Income splitting is unfair and expensive

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Middle class families should not have to pay more to give wealthier families like those of MPs and Cabinet Ministers a $2,000 tax break. But that’s exactly what’s happening with Harper’s new “income splitting” scheme.

Middle class families should not have to pay more to give wealthier families like those of MPs and Cabinet Ministers a $2,000 tax break. But that’s exactly what’s happening with Harper’s new “income splitting” scheme. In families where the parents are in different tax brackets, it allows the higher-income spouse to claim a tax credit of up to $2,000 per year (as if a portion of his or her income were being taxed at the other parent’s lower rate).
Former Finance Minister Jim Flaherty was concerned that such a policy would be expensive and unfair to most Canadians. “It benefits some parts of the Canadian population a lot and other parts of the Canadian population           virtually not at all,” he said. And he      was right.
The vast majority of Canadian families will receive no benefit from income    splitting. Single mothers get nothing. Families in which both parents are in the same income bracket get nothing. The most needy and lowest income families get nothing. In fact, fewer than 15% of Canadian households will benefit; 85% will not. And for the few who do, the biggest gains will go to the wealthiest.
At a cost of $2 billion a year, the Harper government is spending an awful lot of money to help a small and select group; those who have been left out will question both the cost and the fairness of it all and will wonder why income is being re-distributed to the more affluent.
Canadians need a plan for jobs and growth; the income splitting plan does nothing to encourage economic growth or strengthen the middle class.
Ralph Goodale, MP
Deputy Leader of the
Liberal Party of Canada