Income Splitting from the Greens?

By Harold Jansen on Sep 18, 2008

Green leader Elizabeth May unveiled her party's platform yesterday and besides the expected range of environmental policies, there is a promise to bring in income-splitting. For those happy people who don't follow the nuances of tax policy, income-splitting would allow families to pool their income and report it jointly for tax purposes. If a person makes more than her spouse, she could transfer that money over to him, where it would be taxed at a lower rate. This would mean significant tax savings, expecially for families where one person does not earn any income.

That this is now on the table for debate is not a surprise; what's a bit odd is that it is not the Conservatives who are proposing it, but the Green party. This would seem to be more in keeping with conservative ideas in that it seems to support a more traditional family unit, where one parent stays home (such as in the "beer and popcorn" money that parents received as a result of the party's 2006 election promise). The Conservatives have already introduced this in a limited form for seniors, a policy which was brought in to mollify them after the decision to tax income trusts. It constitutes one of those great Big Ideas that appeals to middle and upper middle class families that are one of the bedrocks of Conservative support.

So why aren't the Conservatives behind it? Well, it would be a huge hit to the federal treasury. And the Conservatives have already eaten into a lot of federal revenue by their cuts to the GST. In fact, the way the Green party is proposing to pay for this is through a carbon tax (anathema to this government) and by bringing the GST back to 6% from 5%. Or, flipped around, a carbon tax and a GST increase allows the Greens to do this. But, whichever way you see it, without tax increases elsewhere, it just isn't going to happen. Because of past fiscal decisions, the Conservatives don't have room to do this.

It puts the Green party in an interesting position: this is a party that sees itself as socially progressive, but it's now espousing something that would be seen as small-c conservative by many analysts. This will confirm the suspicions of NDPers who are suspicious of the Greens' progressive credentials, but it will buttress the arguments of Green supporters who argue that their party is something different, something that transcends older left-right debates. In any case, it brings an important policy debate to the table.

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So who's the true conservative?

Thanks, Dr. J. for this piece. It makes you wonder what us social conservatives are supposed to do. Do we support a party like the Greens that is proposing a very socially conservative form of taxation yet in other ways is quite liberal, or do we support a party like that Conservatives that is comparatively socially conservative yet with their taxation is socially liberal? Voting in an election is never an easy choice.

Income Splitting

I too was surprised to hear that the Greens were proposing income splitting. While I knew that they were pro-business fiscal conservatives, I didn't realize that they were going down this socially conservative road. Having said that, my wife and I are in favour of income splitting because it works out better with our income.

But then again, we paid more taxes under the Tories than the Libs.

kgp

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