Family Income Splitting Not a Benefit Just for the Wealthy

Should joint tax filing to enable full family income splitting be allowed? 70% of KBR readers say ‘yes.’

Over 300 votes were counted in our April poll, and while those in favour of family income splitting far out-weighed those who disagreed, the opinions posted for and against were evenly matched.

Gaetan writes: “Our tax system has progressively gotten “out of hand” as most working taxpayers now pay more than they should have to. Income splitting allows families to organize themselves to reduce their tax burden and spend those tax savings within their own economies… Having more disposable income is always beneficial to our economy – either by increased spending or saving for our retirement. It simply makes sense.”

Roberta counters: “Income splitting will mainly benefit those in the upper tax brackets, not those who really need it. Lowering the rates in the first two tax brackets will help the middle class and increasing the basic personal exemption and working income tax benefit will help lower income taxpayers…”

Dale concurs: “Full tax splitting is not an equitable way to share resources. The benefit is mainly to wealthy individuals who can afford to live on one income. This government largess would advantage a small group of individuals but many would pay for it with no benefit. Why spend tax dollars that way?”

While Dave may be positively impacted by this benefit, he comments: “As nice as it would be personally, this is totally skewed to benefiting high net income families and is far too costly in lost revenue with negative social benefit.”

Bev considers the single individual: “Nice idea but not fair to the single worker and impact would be negative.  Instead do something for the middle income tax payers without children.  They are the lost bracket with no benefits and not earning enough to feel comfortable.”

Virginia points out how it could benefit lower to middle income families: “… For example the spouse with 11k income is wasting their CPP, EI, employment expense, BC tax reduction, tuition and student loan interest carry forwards, etc.  Add a little more and they can claim their modest medical expenses that are wiped out on the higher income spouse…”

Maria adds: “Sure. They already started with pension splitting which is an enormous tax advantage. Some couples save as much as $5,000 on their taxes. That’s a start. I think salary splitting would truly be a blessing – especially with spouses who are home with children.”

Finally, Vincent opines: “… None of my clients are in the top 5%, nowhere near! But all would benefit in one way or another. Young families with a spouse on EI, to families who have a spouse at home – how would this not benefit them? We have a responsibility to our clients and all Canadians for a better life. Whether it is a few hundred or a thousand dollars in tax savings, we as tax preparers have a responsibility to educate our clients and campaign for our clients’ best interest…”

Thank you to all who participated in our April poll. With the recent impact of the Heartbleed bug, our May poll asks: “Has the Heartbleed security error caused you or your clients more concern about filing online with CRA?” Tell us what you think.