Broadbent Institute study finds income splitting would result in many losers, few winners, big regional variations

Detailed analysis of Conservative proposal reveals deeply unequal scheme

To out of three families targeted by the Conservative income splitting plan would receive less than $500 while fewer than 4% of such families – some of the wealthiest in Canada – would be eligible for a benefit in excess of $5,000, a new study by the Broadbent Institute has found.

The Big Split: Income Splitting’s Unequal Distribution of Benefits Across Canada, based on a statistical analysis by Tristat Resources on behalf of the Broadbent Institute, relies on Statistics Canada’s tax analysis model (the SPSD/M). The results contrast the few big “winners” of income splitting with the majority of families with children under 18 that would receive no benefit at all. “This study spells out clearly why the Conservatives’ income splitting scheme is a terrible idea. It would increase inequality and is skewed heavily toward a Mad Men-style family with a high-income earner and a stay-at-home spouse,” said Broadbent Institute Executive Director Rick Smith.

In addition to the scheme’s unequal distribution of benefits across families with partners in different income brackets, the benefits would also vary significantly by province
– Nine out of 10 Canadian households would receive no benefit at all.

– Under 2% of families in Canada with children under 18 would be eligible for the maximum benefit.

– Just 7.4% of families in Quebec with children under 18 would receive a benefit of $2,000 or more, compared to 22.8% in Alberta and 19.5% in Saskatchewan; nationally, only one in seven Canadian families with children under 18 (13.8%) would see such a benefit.

– 61.1% of Quebec families with children under 18 would see no benefit at all, compared to 44.1% in Alberta; nationally, 54.1% of all families that are the target of the scheme would receive no benefit at all.

“Income splitting fails the fairness test,” said Smith. “The $3 billion that income splitting would drain from federal coffers as a gift to the richest families would be better spent on programs targeting lower-income families, such as improved parental benefits under Employment Insurance, increased child tax credits, or enhancing access to quality child-care services.”

Loading Facebook Comments ...

Be first to comment

3 + 4 =