IAM Political Action

Income splitting

The Mad Men tax scheme, which the Conservatives are trying to rebrand as “The Family Tax Cut,” allows parents with kids under the age of 18 with different incomes to shift up to $50,000 from a parent in a higher tax bracket to a parent in a lower income bracket (with a $2,000 cap).

You have to be a certain kind of household to get  a piece of this $12.65 billion pie:

And even among the families that do qualify for income splitting, the benefits are pretty underwhelming.

The actual target of the income splitting scheme are parents with children under 18, and yet 54.1% of these target families will get $0, in many cases because both parents are in the same tax bracket.

A further 12.8% of families would only reduce their tax bill by an average of $254, while the remaining — many who are Canada’s wealthiest least in need of financial help — would reduce their tax bill by between $725 and the cap of $2,000.

Compare that to the median cost of raising a pre-schooler:

Meanwhile, Statistics Canada points out that over 60% of parents of pre-schoolers between the ages of 2 to 4 currently use child care, meaning income splitting won’t do very much to help find child care spaces for their kids or cover the skyrocketing costs of day care — that’s if they make up the minority of families that even quality for the benefit.