Income Splitting: Why Not?

I have been traditionally opposed to tax breaks for families and couples.  My rationale was that an equivalent amount of income should always be taxed the same, whatever the circumstances of the person, because it represented a fair tax for the equivalent amount of work done.

However, mulling over ACT's proposed $10K tax free threshold has caused me to adjust my thinking.  If a man is earning money, not just for himself, but for a dependent wife and two young children, why is his income not assessed as supporting four people instead of one?  He is not just working for himself, but for three others.  With a creative accountant, you could wangle this anyway by making them "employees".  So why not make it official?

This would mean that a man providing for such a family could earn $40k tax free instead of just the first ten.  He could earn $152k and still only be taxed at 19.5c/$ for anything above that $40k.  That would make a huge difference to a family, and would compensate for any reduction in the ghastly Welfare For Families scheme.

I would love to see ACT formalise this consequence of their policy.  Nobody ever lost votes by arguing a policy was good for families.

Comments

[mawm]

There is an inherent unfairness in your proposition - a man with 2 kids is using more of the infrastructure, getting more subsidisation for things like schooling and public transport than, say for instance, a single guy. This translates into the person who chooses not to have a large family, or even no family, to subsidise other people's choices.

[Blair]

That's why we should work towards eliminating income tax altogether!

[Harbinger]

Yes, please help eliminate income taxes altogether by supporting the Fair Tax.

Go to fairtax.org and read research the Fair Tax before you listen to any of the critics or they'll appeal to your ignorance.

[Cactus Kate]

Blair

I am all for income splitting but as I said it should be applied in an equitable manner.

single people should be able to split their current income between all the unrelated bludgers currently bludging off their tax at present.

[Mum of Eight]

"single people should be able to split their current income between all the unrelated bludgers currently bludging off their tax at present."
That sounds great, if you want to take someone into your home, clothe and feed them, provide for them , and they receive no income from any other source, then of course you should be able to income split with them ;-)

It is only the wage and salary earners that can not split their income based on division of labour.

"a man with 2 kids is using more of the infrastructure, getting more subsidisation for things like schooling and public transport than, say for instance, a single guy. This translates into the person who chooses not to have a large family, or even no family, to subsidise other people's choices."

What if I homeschool my 8 children and we don't use public transport...
Just get rid of all subsidisation except private, voluntary ones.
Regards
Mum of 8