Canadian Personal Finance Blog

So, John and Jane Q. Public both have successful careers at Generic Co. and are both pulling down the same salary, here is what Quicktax’s Tax Summary report says about how much tax they will owe this year.

If you click on this you can see the full size version of the image. The final income tax they both owe is $20,561,46 (in this specific scenario with the parameters that I have set, total tax for both John and Jane). Now to me that sounds like a whack load of money to pay, but surprisingly this is lower than what they would have paid a few years ago.

Remember these numbers come from Quicktax so if the math is wrong, don’t blame me.

Tomorrow, what if Jane wasn’t working, wouldn’t they pay about the same taxes if their family income was the same? In a word, No.

So, I have actually had some excellent comments and feedback from different folks about this set of writing, so I will do a formal study from here.

First meet the family we will be studying (completely fictional, so no e-mails about I know who this family is):

• John and Jane Q. Public who are married
• John was born January 1, 1960
• Jane was born January 1, 1962
• They have two kids Zeke born January 1 1997 and Mary born January 1 1999
• They don’t save, own anything or invest (yes, this is a very boring scenario, my apologies)
• The gross family income I will assume for this family is $100,000/year (a little higher than average).
• They live in Ottawa.

Tomorrow I will post their current tax return for 2006, where John and Jane both work at Generic Co. and make the exact same income, and we will see how much tax they pay (assuming they receive popcorn and beer money as well).

If you have any commentary please feel free to jump in. Note I have changed the title from my original “My Wife” is worth how much, since that is sexist.

Related Links:

• The Disappearing Middle Class in Canada
• Spousal RRSP: Income Splitting
• My Spouse is Worth How Much?
• High Price of Parenting
• My Wife is Worth How Much 2007

The past couple of years, I have used my Quicktax program as a financial forecasting tool (as well as an excellent, if somewhat expensive, tax preparation program). Every year I wonder what is the difference if both my wife and I worked and earned the same Gross Family Income, as compared to our current situation where I am the sole bread winner (by choice)? (a note for American readers, there is no concept of income splitting in Canada, until you retire, and even then…)

I have pointed out on this web site (and to my members of Provincial and Federal Government) that the Canadian Tax code is slanted toward dual income families and actually penalizes the “traditional” single income family.

Before I get posts about how I am against women in the workplace, or the same kind of arguments, I am the father of 3 daughters, and I am not against women in the workplace (I prefer female bosses, if you were asking my opinion), what I am saying is that single income families do not get the advantages that dual income families have.

Some of these advantages are:

• Writing off day care costs. Now yes, this is legitimate costs of going to work, so I am not saying this is bad, however, they get to write off summer camps as well, however, I do not because my wife stays at home.
• The “equivalent to married” non-refundable tax credit I get for my wife adds up to not very much (I’ll have that as part of my calculations in later postings).
• A benefit of having two medical programs (which not all dual income families have) is that a lot of expensive medical procedures typically only covered as 1/2 on most medical plans, end up being covered completely by both insurance companies (e.g. Braces, Crown replacements, etc.,)
• What happens with CPP? Both in a dual income family would get CPP payments, but does my wife get one, in a single income family? Don’t know, need to go find that one out.

There are other tax advantages as well. Now, a single income family like mine has other advantages as well (I am not complaining about the single income concept, I think it is good), so let’s not get into discussions like that I am looking solely at the Canadian Tax system. My family gets the “Beer and Popcorn” money and doesn’t get it clawed back!

Coming next, what do the numbers say?

Related Links:

• The Disappearing Middle Class in Canada
• Spousal RRSP: Income Splitting
• My Spouse is Worth How Much?
• High Price of Parenting