mad-men_0thumb-1.jpg
mad-men_0thumb-1.jpg This article is more than 6 years old

Secret doc casts doubt over Finance Canada’s support for Conservative income splitting scheme

Has the Department of Finance told the Conservatives their family income splitting plan violates a key tax policy principle that seeks to minimize “interference with individual decisions such as those related to labour force participation, work effort, choices in childcare, and family formation?” In a heavily redacted briefing note marked “secret” to Finance Canada’s Deputy […]

Has the Department of Finance told the Conservatives their family income splitting plan violates a key tax policy principle that seeks to minimize “interference with individual decisions such as those related to labour force participation, work effort, choices in childcare, and family formation?”

In a heavily redacted briefing note marked “secret” to Finance Canada’s Deputy Minister, prepared by senior departmental staff soon after Stephen Harper’s re-election in 2011, the department presented a “preliminary analysis” of the electoral promise to allow families with children under 18 to split up to $50,000 in income (after the federal budget is balanced).

The document, newly released to PressProgress under access to information law, analysed the Conservative promise through the lens of “tax policy principles,” including “Economic Efficiency and Neutrality”:

“An economically efficient and neutral tax system generally minimizes interference with individual decisions such as those related to labour force participation, work effort, choices in childcare, and family formation.”

What follows is two full pages of analysis about how the Conservative plan stacks up (or doesn’t) against this tax policy principle.

The entire analysis is blacked out because the information is considered advice, recommendations, or deliberations involving a government institution or a minister. (Click here to see what former Finance Minister, the late Jim Flaherty, thought about the scheme.)

Thankfully, an income splitting study released recently by the Institute of Marriage and Family Canada outlines exactly how the Conservative scheme would violate this tax policy principle.

The “myth busting” report, given a boost by Employment Minister Jason Kenney, explains why social conservatives are big fans of income splitting: the scheme may discourage women from participating in the paid workforce to stay at home to look after the kids and create an incentive for guys to marry their (not working) “impecunious, long-time girlfriends.”

Here’s how Lawrence Solomon, a contributor to the institute’s study, sums it up:

“As an example, a single man earning $40,000 a year today can pay more than $6,200 in taxes to federal and provincial governments. Under the current tax system, he would see little immediate financial gain in getting married to his impecunious, long-time girlfriend. But under a full income-splitting system where he and his wife would each report $20,000 in income, tying the knot would lower the tax bill to $3,500, a marriage benefit of $2,700.”

Sounds like maximizing interference with individual decisions related to labour force participation and family formation.

Here’s the full briefing note:

Finance Canada briefing note in family income splitting

Help us protect Canadians by holding the powerful accountable.

Journalism is an important public service. That’s why PressProgress is prioritizing stories aimed at keeping Canadians safe and holding the powerful accountable during the coronavirus pandemic.

Please consider supporting our award-winning non-profit news organization so we can keep making a positive impact for Canadians.

 

Support Our Journalism
PressProgress
PressProgress is an award-winning non-profit news organization focused on uncovering and unpacking the news through original investigative and explanatory journalism.

Most Shared

thumb-2021-06-022 News

Doug Ford’s Government Cut Education By More Than Half a Billion Dollars, New Report Finds

Related Stories

News

Ontario PC MPP Held Shares in Amazon As Government Faced Criticism Over Outbreaks at Amazon Warehouses

View the post
Explainer

Why Canadian Politics Does Such a Bad Job at Reflecting Working Class Values

View the post
News Brief

Zero Per Cent of Manitobans Say They Are ‘Very Satisfied’ With Brian Pallister’s Handling of COVID-19 Pandemic, Poll Finds

View the post

Explainers

Power and democracy

Andrea Reimer

Why Canadian Politics Does Such a Bad Job at Reflecting Working Class Values

View the post
Politics & strategy

Tom Parkin

Why Jason Kenney is Playing Politics with the Horrific Legacy of Canada’s Residential Schools

View the post
Work & rights

Liz Walker and Shanice Regis-Wilkins

Here is What Everyone in Canada Needs To Know About How Collective Bargaining Really Works

View the post