I have argued since being elected that allowing retired couple to split their income for tax purposes is the right thing to do. And it is. The Harper administration needs to make this change.
But it is also right to allow single-income families to do the same. In fact, there is a strong argument for allowing all families with children to income-split between spouses, because now those families are being placed at an economic disadvantage.
Face it: Kids cost money. Huge amounts of money. And yet creating and raising children is fundamental to our society’s future, and couples should not be penalized for doing so. Yet, because our tax system is based on individuals and not families, that is exactly what has been allowed to happen. This is why I have argued that the ultimate solution is a family tax return but, barring that, this Conservative government should move as quickly as possible to allow families with kids to split income.
The intellectual reason is simple: People in similar financial situations should pay similar amounts of tax. And yet today single-income families, in particular, pay more since the money coming into that family flows through the hands of one person, who is likely paying at the highest marginal rate. Bad policy.
The social reason for doing this is even more poignant. Despite the recent hundred bucks-a-month child care payment, the level of government assistance to families has been eroding for the past thirty years. And yet, the financial burden of raising children has only increased, especially as costs for higher education have been downloaded by the provinces onto parents, and with the advent of the health tax in Ontario.
In my mind, it is no coincidence that this ongoing government war on the family has resulted in fewer couples deciding to have children. Canada today has only 1.5 births per woman, a rate so low that were it not for immigration, we would die out as a society. At the same time, the age of our population is rising fast, and the number of seniors will about double in the next 20 years. More people draining resources. Fewer new workers entering the labour force – this is a recipe for national bankruptcy.
So, from a tax fairness, societal and economic point of view, giving families a break through income-splitting makes plain sense. It would encourage more families to have stay-at-home caregivers since the tax on single-income families would be cut. It would encourage more couples to have children, since the financial sacrifice involved would be lessened. And income-splitting among seniors would give them more after-tax income to live on, reducing the need for them to look to government for assistance.
Finally, one would think that if ever there was a government ready to walk the walk after talking the talk, it would be this one, on this issue. The Harper Administration is avowedly pro-family, and I would expect income-splitting would be one of the goals most worthy of achieving. It certainly is for me. I campaigned for this in the last election. I promoted it in all my literature. I lobbied Jim Flaherty for it while he was writing his first budget. I have organized a national conference for October 3rd on pension-splitting. And I will be making the strongest case I can once again for family income-splitting in my pre-budget report this November.
It is the right thing to so. This is the right time to do it. This is the right government to pull it off. And once Canadian couples with kids are allowed to split income, no government will ever be able to take it away.
But, what will this cost? Can we afford it?
I wondered that, and so commissioned the Library of Parliament to research the issue and give me a report, as I write private member’s bills on exactly this. I’ve already told you the cost of allowing every retired couple of Canada to split pension income between them – which works out to $301 million a year for roughly two million folks. That’s bargain if ever there was one.
By the way, did you catch the news last week that Ottawa chalked up a $6 billion surplus in the last four months of the fiscal year? Six billion is six thousand million dollars, and puts us on track to have an annual budget surplus of more than $15 billion. So, can we afford to give seniors one-fiftieth of that money to allow pension-splitting, and do the right thing morally, and societally? You bet we can.
As for income-splitting for working families with kids, well, it costs more – but not out of the park. If we restrict this to two-parent families with children under 18 years of age, the cost would be $1.561 billion per year, based on 2005 numbers. Of that, two-thirds of the cost would go to benefit double-income families, and the remaining amount for the 26% of all families that have just one income. The greatest number of people to benefit would be in the income range of $60,000 to $80,000 per year.
I have no doubt Flaherty will argue this is too rich, since he also has to find $5 billion to cut the GST by another 1% in the coming budget and maybe a billion or more to allow investors to roll over capital gains without paying tax. In addition – as I know from sitting in endless Finance Committee pre-budget meetings – every special interest group in the land has its hand out.
But I believe this is a pivotal time. The economy is strong. The books are balanced. The money is flowing in.
