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Thursday, January 30, 2014

Income splitting - More smoke and mirrors from the Harper Regime

Most families have little to gain from income-splitting, says think-tank

OTTAWA - A new report maintains that some 86 per cent of Canadian families will find nothing to be gained from the Conservative government's long-promised plan to allow some of them to split their income for tax purposes.
The Canadian Centre for Policy Alternatives says it looked at the potential impact of income splitting in three scenarios: on pensions, for those families with children under 18 and for all families across the board.

The left-leaning think tank says the impact in all three cases is very unequal, while the cost to Canadian governments would be substantial.

Senior economist David Macdonald says income-splitting for families with minor children would cost Ottawa $3 billion in lost revenue and another $1.9 billion provincially.

Macdonald says it wouldn't help the middle class either, since the top third of Canada's richest families would receive $3 of every $4 spent on income splitting.

Macdonald says seven out of ten senior families get no benefit at all from pension income splitting, while the richest 10 per cent of senior families receive more than the bottom 70 per cent combined.

"Income splitting creates a tax loophole big enough to drive a Rolls Royce through," Macdonald says in a statement. "It's pitched as a program for the middle class but in reality it's an expensive tax gift for the rich."

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