The federal government’s spousal income-splitting plan has already come under criticism for disproportionately benefiting high-income families, but there are other problems with the tax break, says Maclean’s guest columnist Kevin Milligan.
The first problem is the credit is complex, says Milligan, a professor at the University of British Columbia’s School of Economics. It takes 85 steps and a new tax form to calculate the credit. That “might bring joy to hourly-compensated accountants, but adds complexity and obfuscation for the rest of us,” he writes.
The way the tax credit values paid and unpaid work is also an issue, he says. With this credit, the government is arguing that a couple where one spouse earns $100,000 and the other earns nothing should be taxed the same as a couple in which both partners earn $50,000. But that’s simplistic, says Milligan.
Income-splitting’s effect on the workforce also undermines some of the government’s other policies. Read more here.