Friday, February 26, 1999Tax system weakens families: think-tank
Marriage undermined: C.D. Howe Institute says no-fault divorce increases poverty
Jonathon Gatehouse and Alan Toulin
Canadian social and tax policy reforms have created more societal ills than they have solved because marriage has been devalued and middle-income earners fiscally punished for having children, concludes a new book published by the C.D. Howe Institute.
It Takes Two, a collection of six essays by Canadian and American academics released yesterday by the independent think-tank, links changes in public law and finance to growing poverty for women and children, and argues that one of the best ways to improve the overall quality of life in Canada would be to put all families back on an equal tax footing.
"Canada's income tax system is inequitable and inefficient in its treatment of families with children," write Douglas W. Allen and John Richards, editors of and co-contributors to the book.
The trend in recent years to target tax reductions on very poor families, coupled with an aggressive "clawing back" of social transfers such as child benefits and GST credits from almost everyone else, has created serious imbalances in the system, say the authors.
Middle-income families earning between $30,000 and $60,000 a year now pay, proportionally, some of the highest taxes. At the same time, single-income families pay even more, because they are generally unable to take full advantage of credits for child care.
The discriminatory tax structure is seriously undermining the traditional family, the editors argue, comparing its negative impact on families to the explosion in divorce rates over the past 30 years.
One of the solutions, advanced by Kenneth Boessenkool, an advisor to the Alberta Treasury Branch, and John Richards, a former Saskatchewan NDP MLA, is to make the Canada Child Tax Benefit universally available. While Paul Martin reduced the clawback of the CCTB for low- and modest-income earners in last week's federal budget, he didn't go far enough, they say. As it stands now, families earning less than $26,000 a year receive an average of $1,229 per child, while families earning more than $79,000 get nothing.
"We've let social policy take a run at the tax system," Mr. Boessenkool said in an interview yesterday. "People who have children ought to have some recognition in the tax code."
Though a return to universal child credits would cost the federal government an estimated $6-billion a year, it would send a powerful message that all families are equally valued and should be considered as a "social policy initiative intended to recognize more adequately the costs incurred by parents in raising children well," writes Mr. Richards.
The book also takes aim at a number of social policy innovations and movements that it says have seriously undermined what it terms history's most efficient and effective "organization for procreation and social structure" -- marriage.
In a provocative essay, Mr. Allen, an associate professor of economics at Simon Fraser University, takes on Canada's divorce laws, arguing that the introduction of "no-fault" marriage dissolutions in 1968 has exacted a heavy toll.
"One would be hard pressed to find another example of a single piece of legislation that has had as much impact on families as the introduction of no-fault divorce. It has increase the divorce rate in a way that has left many in poverty, both emotionally and financially," he writes.
Decrying the popular reform as an "invisible cancer" that has created a lost generation of socially and economically disadvantaged children, Mr. Allen concludes that the only way to right the situation is to return a system where divorces can only be granted by mutual consent.
"If you look at anything -- high-school dropout, birth-out-of-wedlock, criminal behaviour, you name it -- you can multiply by two if the person is from a divorced family," Mr. Allen said in an interview.
The consequence of maintaining the current divorce laws are continuing increases in the number of children and women living in poverty, said Mr. Allen. It is invariably the case that a family - husband and wife -- is worse off economically after a divorce, he said.
"The law used to treat marriage as an institution where it recognized there are interests of a number of parties - children, extended family, the community, the state, and, at one time, the Church," Mr. Allen said.
"Now, marriage law has become just a private contract that can be dissolved at the will of either party."
Another essay concludes that the current movement to recognize same-sex unions will only end up "lower(ing) the respect afforded heterosexual marriages, which need more, not less, support."
The C.D. Howe Institute
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