In an attempt to appease upset investors, the government said it will increase the seniors tax credit and allow income splitting. “Pension income splitting is a major positive change in tax policy for pensioners and seniors,” Flaherty told the committee.
Lobbyists suggest the signals are strong that the minority government could muster enough support for pension-splitting plan. But getting it passed may be complicated because it is likely to be treated as part of a package of measures that includes its controversial plan to phase out tax breaks for income trusts.
Sara Landriault, national coordinator of Care of the Child Coalition, says spouses who care for children at home, the vast majority being women, should be paid through the tax system for their work.
She acknowledges a sobering fact a sobering fact Turner himself discovered in a research paper he commissioned from the Library of Parliament. Though he calls the income-splitting scheme a tax reform for the middle class, the library document shows it is actually the upper - maybe upper-upper - classes that would benefit most.
"Sure, they pay more taxes, they're going to get more of it back," says Landriault.
And that doesn't even take into account lone-parent families, the majority of whom are headed by a woman and many of whom live below the poverty line, says Martha Friendly, one of Landriault's staunchest opponents and co-ordinator of the Childcare Resource and Research Unit at the University of Toronto.
"Low-income single mothers, they don't get anything out of this," says Friendly, noting with apprehension that Turner's own research shows the move would take $5 billion out of federal revenues when it's combined with income-splitting for pensioners. "It's cutting taxes for people who have more money."
But John Williamson of the Canadian Taxpayers Federation stresses that higher-income couples shoulder a disproportionate share of the tax burden.The weight is especially heavy for single-earner families.
Well duh they earn more they should pay more taxes. But of course that's the right wings definition of class warfare, taxing the rich. Because only those who are wealthy can afford to have an unemployed spouse living at home.
You may have heard the recent news from the Census Bureau that as of 2005, and for the first time in recorded history, more than half of all adult women are living without a spouse. There are plenty of implications that arise from this latest finding, but as the New York Times points out, contrary to popular perception, this so-called “marriage gap” isn’t about gender, but instead, it’s about education and social class -- women with lower socioeconomic attainment are less likely to marry than women with higher socioeconomic attainment.
And to add insult to injury the folks who will benefit the most from income splitting of pensions will not be widows, the largest group of single pensioners in Canada and the poorest, or the average working class family but those who can afford to retire early or retire and continue working.
Income-splitting is a vote-getter that would save middle-class families billions of dollars a year in taxes, but experts say that doesn't make it sound fiscal policy. MPs inside and outside the Conservative party are urging Prime Minister Stephen Harper to lower taxes in his upcoming budget by allowing couples to combine their incomes and divide the tax load. Some experts are saying the cost of income-splitting -- anywhere from $3 billion to $5 billion a year -- could blow a hole in the nation's finances.
Tax fairness is rhetoric for tax breaks for the rich and wealthy in Canada.
Contrary to what the spin masters would have us believe, not all pensioners are opposed to the government's decision to tax trusts. The National Pensioners & Senior Citizens Federation, which speaks on Thursday, supports Flaherty's decision. Its 450 chapters and clubs represent a million seniors and pensioners, including the 300,000 members of the United Senior Citizens of Ontario.Even before the Halloween decision came down, the NPSCF was concerned about "income trusts being sold to seniors on the basis of cash yields that are inaccurate, inflated and misleading."
What the Liberals should have done and didn't and what the Conservatives promised not to do, but did, affected investors, sure, but only a small number of well off seniors. Canadian seniors who have been screwed by Income Trusts should remember the financial term used for these kinds of investment; high risk.
This is not the same kind of rip off seniors in Alberta faced under the Tories in Alberta in the eighties (during the last big boom) when Dial Mortgage Abacus-Cities and Principal Trust collapsed. Those were avoidable and had been backed by the Alberta Treasury Branch as well as the Government. Yet when they collapsed seniors were left holding the bag.
