Equality under the law is one of the corner stones on which our democracy has been built—except, of course, any law pertaining to taxes. In other words, when it comes to tax law, the principle of equality is pretty much irrelevant.
Take the case of the controversial income-splitting proposal announced by Prime Minister Stephen Harper last week, and pretty much universally panned by media and political party critics across the land. Opposition to income-splitting is based mainly on the contention that it is not fair because only a relatively few well-healed taxpayers would benefit.
But how about the status quo?
Under the present system, families whose incomes are earned primarily by one spouse are taxed a significantly higher amount than those families with two spouses each earning about the same amount. Recently in the Financial Post, economist Jack Mintz calculated single-earner families with $80,000 total income will each pay $4,170 more tax than families whose spouses each earn $40,000.
So, two families living next door to each other—both earning the same total income—pay very different amounts of tax. How fair is that? And what does that say about our cherished principle of equality before and under the law.
Way back in 1966, the Royal Commission on Taxation under Kenneth Carter argued in favour of family taxation. Governments across Canada recognize this principle when dealing with several tax elements. That is, governments use family income when calculating eligibility for several tax credits such as the child tax benefit and GST credit. And none in opposition seem to see income-splitting of pensions by seniors as other than a good thing. So the general principle of using family income for calculating income tax would seem to be a sound one.
The status quo is, as national columnist—and no shill for the Harper Conservatives—Andrew Coyne calls it, “manifestly unfair.”
When the Conservative government tries to partially address this longstanding injustice, however, its proposal is met with hyperbole rising almost to the level of hysteria. Take this recent gem from Martin Regg Cohn of the Toronto Star:
Not to split hairs, but income-splitting is perhaps the most indefensible and insidious campaign gimmick ever conjured up by Prime Minister Stephen Harper.” [Emphasis mine]
Doesn’t this seem rather extravagant language even for the Toronto Star? I think, though, most readers have learned not to expect fairness and balance in the Star’s commentary.
And how about this from the NDP’s website:
New Democrats will use their last Opposition Day motion of the Spring session to force a vote on the Conservatives’ unfair and expensive income splitting scheme—one that will have no benefit to 86% of Canadians.”
“[U]nfair and expensive income splitting scheme”? Really. Well, the NDP’s $15-a-day daycare plan will cost $5-billion over eight years, and millions of taxpayers will never see a penny’s worth of benefit because they have no eligible children or can’t get one of the 370,000 new licensed spots. This sounds pretty unfair and expensive to me.
Liberal Leader Justin Trudeau was also not impressed with the Prime Minister's attempts to partially level the playing field for single income families, saying they were “not good enough.” And, as is typical of the Liberal leader, he did not offer a counter-proposal.
So why do the Dippers and the Grits and their media cheerleaders so roundly condemn income-splitting?
Politics, dear readers, crass politics.
Even though neither I nor my children will ever see a penny from it, I’m with the Conservatives on this one. I just think it’s the right thing to do. Working to remedy injustice is always the right thing to do—and not a bad way to spend some of our federal surplus.