Beyond that, we’re a country in need of the moral backbone to admit families are the basis of our society, and that government needs to do much, much more to support them. The middle class voters of Halton have asked me for this. I gave my promise it would be my work in Ottawa. I will not let them down.
49 comments ↓
“The middle class voters of Halton have asked me for this.”
Not really Garth. Maybe a certain demographic of seniors have asked you for this…but my demographic of 40-something want nothing to do with financing the migration of snowbirds. There are lots of better ideas on how to help the middle class. Let’s not resort to senior-welfare to spend any tax surplus.
Did you even read the article? It is in support of income-splitting for working families, as well as seniors. — Garth
What can I say? I’m in total agreement with everything you have said, other than the time being right. Its great ideology, Garth, which is why I’m skeptical in its ever being introduced.
I’m skeptical at this point that our NCC ideologically led leader’s commitment to spend 20 billion on the military, combined with a GST cut, will allow for government coffer flexibility to afford to cut tax revenue on something liberal, so liberally… once military expenditure increases and tax revenue decreases kick in with the GST cut.
I’m already fearing a deficit as a result of Conservative fiscal spending and revenue policies coming at a time where commodities could deflate, lowering Canada’s tax revenue overall.
Otherwise, it’s time governments encouraged couples to stay together on tax returns in light of present good fiscal times, with split incomes most assuredly having merits with seniors. I wish you the best in your efforts to help keep families together.
Dear Mr. Turner
I would like to thank you once again for keeping top-of-mind-awareness to abolish duel citizenship.
I read in the Hamilton Spectator you were once again labelled at being prejudice against Muslims!!!
Little do they look at the big picture here in Canada and your comments don’t revolve around them.
Our services such as eye examinations have been taken away from us here in Ontario
We don’t have not enough police across Canada
Hydro problems here in Ontario. The Provincial Government only sees to implement a band aid solution of smart boxes and
can’t see beyond their noses they created the problem. Smart boxes are once again to cover their “butts” making us pay out of pocket
instead of stopping immigration that brings more over load to the hydro system and look for a solution for our present population
Water is hot commodity. Here in Guelph they want to tap into Lake Erie. Not acceptable. It’s the fastest soultion to appease Provincal Government because they think our municipipality not growing fast enough. All of Ontario dosen’t need to become as the GTA area.
Poision us not with the most polluted lake in Ontario ground water is the only solution for us !!
This is only a small portion of a long list.
We work hard for our money and deserve it to work for us !!!
Cynthia
Guelph Ontario
Thank you Garth! This is exactly what I have been going on and on about on your blog over the last few days. Fairness demands that we at least consider providing limited income-splitting to ALL single income families…not just pensioners. Thanks for listening. – Tim D’Souza
What I’m not fully understanding is why tax fairness should only kick in once you have kids. Why can’t there be familial tax returns with just a married couple with no kids? Especially if one person makes significantly more than the other (and the majority of which goes towards supporting BOTH).
Because that’s called a tax cut, not a tax readjustment to promote societal goals. The goal here is to encourage families, which is precisely why this change would be made. — Garth
i’m a halton resident and i didn’t ask for it. i don’t believe in it and it’s not fair. it turns kids into a tax break and in turn penalizes those who are unmarried or have no children. a flat tax is the only fair alternative. this isn’t even a step on the way to a flat tax. it’s pandering to one specific group, and smells more like vote buying than a “tax readjustment to promote societal goals”. frankly, i’m disappointed.
Garth,
The CPC just don’t seem to get it.
Reducing tax is not a difficult task, just DO IT.
To reduce tax it will be necessary for the government to spend less. Increasing the military buildup will only increase tax.
Afghanistan and Iraq want our money, but want nothing to do with democracy or anytbning else “western”. They could drain us dry financially and nothing will change inthose countries.
BRING our troops home ASAP.
Look after our own yard first.
REDUCE TAX.
When people say that the government discriminates againt stay at home parents by not allowing income splitting, would this falily tax return not discriminate on a husband and wife who cannot have children by no fault of their own? Only allowing families with children to income split hardly seems like it can be fair as there are numerous reasons why people don’t have children.
