as individuals. The current system discriminates against single income families. Allowing income splitting is not the perfect way to resolve this discrimination but it does help. The bottom line: you are wrong when you say the current system is baised in favour of single income families.

This is total nonsense. One income couples already benefit from partial income splitting through the credits and benefits mentioned above. If no income splitting works for you, I don't mind it a bit. You'd lose the current tax breaks you have because your spouse doesn't work. I told you that the current system does NOT discriminate against single income couples. At every level of income, you would pay more taxes as an individual (with a spouse who works or without a spouse) than as an individual with a spouse who doesn't work. If it pleases you to file your taxes separately from your spouse, you can always do it. You just claim that you had a breakdown in the relationship for a week or longer during the year and you can file separately. It's that easy because nobody in their right mind would file taxes separately and lose tax breaks for filing taxes together.

Link to comment
Share on other sites

Still, I am concerned that this is a costly promise to make. Has anyone costed it out?
The newspaper report said $5 billion annually if income splitting were extended to all families. As Saturn noted, it's not clear whether that figure includes an estimate of changes due to people changing their behaviour.
Link to comment
Share on other sites

It really depends on what the incomes are. If bothe spouses make over $60,000.00 then there would be little difference for them. But if one spouse has little or know income and the other has high income then yes it will benefit that couple. The biggest case would be the family with $80,000.00 income with the wife a stay at home mom. She could declare $40,000 and so could he. This way they would pay tax at a lower tax rate plus the wife would also have her basic personal exemption. The husband would lose the wife as a dependent, but the gain on her basic exemption would be greater then that. The lower you can drop your tax rate to the more it would benefit, but yes there would be a point where it would still be better to make more money if possible. If your wife works and is in a low paying job then it still will be ok. But if both work and make pretty much the same then it really is not a saving.

I would call this a tax benefit for the mid to lower income earners and stay at home moms families.

At the moment, my wife and I have an unequal income. It will probably be more even by time this new financial arrangement comes to the fore. Probably won't help me all that much but maybe later in life when one of us retires earlier than the other.

Still, I am concerned that this is a costly promise to make. Has anyone costed it out?

They are saying $5 billion per year but that doesn't include any changes in people's behaviour. Obviously, such a change gives a significant incentive for a spouse to not work or to work less and even if a small percentage decide not to work or to work less as a result of this change, the cost can balloon very quickly. My estimate is $5-$10 billion during good economic times and $10-$15 billion during a recession (when the number of single income families increases significantly).

You will not benefit from this change unless you and your spouse are in different tax brackets. For example, if you are both in the top tax bracket, you make 1 million and your spouse makes $200 thousand, you won't benefit. You have to be in different tax brackets to benefit. And the greater the difference, the more you benefit. The greatest winners here will be couples where one spouse does not work.

Link to comment
Share on other sites

Obviously, such a change gives a significant incentive for a spouse to not work or to work less
Which is a wonderful way to address the daycare problem. Seems to me that the best daycare is care provided by a child's parents. If the gov't incroduces policies that make staying at home economically feasible for for couples then the kids win. If kids win, society wins.
Link to comment
Share on other sites

You want a fair tax - go flat rate - works in Hong Kong.

It happens on a daily basis.

Hong Kong is about to initiate a GST.

Statistics Canada doesn't really confirm your assertion that there is a mass of people leaving Canada over taxes.

A GST is a flat tax, the rate is the same for everyone.

GST is a regressive tax, not a flat tax. A flat tax means that the rate you pay stays the same as your income increases. People with higher incomes spend less on the GST as a percentage of their incomes than people with lower incomes. Therefore, the GST rate goes down as income increases.

So, flat tax = tax rate stays the same as income increases. GST = tax rate goes down as income increases.

Link to comment
Share on other sites

Obviously, such a change gives a significant incentive for a spouse to not work or to work less
Which is a wonderful way to address the daycare problem. Seems to me that the best daycare is care provided by a child's parents. If the gov't incroduces policies that make staying at home economically feasible for for couples then the kids win. If kids win, society wins.

