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November 23, 2006
Income splitting
The very modest proposal by the Finance Minister to allow income splitting for pensions with the hint that it could follow by the general income splitting for the tax purposes.
Instantly Liberals, NDPs and other critics began to claim that this is bad. Their arguments are of three types:
1." It is not fair because singles/pairs with equal incomes/people with little income do not benefit from it."
These arguments are based on the assumption that the current sstem is absolutely fair, which is not the case. Further, taking these arguments to their logical end one would conclude that any change in the policy is not fair. No money to school and preschool education (those who do not have children would not benefit), for cancer research, for universities, for TTC... No money for anything I do not benefit from.
2. "It is not fair because only richest would benefit from it". This is BS. Benefits would be mainly in the mid-class. If one spouse gets $1,000,000 per annum, the other spouse has a lot of money to invest and report investment income, thus actually splitting income for tax purposes. But this is meaningful for the richest ones only.
3. "It is bad because tax reduction is bad". I agree. Let us increase tax burden by imposing a new tax: for economists who are against tax reduction. $10,000 per annum per person (let's call it "Stupidity Tax"). And according to 1. it should never be cancelled.
Posted by Victor at November 23, 2006 06:15 AM