I don't understand parts of the argument against. It may effectively reduce the income of lower-middle class couples, because taxes might have to be raised to compensate for the lost revenue, but the government is currently collecting a surplus, so that's not a huge issue.
The argument that it will force women to work in the home to achieve the "huge tax savings" seems wrong. In that case, the higher wage earner might save more on income tax if the lower income earner generates no taxable income, however, that's an illusionary savings. Because you are actually losing the income that lower earner would generate and only getting a percentage of that back in tax savings:
Say the higher income earner, earns 50,000 dollars. If you split that two ways it's 25,000 each, which is pretty low for taxes, however, if the lower incomer earner could earn 25,000 in addition to that 50,000 then 37,500 each is obviously a better situation for both spouses.
The only time this isn't the case is when the real value of the domestic work the wife could do while unemployed outweighs the the tax levied on that addition income. So for example, if at 37,500 they both pay $1,350 more in taxes, then it becomes a question of whether tha 22,300 after tax income of the lower earner's job is worth the costs associated with it (like day care and travel).
I don't trust the Conservative government, but I can't fault them for attempting to make it easier for the "traditional" family to prosper. On the other hand, the point about most of the savings going to the very wealthy is an excellent point. On the flip side the savings are not unlimited, the savings max out at a combined income of around $227,608 because at that point, both spouses enter the highest tax bracket and are both taxed at the highest rate. Therefore the maximum savings appear to be $9,600.
Those are federal tax only numbers, and doesn't count surtaxes. I don't know if the provincial governments are going to follow suit and allow joint filling as well (I'm not sure if they even have the option of not doing so).
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I don't get it.
Date: 2006-12-12 09:35 pm (UTC)The argument that it will force women to work in the home to achieve the "huge tax savings" seems wrong. In that case, the higher wage earner might save more on income tax if the lower income earner generates no taxable income, however, that's an illusionary savings. Because you are actually losing the income that lower earner would generate and only getting a percentage of that back in tax savings:
Say the higher income earner, earns 50,000 dollars. If you split that two ways it's 25,000 each, which is pretty low for taxes, however, if the lower incomer earner could earn 25,000 in addition to that 50,000 then 37,500 each is obviously a better situation for both spouses.
The only time this isn't the case is when the real value of the domestic work the wife could do while unemployed outweighs the the tax levied on that addition income. So for example, if at 37,500 they both pay $1,350 more in taxes, then it becomes a question of whether tha 22,300 after tax income of the lower earner's job is worth the costs associated with it (like day care and travel).
I don't trust the Conservative government, but I can't fault them for attempting to make it easier for the "traditional" family to prosper. On the other hand, the point about most of the savings going to the very wealthy is an excellent point. On the flip side the savings are not unlimited, the savings max out at a combined income of around $227,608 because at that point, both spouses enter the highest tax bracket and are both taxed at the highest rate. Therefore the maximum savings appear to be $9,600.
Those are federal tax only numbers, and doesn't count surtaxes. I don't know if the provincial governments are going to follow suit and allow joint filling as well (I'm not sure if they even have the option of not doing so).