I disagree. From what I've read, it is not at all clear that it is better for kids to stay home. In fact, kids who go to daycare appear to have better problem-solving, language, and social skills but this varies a lot with the quality of daycare. In any case, there is no evidence that staying at home to care for your kids is good for them. It may be good for you if you feel uncomfortable letting them go to daycare but that's your problem, not their problem and eventually you have to learn to let go.

What your solution to the daycare problem will create though, is another problem called labour shortage, which Canada is already facing in many areas and will only get worse as the babyboom generation retires. You see, we could all stay home and grow our own food and make our own cars and treat our own health (the way things were 200 years ago) but that wouldn't be much of an economy. What is important for economic efficiency is specialization. In other words, it's best if doctors treat, farmers grow food, mechanics fix cars, and early childhood educators take care of kids.

So your solution = kids may or may not win. Labour shortage = society loses.

Link to comment
Share on other sites

They are saying $5 billion per year but that doesn't include any changes in people's behaviour. Obviously, such a change gives a significant incentive for a spouse to not work or to work less and even if a small percentage decide not to work or to work less as a result of this change, the cost can balloon very quickly. My estimate is $5-$10 billion during good economic times and $10-$15 billion during a recession (when the number of single income families increases significantly).

You will not benefit from this change unless you and your spouse are in different tax brackets. For example, if you are both in the top tax bracket, you make 1 million and your spouse makes $200 thousand, you won't benefit. You have to be in different tax brackets to benefit. And the greater the difference, the more you benefit. The greatest winners here will be couples where one spouse does not work.

Sounds like I won't benefit much then during the bulk of my working years.

That is a hell of a lot of money lost in tax. I think I might prefer a general income tax cut instead of splitting. I think it would be better for me, better for the government.

Link to comment
Share on other sites

The newspaper report said $5 billion annually if income splitting were extended to all families. As Saturn noted, it's not clear whether that figure includes an estimate of changes due to people changing their behaviour.

That is a heck of a lot of money. I wonder if there is a more effective ways of lowering taxes. I'd hate for income splitting to be the tax cut of choice if it turns out to be dog in terms of benefits to people.

Link to comment
Share on other sites

So, flat tax = tax rate stays the same as income increases. GST = tax rate goes down as income increases.
Man, you are amazingly creative when it comes to manipulating taxation statistics. Consumption taxes apply to the price of goods and have no relationship with a person's income.

You obviously don't know much about taxation. To determine whether a tax is progressive, flat, or regressive, you must compare the tax $$ to income BY DEFINITION. Here is the definition of flat tax.

flat tax

Definition

A system in which all levels of income are taxed at the same rate.

http://www.investorwords.com/2004/flat_tax.html

Link to comment
Share on other sites

A GST is a flat tax, the rate is the same for everyone.

Unpopular in a country with no GST, I'm sure.

At the moment though, Hong Kong derives a lot of income from tax on property transactions. It is not a consistent funder of government operations.

Link to comment
Share on other sites

early childhood educators take care of kids.
ROTFL. Do you actually have kids? Have you ever had to deal with 'childhood educators' that work in the schools? Individual kids are nothing to them - they just faces in a crowd that disappear after a year. No amount of knowledge can replace an caregiver than actually cares about the individual child.
Link to comment
Share on other sites

They are saying $5 billion per year but that doesn't include any changes in people's behaviour. Obviously, such a change gives a significant incentive for a spouse to not work or to work less and even if a small percentage decide not to work or to work less as a result of this change, the cost can balloon very quickly. My estimate is $5-$10 billion during good economic times and $10-$15 billion during a recession (when the number of single income families increases significantly).

You will not benefit from this change unless you and your spouse are in different tax brackets. For example, if you are both in the top tax bracket, you make 1 million and your spouse makes $200 thousand, you won't benefit. You have to be in different tax brackets to benefit. And the greater the difference, the more you benefit. The greatest winners here will be couples where one spouse does not work.

