Family Tax Splitting

[geoffrey]

Get a civil union with the roommate and save a k of taxes? Why not? Good point.

A civil union would entitle the lesser earning one to spousal support if you break up. It is not a risk free strategy.

Good call. Cancel that idea.

[Charles Anthony]

"Who to forsake?" indeed, seems to be the question.

WTF? The only difference bewteen a consumption tax and an income tax is the amount saved. (If you spend all you earn, then a consumption tax and an income tax are the same.)

That is not the whole picture. There is a whole lot more to taxation than that. Ultimately, ANY tax chooses winners and losers.

It is not enough to evaluate a tax by only looking at the people "paying" it at the cash. You have to look at the person on the other side of the cash register -- the person whose livelihood depends on people spending (or saving) money. Let me expand on your own example: "If you spend all you earn..." and consider a business-man who lives at the margin.

A hot-dog vendor depends on consumption and a rise in a consumption tax will affect his revenues. [Granted, the simultaneous abolition of income tax may concievably send a lot more disposable money flowing onto the streets for the purchase of delicious hot-dogs but not likely.] If the hot-dog vendor currently makes ONLY enough money to survive and not enough to save, your consumption tax will hit him hard. Your consumption tax chooses him to be a loser.

I am open to hearing some more noble purpose behind taxation that would rightfully make our poor hot-dog vendor a loser. [enter RiverWind...]

[Jerry J. Fortin]

First of all, under the present system I favour income splitting, it would recieve the maximum benefit which will help my family.

Secondly the idea of abolishing income taxes is one in which I personally advocate. The concept of a consumption tax WILL increase disposable family income. Anything that puts more money into the hands of the individual is something that I would support. No matter what level f income you are talking about the more you spend the more you pay in taxes. This is equal treatment in taxation.

[Saturn]

I have a suspicion that family tax splitting (or whatever it's called) may figure in the upcoming federal budget. (Only a suspicion, mind you, and I figure the Tories would have to have much better projections than my suspicions or Parliamentary research).

Are you deaf or just stupid? I told you the Conservatives don't have better projections than SPSD/M can produce. If they claim they do, they are lying.

WTF? The only difference bewteen a consumption tax and an income tax is the amount saved.

Dude, you're hopeless. Will you stop making stupid claims when you really don't have a clue?

[Saturn]

First of all, under the present system I favour income splitting, it would recieve the maximum benefit which will help my family.

That figures.

Secondly the idea of abolishing income taxes is one in which I personally advocate. The concept of a consumption tax WILL increase disposable family income. Anything that puts more money into the hands of the individual is something that I would support. No matter what level f income you are talking about the more you spend the more you pay in taxes. This is equal treatment in taxation.

Which is why you don't want to spend. Neither do I, nor anyone else. We are all sitting at home, growing our own food and raising our kids. Welcome to the 19th century.

[Charles Anthony]

First of all, under the present system I favour income splitting, it would recieve the maximum benefit which will help my family.

Would you permit ANY form of household to income split? For example, husband/wife, wife/husband, husband/husband, wife/wife, mother/daughter, brother/sister, husband/mistress, wife/neighbor, friend/foe, master/slave, etc. etc.

The concept of a consumption tax WILL increase disposable family income.

Not for everybody. Like I explained in post #177 up above, people whose income depends on consumption may conceivably see their disposable income drop. With a consumption tax, some people will win and some people will lose.

No matter what level f income you are talking about the more you spend the more you pay in taxes. This is equal treatment in taxation.

Not really. Equal treatment in taxation would be: the same amount of money is extorted from each person. For example, total cost of government waste is $1,000,000,000,000,000,000.00 each year divided by $30,000,000 people = each person's tax bill. Bingo! That sounds equal to me.

[Jerry J. Fortin]

I don't think that it is my business or the governments business what goes on behind closed doors. A couple in my opinion that is living together should be allowed to split the income of a single wage earning household.

It is also conceivable that the NDP will form the next government but I don't think it is very damned likely. Lets use yourself as the example shall we? Lets say that you no longer suffer from withholding taxes and are no longer subject to income tax. You will have more money to use at your own discretion. A portion of that money will likely be invested, another portion will be used to cover your debts, and the remaining portion will go into your household budget which you will likely use to raise your standard of living. That new household budget will let you increase your discretionary spending and probably buy a hot dog while walking downtown looking at things that you can now afford to buy that you could not afford to buy before. The hot dog vendor has a larger potential customer portfolio due to increased spending provided through enhanced disposable family income. This is a consumer society that follows the motto.."the more you earn, the more you spend".

That is not equal treatment! Equal would be everybody paying the same percentage of tax, not the freaking sum total divided by the number of tax payers. That type of convoluted reasoning is what brought us to this point in the first place. True equality in taxation can only be realized through a system based upon a levy placed on real estate. The rental value of real estate being determined to be the base of a tax structure. In this way those who could afford to pay tax would do so and those who could not would not be required to do so. This is an extreme example and not one which I would advocate, yet it is the most FAIR system that I can think of.

[Charles Anthony]

The hot dog vendor has a larger potential customer portfolio due to increased spending provided through enhanced disposable family income. This is a consumer society that follows the motto.."the more you earn, the more you spend".

You are making a very serious error in economic reasoning. By your logic, the more disposable income a person has, the more hot-dogs they will consume each day. Usually, one hot-dog is enough. Even more likely, they will move up the ladder and go to a sit-down restaurant and order a meal.

The effect of a consumption tax on the hot-dog vendor is variable. The salient feature is that the hot-dog vendor relies exclusively on consumption for his income and his product is not a luxury item.

That is not equal treatment! Equal would be everybody paying the same percentage of tax, not the freaking sum total divided by the number of tax payers. That type of convoluted reasoning

Wait. Do you recommend that the hot-dog vendor charges customers based on your sense of equality?

[Renegade]

I don't think that it is my business or the governments business what goes on behind closed doors. A couple in my opinion that is living together should be allowed to split the income of a single wage earning household.

Why stop there? What about a couple who is not living together? Who defines what a couple is? Can a father-son who are not liivng together decide to share income? If they do, is it the government's business?

That is not equal treatment! Equal would be everybody paying the same percentage of tax, not the freaking sum total divided by the number of tax payers.

Why is your definition of "equal" any better than the one CA put forward? There are many examples in life where the whole freaking bill is devided by the number of payors.

[geoffrey]

Would you permit ANY form of household to income split? For example, husband/wife, wife/husband, husband/husband, wife/wife, mother/daughter, brother/sister, husband/mistress, wife/neighbor, friend/foe, master/slave, etc. etc.

Realistically, that's what happening. I don't think there are many single income families where the income earner hordes all the cash and the others starve, though I'm sure it's possible. That income is effectively split amongst those living in the family/whatever living arrangement anyways. Why not tax it as such?

[Renegade]

Realistically, that's what happening. I don't think there are many single income families where the income earner hordes all the cash and the others starve, though I'm sure it's possible. That income is effectively split amongst those living in the family/whatever living arrangement anyways. Why not tax it as such?

It should either be taxed one way or the other. This fuzzy proposal which proposal which taxes based upon individual income but has only very specific case of allowing "family" income will be discrimminatory to many other situations. If you want to argue that taxing family income is the way to go, fine, but then use family as the basic fiscal unit of income taxation and not the indivdual. Also, let filers self-define who is or isn't included in their family.

[Saturn]

It should either be taxed one way or the other. This fuzzy proposal which proposal which taxes based upon individual income but has only very specific case of allowing "family" income will be discrimminatory to many other situations. If you want to argue that taxing family income is the way to go, fine, but then use family as the basic fiscal unit of income taxation and not the indivdual.

Sorry, but in this country the individual is the basic unit of society. If you don't split your work with your spouse and you don't split a jail sentence with your spouse, you can't split income with your spouse either.

Also, let filers self-define who is or isn't included in their family.

My family includes my retired parents and my student sister. How's that?

[Renegade]

Sorry, but in this country the individual is the basic unit of society. If you don't split your work with your spouse and you don't split a jail sentence with your spouse, you can't split income with your spouse either.

As I've said, I don't care one way or another but let's do it consistently. Yes in some cases the individual is the basic unit. Yet in others in the family is the unit. For welfare, family income is considered, not an individuals, similary for many benefits and deductions.

My family includes my retired parents and my student sister. How's that?

By all means. You family can include all the people in your block or your city if you can all agree to be so considered.

[August1991]

In the event Saturn ever sees this thread, I'll make these points. With recent budget, the thread deserves resurrection anyway.

I have a suspicion that family tax splitting (or whatever it's called) may figure in the upcoming federal budget. (Only a suspicion, mind you, and I figure the Tories would have to have much better projections than my suspicions or Parliamentary research).

