Two out of three families targeted by the federal government’s income-splitting plan would receive less than $500, while less than 4% of such families—some of the wealthiest in Canada—would be eligible for a benefit in excess of $5,000, according to a study.
The Broadbent Institute report, The Big Split: Income Splitting’s Unequal Distribution of Benefits Across Canada, says the plan would increase inequality and is skewed heavily toward a family with a high-income earner and a stay-at-home spouse.
In addition to the scheme’s unequal distribution of benefits across families with partners in different income brackets, the benefits would also vary significantly by province:
- nine out of 10 Canadian households would receive no benefit at all;
- under 2% of families in Canada with children under 18 would be eligible for the maximum benefit;
- just 7.4% of families in Quebec with children under 18 would receive a benefit of $2,000 or more, compared with 22.8% in Alberta and 19.5% in Saskatchewan; nationally, only one in seven Canadian families with children under 18 (13.8%) would see such a benefit; and
- 61.1% of Quebec families with children under 18 would see no benefit at all, compared with 44.1% in Alberta; nationally, 54.1% of all families that are the target of the scheme would receive no benefit at all.
“Income splitting fails the fairness test,” says Broadbent Institute Executive director Rick Smith. “The $3 billion that income splitting would drain from federal coffers as a gift to the richest families would be better spent on programs targeting lower-income families, such as improved parental benefits under Employment Insurance, increased child tax credits, or enhancing access to quality child-care services.”
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