On the budget surplus does the government still count the EI surplus as part of that money? I believe that surplus is conficated and put into general revenue thus making it a tax and not a contribution. Regards
The point of this policy initiative is to encourage families to have and raise children. For the rest of us, there is the GST cut, coming capital gains roll-over, new employment tax credit and other tax reductions. — Garth
Garth,
I have asked on this blog several times how you were going to deal with the problem of having a university professor “marrying” a student if you allowed income-splitting…you seem to have solved that problem by insisting they have kids first. Bravo!
A $15 billion surplus? I must have had my head in the sand as this is news to me. I seem to remember the conservatives screaming bloody murder over a liberal $8 billion surplus.
Sounds to me like a Chrismas budget, with JF wearing his Santa suit would be appropriate.
$301 million to help seniors sounds affordable to me. The way that we treat our seniors is a benchmark by which we can measure the integrity of our society. It’s the right thing to do.
Let’s remember that a tax cut is not a handout or “senior-welfare”. A tax cut simply means taking LESS of OUR money.
I’d love to see an income tax cut for everyone and a little more going towards the national debt.
This would be a giant leap in the right direction.
By the way, getting working families and seniors to vote for you is a great plan for a majority next election. At a cost of less than $2B, that’s a bargain for PMSH…
Good Luck.
Dear Mr. Turner:
I read your article about income splitting for pensioners and although I agree with the general premise I disagree with your target market. My father retired 10 years ago right around when our personal tax rates peaked in this country. He has a good defined benefit pension and does okay. I recently had my defined benefit plan converted to a DC plan with the associated out of pocket costs and risks falling on my shoulders.
My father worked during decades (60′s and 70′s) when tax rates were relatively low compared to today. I on the other had started working in the 80′s when tax rates were climbing dramatically. So I will spend my entire working life paying these onerous taxes (unless you guys actually do something about them) while he only spent part of his working life paying them, allowing him to build up his personal assets faster.
As my wife only recently started working again after years at home I know the complete lack of government help single income families get. I believe you have started with the wrong group, our pensioners, especially recent retirees had it pretty good during their working life. Single income families of today on the other hand are paying way too much in taxes for doing the right thing, which is bringing their kids up themselves.
Thanks for listening.
Hi Garth
I read a couple of articles you wrote about Retirement income splitting in the Burlington Post. If this issue isn’t a concern for many Baby Boomers now, it will be in the not too distant future. My wife and I are both recently retired and our small pensions are sufficient for our current living standard. Unfortunately these monthly pensions are quite disproportionate and therefore I will be paying a lot more in taxes than my wife.
As inflation gradually eats away at these pensions, which are not indexed, the only way to save our independence will be to lower the taxes. We support your initiative and look forward to seeing the results of your conference.
Garth
Read with interest your column on the above in the Oakville Beaver. I quite agree with the argument you are making regarding splitting income between elderly people and treating the income as that of a family unit. In addition to this e-mail I would be happy at the appropriate time to lobby my Oakville MP. Let me know when the timing is appropriate. I will also gladly lobby the PM himself (despite that the fact that he does not take too kindly to advice from just about anybody) and the leaders of the Liberals and NDP.
Even though I did not vote for your party at the last election, I have considerable respect for the courage of your stands and your lack of concern for the party big wigs, whips and other anti-democratic devices built into our parties to render them distant and insensitive to the constituencies they represent.
Dear Mr. Turner:
Please add my name and that of my wife, Christine, to your list of people who support your position on income splitting for tax purposes for retired people.
I would like to add that I have followed your activities and speeches since your election, and am impressed by what you are doing. We can’t vote for you directly, as we live in the adjacent riding, but we are pleased to have such an active person in government who seems to be doing all the right things.
Garth:
I just read your column in the Sept 23 Beaver. I agree! Having been a stay at home mom for the past 17 years I have had no income and no pension-building ability. When I “retired” after 8 years on the job (a well paying job by the way) I was given my portion of my pension–about $1200–to put in a locked in RSP until the year I would have retired (still in the future). My husband has been working and contributing to RSP and pension as allowed by the government. Through frugal living we have managed, but I often wonder if it will be enough. I’ve been wishing for years that there was a family income tax return that we could use. It would make so much sense. The government wouldn’t have to create more day care spaces if it was more economical for people to stay home with their children. Society might be a lot less stressed out if one parent could stay at home with their children. I feel very lucky and wouldn’t trade my ability to stay at home for anything, but I often wonder about the future.
