Income Splitting for Two-Parent Families: Who Gains, Who Doesn't, and at What Cost?

Alexandre Laurin and Jonathan Rhys Kesselman
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Alexandre Laurin: C.D. Howe Institute
Jonathan Rhys Kesselman: Simon Fraser University

C.D. Howe Institute Commentary, 2011, issue 335

Abstract: In the 2011 Canadian federal election, the Conservative Party pledged to allow couples with minor children to split up to $50,000 of their incomes each year for tax purposes. Tax savings would arise to the extent that the spouses’ marginal tax rates differ. Advocates of splitting claim an inequity in tax burdens for one-earner couples versus two-earner couples and often invoke the image of the traditional family with mom at home minding the kids. This report provides a quantitative analysis of the economic impacts of the federal income splitting proposal including the effects if the provinces adopted a similar scheme.

Keywords: Fiscal and Tax Competitiveness; Canada; income splitting; tax savings; marginal tax rates (search for similar items in EconPapers)
JEL-codes: H21 H23 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (2)

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