‘Tax break’ conceals low benefit

Posted on April 1, 2011 in Child & Family Debates

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MontrealGazette.com – life
March 29, 2011.   By Jay Bryan, The Gazette

The most interesting thing about the first major campaign announcement of Stephen Harper’s Conservative Party is what it conceals, not what it reveals.

This proposal, entitled the Family Tax Cut in the Conservative Party press release, would cost a whopping $2.5 billion a year, and is pitched as a way of lightening the burden on hard-pressed families raising children.

But what’s not said is that most such families would receive little or nothing from this costly measure. And that’s on purpose.

If you’re a single parent raising a child, you get nothing. The tax break is solely for families with two parents.

This even though singleparent families have a much higher poverty rate: about two and a half times as high as the poverty rate for working-age couples with children, notes Katherine Scott, director of research at the Vanier Institute for the Family.

If you’re in a family where both parents work and receive similar paycheques, you get little or nothing. The tax break, which allows a higherincome spouse to split income with a lower-income one, is only helpful where there’s a big difference in salaries.

So if both parents are working at low-wage jobs, they get little or nothing. If one has a very good job, they get a pretty good tax break. If one has a very good job and the other doesn’t work at all, they get an even better tax break.

Is the light beginning to dawn? This isn’t really a tax break for most people; it’s social policy: a tax break for people who fit the rightwing ideal of an upstanding family: dad makes a lot of money and mom stays home with the kids, as any good mother should, instead of relying on daycare.

In other words, it’s manipulation of the kind that rightwingers like to attribute to the left, only turned on its head.

The Tories attempted to spin this as a tax break for ordinary Canadians by stressing the tax break it would represent for a family in which one spouse earns $70,000 and the other stays home. They’d save about $2,000 in taxes by being taxed on the equivalent of two $35,000 incomes because tax rates are lower at lower salaries.

That’s a pretty good saving, and it’s true that a family in this situation would have reason to be pleased. But are they representative? Not at all.

The Library of Parliament research service studied the impact of a proposal like this in 2007 and found 61 per cent of the tax savings would go to families with incomes of more than $90,000.

A stunning 92 per cent of its incomes would go to families with above-average incomes of $60,000 or more. (those income figures would be higher now.) Families with lowerthan-average incomes would get just eight per cent of the tax benefit.

While it’s true that tax splitting will be a nice benefit for families with stay-at-home moms or dads, it won’t do much for families that have the greatest need for help with the cost of child-rearing.

Most of these are left out because they’re either single-parent families or ones in which both parents find it necessary to work, points out Armine Yalnizyan, senior economist with the Canadian Centre for Policy Alternatives, noting that in the bulk of cases, two-income families have salaries that are roughly comparable.

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