Taxes, Politics, and Governance

Does income splitting make sense?  Maybe, but not for everyone, and not always.

In Canada, the government is talking about a form of income splitting for families with a child under 18.  The maximum benefit is $2,000 per year.  The left is up in arms and some of the right, too.  The problem is one of perception.

The “cost” to the government is $2.2 billion.  I would quibble about the cost idea.  To call this a cost is to presuppose that the government has some a priori right to the money.  I suppose if they argue that they are entitled to all of our income then anything we  keep is a tax cost to them.  It would be interesting to know where they would put the dividing line as to what is theirs and what is not.

This proposal is just another bandage on a flawed system.  Taxation is supposed to provide money for the government to carry out needed and useful functions.  Once the mandate exceeds that, there are philosophical problems.  Substantive tax and spending reform is long overdue and this sort of thing just pushes it further into the future.

The political rhetoric is becoming insane.  Few of the pundits know what they are talking about and politicians in the know are fewer still.  Fair is a hard concept to quantify and it is even harder when you argue that as only 15% of families qualify for the benefit that somehow the others have a cost.

If the absence of benefit is a cost, then there are MANY other areas to discuss.  Who is addressing those?

I am sorry that we have devolved to the point where governments exist to provide political theater.  Maybe we could think about going back to governance for the betterment of the people instead of politics for the advantage of a few.

I am not optimistic about that change.

This cynical, Gore Vidal idea applies to a wider range of politicians than he talked about.

Enough of the cynic for today.

Contact: don@moneyfyi.com  

Don Shaughnessy is a retired partner in an international public accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario.