Jack Mintz argues case for income splitting in Canada
OTTAWA, April 29, 2013 /CNW/ - Nearly six decades after a royal
commission recommended that the income tax system be changed to
recognize total family household income, instead of each individual's
income, the federal Conservative government has at last suggested that
it wants to level the playing field - a move considered long overdue by
Jack Mintz, a noted economist and Director of The School of Public
Policy. In a media conference held today where he released a
ground-breaking report co-authored with Matt Krzepkowski , Mintz
outlined the unfairness of the current tax regime and suggested
practical changes to create tax fairness for families where one parent
stays at home.
According to Krzepkowski and Mintz, the Canadian personal income tax
system ignores whether the amount of money an individual brings home is
supplemented by the income of a spouse or not. That means that families
where one spouse earns more than the other get taxed at a higher rate
than families where two working partners earn the same total income
split evenly between two paycheques. In fact, a family with just a
single earner making $70,000 a year pays 30 per cent more in taxes
every year than a family with two partners making $35,000 a year. A
single-earner family taking in $120,000 a year pays the same income tax
as a dual-earning couple making $141,000.
"Since Canada's income tax system purports to treat people in similar
circumstances as equally as possible, it is time to let couples split
their income so they do not face a penalty in higher tax rates than
those faced by couples bringing home the same amount of total pay,"
Mintz said today.
Mintz called for cutting the transferability of the unused portion of
the basic personal tax exemption for couples splitting income. There
may be other mechanisms the government might consider. But the bottom
line is that there are ways to account for non-labour-market-related
differences between single-earner families and dual-earner families.
"Allowing families to split income is already available for income
other than wage earnings… (Wages) Income splitting would level the tax
burden between differently earning family types, allowing for other tax
instruments to adjust for differences in implicit income from unpaid
home production," Mintz said.
The report by Jack Mintz can be found online at The School of Public Policy website.
Video with caption: "Video: Time to End Tax Unfairness for Families". Video available at: http://stream1.newswire.ca/cgi-bin/playback.cgi?file=20130429_C9671_VIDEO_EN_26128.mp4&posterurl=http://photos.newswire.ca/images/20130429_C9671_PHOTO_EN_26128.jpg&clientName=The%20School%20of%20Public%20Policy%20%2D%20University%20of%20Calgary&caption=Video%3A%20Time%20to%20End%20Tax%20Unfairness%20for%20Families&title=THE%20SCHOOL%20OF%20PUBLIC%20POLICY%20%2D%20UNIVERSITY%20OF%20CALGARY%20%2D%20Time%20to%20End%20Tax%20Unfairness%20for%20Families&headline=Time%20to%20End%20Tax%20Unfairness%20for%20Families
SOURCE: The School of Public Policy - University of Calgary
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