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A federal Conservative election promise has reignited the debate over income splitting as a way of helping families. Income splitting is based on a false premise, namely that a family can trade in two $50,000 per year jobs for one $100,000 per year job. If this were possible many more families would likely choose to have one parent stay at home at least in the early years. A better way to help all families with children would be to invest in enhancing child tax benefits.
Most of the media attention on the Conservative income splitting promise has been focused on it not taking effect for another five years. I welcome this implementation delay. It provides Canadians with an opportunity to debate whether this is the most effective way to support Canadian families with children.
The Conservatives admit that implementing their income splitting proposal would reduce federal government revenues by at least $2.5 billion per year. Saying - as the Conservatives do - that this will save the "average" family $1,300 per year masks the inequities underlying this proposal. Most of the tax savings caused by income splitting would go to only 20% of families.These are two-parent families with a sole (or close to sole) income earner. Income splitting would be of no benefit to the 20% of families headed by a lone parent. Income splitting would be of limited benefit to the 60% of families where both parents work especially when they earn close to the same income.
Income splitting up to $50,000 per year even creates inequities among two-parent sole income earner families. For example, a modest income sole earner family making $50,000 or less would derive much less benefit from income splitting than a higher income sole earner family making $100,000 or more.
I have some free advice for all of the federal political parties. If the goal is to help families - especially those with low and modest incomes - invest more in child tax benefits. $2.5 billion strategically invested in an enhanced Canada Child Tax Benefit (CCTB) would translate into as much as $1,000 per child per year. The greatest benefit of an enhanced CCTB goes to low and modest income families, but even higher income families earning $100,000 per year receive some benefits.
Investing in child tax benefits rather than income splitting would not only more equitably support Canadian families. It would also help reduce the scourge of child and family poverty.
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Thursday, 17 May 2012 
The ESPC is a member of the Edmonton Coalition on Housing and Homelessness (ECOHH). ECOHH sent out a three question survey related to housing security to each political party competing in the 2012 Alberta election. So far, the Progressive Conservatives (PC), the New Democratic Party (NDP), and the Alberta Party responded to ECOHH's questions. Below are their respective answers.