Are you deaf or just stupid? I told you the Conservatives don't have better projections than SPSD/M can produce. If they claim they do, they are lying.

Saturn, economists in Finance have access to all the tax filings of Canadians. The SPSD/M is a retail model made available by Stats Can. I'll bet Finance has run different simulations. In any case, this should not be a source of argument here.

WTF? The only difference bewteen a consumption tax and an income tax is the amount saved.

Dude, you're hopeless. Will you stop making stupid claims when you really don't have a clue?

If you won't believe me, maybe you'll believe Anthony Atkinson:

Perhaps the single most important tax policy decision is the choice between an income tax and a consumption tax. The topic has been discussed and argued over since at least the time of Hobbes (1651) and Mill (1871) without apparent resolution. Consumption and income taxes both represent substantial sources of revenue in all modern economies.

This paper considers the choice between an income tax and a consumption tax focusing on an argument made by Anthony Atkinson and Joseph Stiglitz in 1976 (AS 1976). AS 1976 shows that taxes should be imposed on all commodities at the same rate – taxes should be neutral. For reasons illustrated below, this conclusion implies that a consumption tax is superior to an income tax. AS 1976 has recently attracted

substantial attention in the technical economics literature but, perhaps because the arguments are technical, it has yet to receive any attention in the legal literature.

Our task here is to explain the intuition behind AS 1976 and explore how applicable the model is to the real world. Our conclusion is that consumption taxes are superior to income taxes.

Link

The link is non-technical and easily read by a layman. It's even got the odd joke.

The link not only explains why a consumption tax is superior to an income tax on theoretical grounds (because it doesn't distort the savings decision) but it also explains why VAT is a better tax on administrative grounds.

[Pat Coghlan]

It should either be taxed one way or the other. This fuzzy proposal which proposal which taxes based upon individual income but has only very specific case of allowing "family" income will be discrimminatory to many other situations. If you want to argue that taxing family income is the way to go, fine, but then use family as the basic fiscal unit of income taxation and not the indivdual.

Sorry, but in this country the individual is the basic unit of society. If you don't split your work with your spouse and you don't split a jail sentence with your spouse, you can't split income with your spouse either.

My family includes my retired parents and my student sister. How's that?

Funny thing though, the government insists that families pool their income for the purpose of determining eligibility for tax-delivered benefit payments (CTB etc.).

Why is it okay to enforce pooling of income for benefits, but not for tax liability?

If you're going to treat everyone as an individual, then let my wife qualify - on her own - for 50% of all such benefits, especially if her income is zero.

Or, do you just want to have your cake and eat it too?

[Saturn]

Funny thing though, the government insists that families pool their income for the purpose of determining eligibility for tax-delivered benefit payments (CTB etc.).

Why is it okay to enforce pooling of income for benefits, but not for tax liability?

If you're going to treat everyone as an individual, then let my wife qualify - on her own - for 50% of all such benefits, especially if her income is zero.

Or, do you just want to have your cake and eat it too?

Benefit payments (like the CTB) are handouts (welfare) for people who can't make ends meet. If you want to get rid of these handouts, I'm all for it. Working families don't generally collect very little those handouts. It's generally families with one or two spouses who don't work that get them in much larger amounts. As far as I can tell, you are eating someone else's cake because your wife is vacationing while other wives work an pay for that cake. So be happy with the preferential treatment you are already getting and don't make too much noise while eating your handout cake.

[August1991]

Funny thing though, the government insists that families pool their income for the purpose of determining eligibility for tax-delivered benefit payments (CTB etc.).

Interesting point Coghlan, I had the same thought today while having a coffee in a Tim Hortons and watching families come in for donuts.

Indeed, this policy is pernicious because it encourages a single parent to stay (officially) single rather than have an income-earning partner. The State replaces the other parent as a provider.

I think the Tory $100/month is taxed at the marginal rate of the lower-income spouse.

In some ways, I think the federal government should tax individuals or families, continue to make equalizartion payments but otherwise remove itself entirely from social welfare transfers and leave these personal transfers up to provincial governments.

Dunno.

Benefit payments (like the CTB) are handouts (welfare) for people who can't make ends meet.

These payments are intended to help children and the best way to do that is arguably to give money to the custodial parent who needs it.

Children should not suffer entirely because of the choices of their parents.