OTTAWA, Ontario, March 29, 2011 (LifeSiteNews.com) – On the campaign trail Monday, Prime Minister Stephen Harper announced a family income-splitting plan that pro-family groups are saying would correct a tax system that unjustly discriminates against single-income families or those where one spouse earns significantly more than the other.
Harper said the current tax system treats married couples like “roommates,” because spouses are taxed individually. He is proposing a Family Tax Cut that would allow families with children under 18 to share up to $50,000 of their household income for federal tax purposes.
But the catch is that the change won’t take effect until the budget is balanced, which the Conservatives aren’t promising until at least 2015-2016.
Speaking in Saanich, B.C., the Prime Minister said the proposal will make the income tax system fairer for families and will provide tax relief to about 1.8 million families who will save, on average, $1,300 per year.
The plan is projected to cost $2.5 billion per year.
“There’s a tax unfairness that exists right now. This will move towards a more fair analysis,” said Dave Quist, executive director of the Institute of Marriage and Family Canada, which has been pushing the income-splitting idea for five years.
Under the current tax system, two families with the same household income can end up paying different amounts of tax. For example, a family with parents earning $60,000 and $20,000 would pay $1,292 more in tax than where each spouse earns $40,000. And a family with one parent earning $70,000 and the other staying at home will pay $1,992 more than a family where each spouse earns $35,000.
Quist pointed out that when families seek a loan or mortgage, the lender’s decision will be based on household income, not individual, so the tax system should operate the same way. “It’s only fair that when we’re looking at income tax levels, that we look at household incomes and household tax levels as well. That’s the real benefit,” he said.
Some are complaining that the move encourages women to stay at home, but Quist says his organization’s research consistently shows that most families want one parent to stay home with the kids. In fact, child care always comes up as their last option.
“Why don’t we afford the tax breaks to families so they can choose how to best use the money to suit their unique family needs?” he said.
Other critics have argued that the proposal does nothing for families where spouses earn comparable salaries. However, Gwen Landolt, national vice-president of REAL Women, says those families have been “riding the waves” of an unjust tax system.
The proposal “allows discretion for the family” and “ends the discrimination against single-income families,” she explained. “[It’s] a recognition of the great value of the mother being in the home looking after children. As well it should be, because she gives an enormous incalculable contribution to society.”
With a stay-at-home mother, “children are absolutely secure because they’re with someone who loves them and cares for them,” she continued. “It also it gives great advantage during the child’s early years. Those years are extremely formative in the child’s character. The mothers are shaping the children’s values and their future.”
The proposal has been sharply criticized for the four-year delay, which would likely extend past even the next election, but Landolt says “at least it’s a promise on the books.”
“One side of me says I like the being fiscally responsible portion of it,” said Quist. “However, I wish it were happening sooner and we could benefit families sooner rather than later.”