Friday, February 26, 1999Family-friendly taxes
The speed with which the phrase "family values" became a term of sarcastic derision among politicians and policy-makers tells us more about politicians than about families. Far from vanishing quietly into the sunset of inevitable social change, the traditional family is in fact fighting hard to stay intact in the face of official hostility.
This is the conclusion of a collection of essays, It Takes Two: The Family in Law and Finance, edited by John Richards and Douglas Allen, and released yesterday by the C.D. Howe Institute. The authors concede that the family is in a worse state today than 30 years ago: "The percentage of children who live in poverty is as high now as in the 1970s. The number of single-parent families and the number of children living in such families has roughly doubled over the past two decades."
These failures, however, are the result not of powerful social trends before which government is helpless -- the self-serving explanation of too many public servants -- but of a "progressive" Canadian income tax and welfare system that treats families with children badly and encourages dependency.
In recent years, tax benefits have been targeted toward very poor families and those with two earners. As a result, middle-income, single-earner families with children are now taxed as heavily as families without children. And as earnings of low-income parents increase from $21,000 to $29,000, they pay $1,700 more in taxes than other taxpayers with the same incomes, as their targeted benefits are clawed back.
Other official policies -- notably no-fault divorce -- also undermine families. But it is within the power of government to reform tax and welfare speedily -- especially given Paul Martin's famous surpluses.
Now is the time to give families a break by cutting their taxes and providing a universal child care credit available to parents working inside or outside the home. Another step would be to introduce a joint tax return, so that single-earner households stop paying more tax than double-earner households on the same income.
A pro-family policy might even be popular. Almost everyone has a family -- even members of non-traditional ones.
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