I certainly hope your bill goes through. You’re right, it’s an issue of fairness.
Keep up the good work Garth. As a pensioner, I support your efforts 100%.
Mr Garth Turner, MP…
We’ll support your idea all the way for Seniors Income splitting, we do it now with CPP which helps a bit…but you’re right on with this initiative…we’ll also contact our local MP’s for all parties.
Good Luck…
Ken & Hazel
Halifax, NS
Hello Garth,
I was so happy to see your commentary in the Sept 23/06 edition of the Oakville Beaver, titled Golden Years Shouldn’t Turn into Aluminum. I totally agree with the points mentioned. As a Case Manager for a local CCAC I couldn’t help but think about the hundreds, perhaps thousands of women I have seen struggle with aging in the community. My memory flashed to those who have not been able to keep a home after a spouse dies or goes into a Long term care facility (LTCF) due to financial strain. Others have chosen to put themselves at risk, caring for an ill partner, because the decision to place that partner in a LTCF would leave them unable to live in their current residence. Not all elderly people are house rich and cash poor. I can only hope that the income splitting option will give our elders the freedom to make safe choices and maintain their independence in our communities.
Thank you for putting your efforts in this area, and I dearly hope you succeed in attaining this change for our elders.
Truly support what you are trying to do here. We definately do not look after our seniors the way they deserve. They have worked all of their lives, I don’t think they should be paying any taxes in their senior years!! In our opinion, a hardworking person, without any unemployment claims, has contributed enough taxes to the Government and to those unemployed over the years. Let’s turn it around now and look after our seniors.
Good luck!
I support this initiative 100% and will definately “lobby” my own MP when the issue comes up.
Great work Garth!!
To Gary Lunn MP
Sir – I’m an Air Canada retiree, and in the newsletter we get there was an
article copied to us written by a fellow MP – Garth Turner, who is urging
a Federal initiative to permit pension income splitting. There is a
meeting to discuss this planned for October 3, room 200 West Block. Perhaps
you know all about this, but it certainly would be a benefit for retirees.
As former Quebecers, we already have our QPP split – I don’t know what the
CPP allows. In any event, we would welcome your support of Mr. Turner’s
efforts.
Tom
North Saanich, BC
Hello After reading your article in the Beaver Im with you 100%.I worked & paid my taxes in the hope I would have an enjoyable retirement, but all I get is more money for this & that, which is bleeding us dry..I could go on & on. I know you have heard it all before, so I will call it quits for now. Tom
Dear Garth,
On behalf of my wife Barbara and I we would like to congratulate and thank you for
your leadership to try and introduce a Private Member’s Bill on income tax splitting.
You have our full support.
Thanks for your all your work and effort on behalf of so many Canadians, Garth.
Dear Mr.Turner,
We are Senior citizens and last night we viewed your video on Pension Splitting in Barrie. We wish to commend you on your initiative on this issue of fairness. We hope our M.P., Peter van Loan, will attend the Conference in Ottawa and give his support.
Sir,
As a retiree and a member of the cash-poor,I am behind
the split-income bill.
Sincerely a concerened citizen.
Hi Garth, I agree about it. My wife only work for two years ,after we had a child she never worked anymore,so we live of only one wage, now we live from one pension and OAS and CCP,so it would be nice if we can split my income.
Please continue to press for pension splitting income tax I beleive this to
be a most important issue I thank you for taking this on
Mr. Turner,
This is to thank you for your efforts in pushing for private pension income splitting. I am a retired Air Canada employee living with my wife who has virtually no income, other than the QPP and OAS. Permitting me to spread my pension between the two of us would save income tax for the couple and result in more money for the economy. Believe me, we would not doubt be spending the extra on our grown children and the grandchildren.
