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

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Author Info

  • Alexandre Laurin

    (C.D. Howe Institute)

  • Jonathan Rhys Kesselman

    (Simon Fraser University)

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    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.

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    File URL: http://www.cdhowe.org/pdf/Commentary_335.pdf
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    Bibliographic Info

    Article provided by C.D. Howe Institute in its journal C.D. Howe Institute Commentary.

    Volume (Year): (2011)
    Issue (Month): 335 (October)
    Pages:

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    Handle: RePEc:cdh:commen:335

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    Related research

    Keywords: Fiscal and Tax Competitiveness; Canada; income splitting; tax savings; marginal tax rates;

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