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

Author

Listed:
  • Alexandre Laurin

    (C.D. Howe Institute)

  • Jonathan Rhys Kesselman

    (Simon Fraser University)

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.

Suggested Citation

  • Alexandre Laurin & Jonathan Rhys Kesselman, 2011. "Income Splitting for Two-Parent Families: Who Gains, Who Doesn't, and at What Cost?," C.D. Howe Institute Commentary, C.D. Howe Institute, issue 335, October.
    • Handle: RePEc:cdh:commen:335
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    File URL: https://www.cdhowe.org/public-policy-research/income-splitting-two-parent-families-who-gains-who-doesn%E2%80%99t-and-what-cost
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    References listed on IDEAS

    as
    1. Alexandre Laurin & Finn Poschmann, 2011. "What's My METR? Marginal Effective Tax Rates Are Down - But Not for Everyone: The Ontario Case," e-briefs 114, C.D. Howe Institute.
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    Cited by:

    1. James Alm & J. Sebastian Leguizamon, 2015. "Whither the Marriage Tax?," National Tax Journal, National Tax Association;National Tax Journal, vol. 68(2), pages 251-280, June.
    2. James Alm & J. Sebastian Leguizamon & Susane Leguizamon, 2023. "Race, Ethnicity, and Taxation of the Family: The Many Shades of the Marriage Penalty/Bonus," National Tax Journal, University of Chicago Press, vol. 76(3), pages 525-560.

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    More about this item

    Keywords

    Fiscal and Tax Competitiveness; Canada; income splitting; tax savings; marginal tax rates;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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