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Canada Inequality Tax

Forget income splitting, tax the rich!

For now, I’ll keep double-posting my pieces for Ricochet here. The latest is on income splitting and taxing the rich more generally. The idea is that even though taxing the rich won’t get generate huge revenue, there are lots of other good reasons to do it, like even just slightly shifting the balance of power in the workplace. On the flip side, the income-splitting tax cut does more than just funnel money disproportionately to the rich, it also reinforces 1950s-style gender roles. Here is the piece in full:

Tax may not to be a four-letter word, but neither is it a one-trick pony. Rather than merely being tools to raise government revenue and redistribute income, taxes can affect the distribution of power in the home and at work.

The tax reform centrepiece just introduced by the Conservatives not only cuts the government’s ability to raise revenues, it is also openly touted as a way to reinforce the 1950s nuclear family. Instead of cutting taxes on the wealthy to make the home more unequal, let’s tax them to get some power back in our workplaces.

Leave it to income-splitting Beaver

First, a quick recap. There are two major pieces to the Conservatives’ most recent “tax reform”: income-splitting, or the Family Tax Cut (FTC), and the extension of the Universal Child Care Benefit (UCCB). Income-splitting is a tax cut that allows families where one person earns more to share income with their partner to lower the overall tax bill. Benefits from this are very disproportionately going to go to families earning above the national median.

The extension of the UCCB is an additional cash transfer, although limited to those with children – in other words, new government spending. The upside? It boosts the incomes of the working and middle classes. The downside? It doesn’t satisfy fans of targeted transfers, as it also benefits the wealthy thus wasting resources and it doesn’t satisfy fans of universal programs because it benefits the rich without getting their support for high-quality public services.