Sounds like I won't benefit much then during the bulk of my working years.

That is a hell of a lot of money lost in tax. I think I might prefer a general income tax cut instead of splitting. I think it would be better for me, better for the government.

I agree. But I think that will be even better if the money goes to pay down the debt. The biggest expense for the federal government right now is interest on the debt. Close to 15 cents for every dollar in taxes we pay goes to pay the interest on that damned debt. I'd rather pay it off sooner and pay less in interest. Just like I'd rather pay off my mortgage sooner - the longer you drag it the more you help the banks.

Link to comment
Share on other sites

You obviously don't know much about taxation. To determine whether a tax is progressive, flat, or regressive, you must compare the tax $$ to income BY DEFINITION. Here is the definition of flat tax.
Those definitions only apply to income taxes. The GST is not an income tax therefore those definitions do not apply.

How many years have you spend working in the accounting field? Clearly none. You are arguing with someone who has considerable experience with taxes. I don't think that we are on an even footing here. So I guess I have to leave it at this. But since you seem to be interested in this topic, here is a short and nice introduction to taxes

http://en.wikipedia.org/wiki/Taxes

Link to comment
Share on other sites

I agree. But I think that will be even better if the money goes to pay down the debt. The biggest expense for the federal government right now is interest on the debt. Close to 15 cents for every dollar in taxes we pay goes to pay the interest on that damned debt. I'd rather pay it off sooner and pay less in interest. Just like I'd rather pay off my mortgage sooner - the longer you drag it the more you help the banks.
What is the interest rate on the federal debt? What is the interest rate on your mortgage? Which debt should be paid off first?

The implication is that the government should cut taxes and return money to Canadians before it pays down the federal debt. (I would go further and argue that it should never pay off the debt ever and possibly even increase the debt.)

How many years have you spend working in the accounting field? Clearly none. You are arguing with someone who has considerable experience with taxes. I don't think that we are on an even footing here. So I guess I have to leave it at this.
You seem to imply that you have experience with accounting but judging by your post above, I wonder whether your claim is true.

The Internet is a curious place. Anybody can claim to be anything and so most self-serving claims are ignored. Instead, you are forced to defend your ideas without the benefit of your reputation in the real world. By and large, if you are right, you will be able to convince other posters.

Link to comment
Share on other sites

early childhood educators take care of kids.
ROTFL. Do you actually have kids? Have you ever had to deal with 'childhood educators' that work in the schools? Individual kids are nothing to them - they just faces in a crowd that disappear after a year. No amount of knowledge can replace an caregiver than actually cares about the individual child.

You can care a lot about your car but you may not be more capable to fix it than a qualified mechanic. You may care a lot about your kids, but you still have to take them to the doctor when they are sick because the doctor has knowledge you don't. You may care about filing your income taxes but if you want it done right, you'd probably take it to your accountant. Caring is important but being actually capable to do it right is important too (or even more important). On top of that, given the number of abused and neglected children out there, I wouldn't say that all parents necessarily care enough.

And yes, I went to daycare for full 4 years and from what I can recall I actually enjoyed it a lot. I couldn't wait to go there in the morning to play with my friends.

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Unfortunately, your content contains terms that we do not allow. Please edit your content to remove the highlighted words below.
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Tell a friend

    Love Repolitics.com - Political Discussion Forums? Tell a friend!
  • Member Statistics

    • Total Members
      10,712
    • Most Online
      1,403

    Newest Member
    nyralucas
    Joined
  • Recent Achievements

    • Jeary earned a badge
      One Month Later
    • Venandi went up a rank
      Apprentice
    • Gaétan earned a badge
      Very Popular
    • Dictatords earned a badge
      First Post
    • babetteteets earned a badge
      One Year In
  • Recently Browsing

    • No registered users viewing this page.
×
×
  • Create New...