A radical feminist economist maintains that income splitting will eventually throw many married Canadian women into the poorhouse.
Income splitting allows couples to pay taxes on their combined incomes instead of individually. That can result in substantial tax savings for couples when one partner has a much higher income than the other.
Economist Elisabeth Gugl said it favours the breadwinner model, in which one person earns most of the family's money and the other, often the woman, stays home and looks after the children.
The UVic economist said that as long as the couple stays together, there would be financial benefits with income splitting.
But she argues a tax system that encourages women to unplug from the workforce would be devastating for them if the marriage breaks down.
First of all, changing Canada's income tax system to allow income splitting is not about encouraging married women to do anything. It's about promoting a key principle of a just tax regime: treating taxpayers in similar income circumstances similarly. Consider two couples, each with two children and each earning a total of $100,000. In one family, one income earner receives 90% of the total, the other 10%. In the other family, each earner receives 50%. The first family will pay considerably more income tax. Is that fair?
There is no defensible reason why those two families should be subject to widely differing income tax rates. It is, to be blunt, unjust. That is the issue behind income splitting.
Of course, the income tax regime entails incentives and disincentives. That is true of every regulation, deduction, and subsidy in the tax code. So, yes, there is a sense in which income splitting creates an incentive for certain types of family arrangements and a disincentive for others. The present system prohibiting income splitting also creates an incentive. It promotes what can be called the “both-parents-get-to-work-and-stash-the-kids-in-daycare” model. Although some might want to label that the “child-neglect” model, it's probably best just to call it the “feminist” model.
Whichever income tax rule the government enacts, it is creating an incentive; it is encouraging a family model; it is implicitly making a moral judgment. It’s simply unavoidable.
Given that moral judgment is unavoidable, a good moral test in the present context is: Which model is best for the children involved? On that test, the evidence is clear and unambiguous. Children fare best when cared for at home by a married parent and much less well when consigned to daycare.
Gugl says there is also well-established research that shows when a woman earns more of the family income, a larger percentage of it is spent on children's items.
I follow family issues pretty closely and I'm not aware of such research, but I'd be very interested in having a look at it. If someone knows of any, please let me know. (I’d need to have documentation on sources, definitions, and methods. A summary of findings won’t cut it, I’m afraid.)
Finally, as Joel Johannesen at Proud To Be Canadian points out, the CBC gave a platform for the uncontradicted opinions of a radical feminist and offered no opposing arguments. Your tax dollars at work.
h/t: Proud To Be Canadian
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