OTTAWA – A new study on income-splitting shows how different family types can achieve tax fairness – so families with dual-income earners or a single-income will pay the same amount of tax.
The School of Public Policy of the University of Calgary released its study, No More Second-Class Tax-Payers: How income splitting can bring fairness to Canada's single-income families.
The April 29 event was hosted by the Institute of Marriage and Family Canada (IMFC), and Conservative MP Stella Ambler and Liberal MP John MacKay.
"Right now, we have a tax system that is discriminating against single-earner families," said one of the study's authors, economist Jack Mintz.
"I'm a great believer in neutrality in the tax system and letting people make decisions for economic reasons without letting the tax system interfere."
The Conservatives promised income splitting for families with children in the 2011 election, but only after the budget is balanced, projected to be sometime after 2014-15.
The study points out the details of how this would be done have not been worked out. Mintz said it is estimated income splitting would cost from $2.5 billion to $2.7 billion a year.
Under the present system, a single-earner family earning $70,000 pays over $2,000, or about 30 per cent, more in income taxes than a dual-earner family earning the same amount, the study shows.
IMFC executive director Andrea Mrozek said IMFC, a non-partisan think tank, has been advocating income-splitting since 2008.
Conservative MP Pierre Poilievre asked if such a policy might encourage more families to have a parent stay at home with children.
Mintz said he did not know whether income-splitting would encourage more families to have a parent stay home.