Hey, you, get off of my cloud.

Monday, February 12, 2007

Just Say No To Income Splitting

Today's Globe and Mail gives us the good news the Finance Minister Jim Flaherty (the best premier Ontario never had) is holding the line on tax relief, unfortunately it appears the proposal to cut taxes only for married couples is still on the table.

Fortunately Jim is a veteran of the Common Sense Revolution and knows that while broad-based tax relief leads to two majority governments the path to targeted tax cuts is paved with 25 seats (remember mortgage tax deductibility?).

Give'er Jim!

6 Comments:

Blogger wilson61 said...

My guess is that Jim left it on the table to bug Garth (and incase of the (unlikely) chance Libs would campaign on it).
It won't happen, it's not a fair tax break, but it pops Garthy's balloon.

February 12, 2007 7:55 PM

 
Anonymous Anonymous said...

The only fair tax break is one you personally profit from.

February 12, 2007 8:36 PM

 
Blogger mostlyfree said...

Yeah, because when your money isn't taken away from you, you profit!

Heck, the streets are so safe nowadays that anyone can walk down most streets at night and make a profit.

February 12, 2007 9:46 PM

 
Blogger TrustOnlyMulder said...

Can I ask why you think a family where the wife makes $45,000 and the husband makes $15,000 should pay more income tax than a family where the wife makes $30,000 and the husband makes $30,000?

February 12, 2007 11:07 PM

 
Blogger wilson61 said...

Time for a flat tax??

February 12, 2007 11:33 PM

 
Blogger Matt said...

trustonlymulder:

Certainly, and my answer would be simplistic "why not?". Our tax system is based on individuals and this seems like a reasonable way to operate. I realize that a married couple may well regard itself as one unit rather than two individuals, but this could true of other arrangements that would not be recognized in the tax code.

I think the better question is why should we be giving a tax break to married couples and not to unmarried individuals (keep in mind, I'm advocating tax relief for everyone).

To build on your example, let's take a wife making $45k and husband making $15k and compare to two roommates; one making $45k and one $15k. I think it's reasonable to assume both pairs of people will use a similar amount of public goods and services so why should the couple pay less?

Moving to the next step it's likely that the couple will have children, at which case they will almost certainly consume more public goods and services (schools, playgrounds, healthcare, and so on). Does it really make sense to reduce the tax bill for that couple then?

The only reason I see for income splitting is if you believe that government needs to encourage people to marry and reproduce. If you believe that then we have a fundamental philosophical difference - I believe that people should marry and reproduce for reasons other than economic benefits.

Wilson61:

I'm fine with just a flatter tax.

February 12, 2007 11:51 PM

 

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