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Feb 12 / Great Apes

A Quick Thought On Income Splitting

One of the major policy planks in the last Conservative election platform was to introduce income splitting for families with dependent children under 18.  There are a bunch of reasons why I’m against this policy, but I think I can provide a quick demonstration of just how absurd an idea it is.

Imagine the following two families:

  1. A single parent who makes $75,000 a year.  This parent has two children under 18.
  2. A married couple where one spouse makes $75,000 a year and the other is a stay-at-home parent to their two children under 18.

Looking at the chart in this op-ed by Andrew Coyne, we see that family 2 will gain $2,261 under the Conservative proposal.  Family 1 will gain nothing.

So under the Conservative plan, not only will family 2 have a person who is dedicated full-time to raising their children, that family will do so with and additional $2,261 a year.  In fact, because family 1 will almost certainly incur significant child care costs they’ll actually be far more than $2,261 a year behind family 2.  Family 2, which already has a financial advantage is being given even more money despite not having any additional burdens relative to family 1.  Family 2 is being given more for needing less.  Isn’t that perverse?

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