Middle-class families should not have to pay more to give wealthier families like those of MPs and cabinet ministers at $2000 tax break. But that is exactly what is happening with Stephen Harper’s new “income splitting“ scheme.
In families where the parents are in different tax brackets, it allows the higher income supposed to claim a tax credit of up to $2000 per year (as if a portion of his or her income were being taxed at the other parents is lower rate).
Former finance minister Jim Flaherty was concerned that such a policy would be expensive and unfair to most Canadians.
“It benefits some parts of the Canadian population a lot, and other parts of the Canadian population virtually not at all,” he said. He was right.
The vast majority of Canadian families will receive no benefit from income splitting. Single mothers get nothing, families in which both parents are in the same income bracket get nothing. The most needy and lowest income families get nothing.
In fact, fewer than 15% of Canadian households will benefit; 85% will not. And for the few who do, the biggest gains will go to the wealthiest.
The most needy and lowest income families get nothing
At a cost of $2 billion a year, Mr. Harper is spending an awful lot of money to help small and select group. Those who have been left out will question both the costs and the fairness of it all. Like the late Mr. Flaherty, they will wonder why Mr. Harper is redistributing income to the more affluent.
Canadians need to plan for both job and growth. Mr. Harper’s income splitting plan does nothing to encourage economic growth or strengthening the middle class.
Liberals oppose this policy, and will continue to put forward a positive solutions that will help our economy grow and give all Canadians are real and fair chance of success.