No doubt there are thousands of couples in our situation. This kind of action would bring about considerable clout for the political party that lends their support.
Hi….caught your article in the Post re-Pensions.We agree with you wholeheartedly.We enjoy your comments.Thank you….keep it up.
I read a short article by you in the Burlington Post this week, and I must say that I have admired your ideas and thoughts for many years.
I am writing to support the idea of income sharing for retired persons living in the same household. It makes so much sense! Good luck with getting it passed
We most heartedly support your initiative with regard to Pension Income Splitting. I have been retired for four years and my wife and I are in the same position as you described for your parents (except we had five kids!). As a matter of fact I had to increase my Income Tax Deduction quite substancially to avoid a spring payout.
Thank you for your work in bringing it to the attention of Parliament and Good Luck.
I am a retired pilot from CPair/Canadian Airlines. I was sent a copy of your article in the Burlington Post by Duane Frerichs of Air Canada Pionairs.
My working profile fits that which you described of your parents. I felt it was particularly important for my devoted wife to stay at home and keep my family together while I traveled the world. In my opinion she got the short end of the bargain, including the paycheque. I strongly support your initiative to bring income splitting to retired Canadians and, indeed, I support the concept of income splitting for all working and retired Canadian families.
Thank you for your efforts
Dear Mr. Van Loan,
I understand a fellow MP, Mr. Garth Turner, is organizing a conference on the subject of pension income splitting. With reference to an article in the Burlington Post, Sept. 20, 2006, my wife and I as well as many of our friends fall into the scenario of the single pension income.
I am asking for your support for Mr. Turner’s endeavours to champion his cause to bring this issue to the floor of the House.
This is an issue which is affecting the livelihoods of many of us now, and many more in the near future.
Dear Mr Turner,
At last seniors are being seen with a little respect. Your private members’ bill to average the income of the one pensioner with his
partners’ is long overdue to bring some equity into the tax system as to not punish the couple’s earnings in their twilight years. Thank you caring.
I’ve copied my BQ MP from Compton-Stanstead Ms France Bonsant in this e-mail as a means of furthering this campaign for equity and fairness.
Thanks again.
Dear Mr. Turner: Your editorial on income sharing for retiree’s is ” right on the mark” I am 52 years old and am the sole income earner in our family. My wife and I decided she would stay at home and raise the children. We have never regretted that decision, but we are penalized by the tax system for having done so. I support and applaude your efforts to have families set up as an economic unit.
I fully support both ideas!
Thank you Garth!
Dear Mr Turner
I read with interest you guest column in the Sept 23rd edition of the Oakville Beaver on the subject matter. Your proposal to allow splitting of pension income between retired spouses to reduce overall income tax is an excellent initiative. My wife and I lived what might be described as the traditional family lifestyle in which I worked and provided income for the family while my wife raised our children. We now find ourselves penalized by an unfair tax system which taxes all my company pension in my hands at higher tax rates than would be the case if it were split between my wife and I. This taxation approach to company pensions is unfair and also inconsistent with the tax treatment of CPP which may be split between spouses. The introduction of income splitting for private pensions would also have a positive effect in reducing the punitive taxation scheme associated with OAS. I urge you to vigorously pursue this initiative.
You quite rightly note that the “boomer” generation, of which I am at the leading edge, will represent a significant proportion of the population and eligible voters. I sense that so far this group has not organized itself sufficiently well in terms of a political lobbying group. However, I believe this may well change as more retirees become aware of the voting power that is in their hands.
I looked forward to seeing rapid progress on this matter.
Mr. Turner,
I have just received, via our Air Canada Pionairs, a copy of your item in the Burlington Post September 20, 2006.
My husband and I are certainly in the same category that you describe. While my husband worked I stayed home to look after the children. We enjoy our pension and feel lucky that we have one, however, on a fixed pension (my husband was Canadian Airlines and their pensions are not the same as Air Canada employees – they are not indexed) it is difficult to make 1992 dollars stretch to cover 2006 expenses so I have returned to work in my “old age”. This is certainly not what we had intended for our retirement. However I am working with seniors and do enjoy my job.
