Andrea Mrozek

Andrea Mrozek

July 7, 2014

OTTAWA – Income splitting is not a tax break for the rich, but a "policy to correct an inequity in the current tax system that treats households with similar income differently," says the head of the Institute of Marriage and Family Canada (IMFC).

"Critics don't like it because it means less tax income for government and more income for families," Andrea Mrozek writes in an IMFC report debunking myths about income splitting as a method of tax relief.

Mrozek said income splitting would rectify an existing inequality in the tax system, rather than create a new one.

Her think tank, which is devoted to policy research on marriage and family, pointed out income splitting – allowing a higher-income earner to share income with a non-working or lower-income spouse thus qualifying for a lower tax bracket – is not new, and that it was once Liberal policy.

At present, two-earner families that earn the same as a single earner family pay substantially less in taxes, in some cases as much as $4,000 a year.


Income splitting became a hot issue when the federal budget was introduced this year because the Conservatives had promised this form of tax relief for families once the federal budget is balanced.

The IMFC noted the late Finance Minister Jim Flaherty "voiced doubts" about the policy, though other cabinet ministers and the prime minister eventually upheld the promise. "What followed was a smear campaign of the policy, led by a rather odd alliance of political and interest groups."

The IMFC released its study, Busting Income Splitting Myths, with contributions from several authors, on June 25.

Among the myths the IMFC challenged are: Canadians don't want it because it doesn't help many families, it offers no real tax savings, it "denigrates" women and removes the choice to work, it fails to help the poor and it would pull people out of the workforce.

A 2014 Abacus poll showed 57 per cent of Canadians support income splitting, the IMFC reported. The breakdown along party lines: Conservatives 65 per cent, Liberals 54 per cent and NDP 55 per cent.

Income splitting will help 46 per cent of Canadian families with children under 18, the think tank said, noting Canadians support it even if they personally do not believe they will benefit from it.

Opposition to income splitting comes mainly from two groups that are otherwise in opposition and on the right and the left: corporate interests wanting an available workforce and feminists, many of whom see work in the home raising children as "oppressive," wrote Paul Malvern.

The roots of this debate go back to that of a "family wage," the income level needed to support a family, he said.

Mrozek wrote that some feminists see the tax savings as a bribe to women to stay at home rather than participate in the workforce. "Lower taxes mean more money in a family's pocket," she wrote. "More money means greater freedom."

"The tax code should not influence parenting choices by taxing families with the same income differently, as it does now," she said. "This discrimination against single-earner families in Canada's tax code must end."

Lawrence Solomon wrote poor households are "overwhelmingly dominated by the unmarried" yet tax policies can in some instances discourage people from getting married.


"Because incentives do matter, many of those now involuntarily stuck in that single household demographic would migrate to married status and then – as research has shown – would, through marriage, have the moorings that lead to future prosperity."

Many critics of the policy support institutionalized daycare instead of tax breaks for family, Mrozek wrote. She called the idea of a national daycare system a form of "soft paternalism" that "takes money away from parents and then proceeds to tell them how to care for their kids."

An "animus against caregivers of all kinds" underlies some opposition to income splitting, she wrote. "People who work less outside the home in order to care for either children or aging parents deserve recognition and support.

"Taking the value of caring for others and trashing it as irrelevant or only for certain families deemed 'traditional' ought to be recognized as the mean-spirited discrimination that it is."