Income Splitting – A Good Idea for Families
By Marvin Van Maanen
Currently in Canada, all wage earners are taxed as individuals. Canada has a progressive income tax system. As one’s income increases, they move up the ladder to a higher tax bracket, allowing the government to take a larger percentage of their income. This current system is biased against single-income families and biased towards dual-income families. For example, a family in which one spouse works and brings home $70,000, and the other spouse stays home to care for the family will pay almost $1700 more in 2007 than a family in which both spouses work and bring in $35,000 each. In both cases, the total family income is the same, yet one family pays significantly more in federal taxes yearly.
“Income splitting” is the ability for spouses to divide their total taxable family income for tax purposes. The purpose of income splitting is to be able to evenly divide family income between the two spouses in order to be taxed at a lower overall tax rate.
Income splitting would provide greater equality between different types of families, as both two-income and single-income families will receive equal taxation treatment. It will also help out families in which one spouse decided to stay home to care for their children, elderly parents or grandparents. This can be viewed as a “benefit” for mothers who stay at home with their children.
Income splitting may have the side benefit of increasing fertility rates in Canada. As we know, the growth in Canada’s population is decreasing which will lead to further labour shortages and higher taxes to pay for health care and other social programs for the aging population. More babies means eventually more tax payers.
Many other countries do have some form of income splitting. These include France, the United States, Germany, Belgium, Greece, Luxembourg, Portugal, Switzerland, Iceland, Ireland, Norway, Poland and Spain.
One year ago, the federal government under the leadership of the Conservative Party announced changes to the way seniors’ income was taxed. Seniors may now take advantage of “income splitting”, but there have been no changes in taxation law for families.
Why should we, as Reformed Christians, be pressing the government to move ahead on income splitting for families? As Reformed Christians we should be promoting and maintaining the nuclear family, one father, one mother and children. The family unit is disintegrating before our eyes, because God’s roles for family members are not respected and followed. We should strive to fulfill our roles as biblical husbands and wives where the husband is called to work and provide for the family and the wife is called to be in the home caring for the family.
We are called to raise our children in the light of God’s word and are responsible for their souls. Income splitting would help our mothers stay home to care and raise our own children in our own homes under Christian influences. This is not easily achieved in daycares or by babysitters, and is difficult to achieve when both parents are actively pursuing careers and spending the majority the day apart from their children. We only have one opportunity to raise our children and must take this responsibility seriously as it is our God-given duty.
Let us take this opportunity to press our government to realize its bias towards single income families, and to promote income splitting as a way to correct this bias. Contact your member of parliament as well as Jim Flaherty, the Finance Minister for the Government of Canada.
All mail can be sent, postage free, to:
Name of MP
House of Commons
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