I might add, that my son and his wife are doing the same thing as we did. They have chosen to have a stay-at-home parent (my daughter-in-law) while the children are young and are therefore trying to make ends meet on one salary. Income splitting should also be considered for young families who choose to look after their children in this way (we would have much better behaved teens in the long run and better citizens down the road). Is it right that my son’s neighbours, whose take home pay is twice as much as his one salary, pay less in taxes? Young couples who choose this lifestyle for their families are being penalized.
Therefore I support your efforts in presenting this bill to parliament and hope that your vision will be fulfilled for a better Canada.
Don on 09.24.06 5:13 pm
“My wife only work for two years ,after we had a child she never worked anymore,so we live of only one wage, now we live from one pension and OAS and CCP,so it would be nice if we can split my income. ”
If your wife is 65 – she is entitled to OAS of 480$ per month. You should check into it.
Dear Mr. Turner, thank you for taking this matter up and hopefully bringing it
to fruition. I am a ex Air Canada
employee and now retired and a member of the Air Canada Pionairs. My spouse also
stayed home with the kids and our sole
income is my pension. I hope that your actions will bring quick results as I
feel we are being penalized for raising
responsible children by staying home. If there is anything we can do to push
this issue along and to be of assistance to
you in putting the bill before Parliament
Good luck and keep up the pressure…
As many others have done here, more kudos to you for pursuing the family income splitting agenda (for both senior and especially for working parents)- this is one of the few ideas that would have no doubt to support if I had a chance to vote in the parliament or at the ballot booth
Pawel
Read with interest your thoughts on income splitting as published in the Sept.23/06 edition of The Oakville Beaver.
My wife, like your mother, was a stay at home mom . Over the years, I made regular contributions to a spousal RRSP so our situation is not quite as drastic as your folks but 2/3s of our retirement income is in mine name. Obviously, we would welcome whatever tax relief we might obtain by income splitting.
Good luck with your planned conference.
I suggest that you publish the names of any MP who declines your invitation .
Thank you for mentioning that Families with Dependent Children have been de-funded over the last 30 years. Tax credits, deductions, exemptions, allowances and welfare for families has been hugely cut. Eg Welfare eligiblity for single parents used to continue til youngest was 16 and is now 3 or less. Quebec eliminated most direct funding fo families including birth bonuses of up to $8000 – to pay for a daycare system that fewer than 20% of children use and which has been repeatedly rated of low quality.
These billions have been transfered to academics (“research”), government services and related bureaucracies. These attempt to fill in the care & relationship work and volunteerism that was once financed by direct funding of Families with Dependent Children.
Income splitting is insufficient to ceate real equality for Families with Dependent Children. If we can pay out billions for the non-essential work done by universities and government, we can pay equally for the essential work done outside of the GDP sector of caring for our children, elders, sick, etc.See Kids First policy recommendations at
http://www.kidsfirstcanada.org/policy-recommendations.pdf
BOLD NEW IDEA – INCOME SPLITTING FOR EVERYONE.
Further extending Garth’s plan, we should extend income splitting to everyone in the country. Let John in BC split his income with Peter in Ontario, Liz in Quebec, Raoul in Newfoundland, etc. What a great idea – that way everyone pays exactly the same rate of tax regardless of their family’s income.
Hmm, wait – isn’t this the net effect of a flat tax.
I just heard that every cent of the 13 plus billion is going to pay down the debt.
Will there be any left for income splitting?
Hey Garth
As a divorced and remarried male and it is time for me to collect my pension or should I say my half, will I be able to use my ex-wife’s income (who will be receiving half of said pension)? And what about my present wife’s income and pension? Just curious as to what impact the proposals you are making will affect my situation.
I agree with most of what you say. Pensioners and the elderly should not have to pay any more tax on the money they get from the government… PERIOD.
Currently, they are taxed at the source on what little money they get which puts them close or into the poverty line.
Our government needs to get their priorities straight and look after the families of this country.
It is all to apparent with the new announcements that this government is on the road to appeasing a certain minority party in parliament.
Don’t get me started on that subject.