We have seen now that the Publics (John Q. , Jane and the kids) pay less income tax if their family income was spread out between the two of them, and the amount of the difference is about $6000 (that is after tax money).
As I have stated this is a very pedagogical model, where I have not taken into consideration some vital concepts:
- The fact with two incomes there would be a need for daycare (unless the Publics had family who would watch the kids or something similar) and that as I have read in my comments is not inexpensive. Having said that, with two incomes the costs of daycare will eventually drop, but the Publics will still be allowed to write off costs of day camps in the summer, and other similar programs, that would not be available if they had a single income in the household.
- The detail that both spouses make the same amount in the dual income model is a little synthetic as well, since usually the female spouse makes 60-80% of what the male spouse makes (from studies, remember, I have daughters, I am not saying I like this, just that, this is the case).
- There are other tricks that can be tried with single income families about loaning moneys and such, but most single income families don’t know, or do such things (that I have spoken with).
- The family income assumed is much higher than the Canadian Median, so whether this is a model for most Canadians, is debatable as well.
My view of this is the tax system does not help out families of all kinds very much these days, and the single income family does not get a lot of the advantages that a dual income family receives.
How could this be changed?
- Introduce the concept of the family income or household income. This would level the playing field for single income families. If there is only one spouse, but there are children under 18 being supported, allow the income earner this option as well (as is the case with families where the spouses are separated or divorced).
- Resurrect a child tax credit for each child under 17 years of age still living at home. This would help both families deal with the expenses of raising children.
Income splitting is allowed currently for retirees, and I think that is a good thing, I’d love to see that program expanded to be a general program.