The Conservative government is in the process of preparing their 2007 Budget, and one of the proposed changes is a complete overhaul of the Canadian taxation system. The proposed change involves income splitting—where income differences between married partners are evenly distributed, or more simply, the income of partners is averaged for tax purposes.
Finance Minister Jim Flaherty’s proposal is merely searching for another loophole aimed at giving tax breaks to those who don’t need them. Obviously the government isn’t looking out for the country as a whole; income splitting means they would receive fewer dollars from tax revenue to fund important social programs.
Single income families will be saving the most money as the averaging out of a couple’s income creates an even playing field for every family. This will only hinder those middle and low-income families who currently require both parents to work full-time, not to mention single-parent families who receive no break at all.
The plan also doesn’t address how divorced, separated and other non-traditional couples will be affected under the system.
While this is another poorly thought out plan for the country, it’s also a detrimental idea with regards to the Conservatives’ political capital. Harper’s Conservatives still only have a minority government, and this could be a polarizing piece of legislation.
The government shouldn’t be providing incentives for couples to be married or incentives for a parent to stay out of the workforce, regardless of the undeniable importance of child-rearing. This short-sighted plan will only pull back the progressivity of the tax system and increase inequalities as most of the middle and low-income households will still bear the same financial burden. Hopefully this impulsive shift won’t become part of the budget as there is no reasonable fiscal, social or even political good that could come from it.
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