Main menu:

History of RPE Thought

Posts by Tag

RSS New from the CCPA

  • A critical look at BC’s new tax breaks and subsidies for LNG May 7, 2019
    The BC government has offered much more to the LNG industry than the previous government. Read the report by senior economist Marc Lee.  
    Canadian Centre for Policy Alternatives
  • The 2019 living wage for Metro Vancouver April 30, 2019
    The 2019 living wage for Metro Vancouver is $19.50/hour. This is the amount needed for a family of four with each of two parents working full-time at this hourly rate to pay for necessities, support the healthy development of their children, escape severe financial stress and participate in the social, civic and cultural lives of […]
    Canadian Centre for Policy Alternatives
  • Time to regulate gas prices in BC and stop industry gouging April 29, 2019
    Drivers in Metro Vancouver are reeling from record high gas prices, and many commentators are blaming taxes. But it’s not taxes causing pain at the pump — it’s industry gouging. Our latest research shows that gas prices have gone up by 55 cents per litre since 2016 — and the vast majority of that increase […]
    Canadian Centre for Policy Alternatives
  • CCPA welcomes Randy Robinson as new Ontario Director March 27, 2019
    The Canadian Centre for Policy Alternatives is pleased to announce the appointment of Randy Robinson as the new Director of our Ontario Office.  Randy’s areas of expertise include public sector finance, the gendered rise of precarious work, neoliberalism, and labour rights. He has extensive experience in communications and research, and has been engaged in Ontario’s […]
    Canadian Centre for Policy Alternatives
  • 2019 Federal Budget Analysis February 27, 2019
    Watch this space for response and analysis of the federal budget from CCPA staff and our Alternative Federal Budget partners. More information will be added as it is available. Commentary and Analysis  Aim high, spend low: Federal budget 2019 by David MacDonald (CCPA) Budget 2019 fiddles while climate crisis looms by Hadrian Mertins-Kirkwood (CCPA) Budget hints at priorities for upcoming […]
    Canadian Centre for Policy Alternatives
Progressive Bloggers


Recent Blog Posts

Posts by Author

Recent Blog Comments

The Progressive Economics Forum

Kesselman on Income Splitting

There has been so much discussion of income splitting on this blog that we already have two posts entitled “Income Splitting Redux.” Adding to the mix, the Institute for Research on Public Policy has released a major paper by Jon Kesselman on the subject. He cites my Ottawa Citizen op-ed among many other sources.

I have not fully read and digested Kesselman’s paper, which opposes labour income splitting, proposes investment income splitting, and suggests reforms to pension income splitting. On the whole, I think that Kesselman is to be commended for producing a thoughtful paper on complex and important issues. In rejecting splitting of the biggest component of personal income, he largely endorses the position that I and others on the left put forward a year ago.

However, I would tend to quibble with him on investment income splitting. His argument is that many wealthy couples already employ aggressive tax-planning to shift investment income to the lower-earning spouse. Overtly allowing such splitting would be fairer to all couples with investment income and reduce the resources devoted to tax planning. However, Kesselman concedes that this approach “likely would entail a net revenue cost for government.”

Existing tax avoidance is too often deployed as an argument for lower rates and looser rules. Instead, tax avoidance should prompt stronger compliance and enforcement provisions.

Kesselman’s call for even lighter taxation of investment income must be assessed in the broader context of a tax system in which the very rich recipients of such income no longer pay their fair share. Deep corporate tax cuts should allow for somewhat heavier taxation of investment income at the personal level.

A more progressive approach, which might help correct the tax system’s current inequity, is the Dutch/Danish model of taxing all of a couple’s investment income (perhaps above a given threshold) in the hands of the higher-earning spouse. However, as Kesselman convincingly demonstrates, there is no theoretically perfect solution to this thorny issue.

Enjoy and share:


Comment from Sara Landriault
Time: April 4, 2008, 5:22 am

I don’t think Kesselman should be commended for his paper due to the fact of his bias towards parents at home.
His analysis of the value of parents at home is a typical “old white guy” syndrom. He only values women if they are contributing financial aspects to the household.
I can tell you, being at home I do contribute financially to the household also keeping my children at home costs us money just as it does for daycares.
One example for you is our heat, it is on higher during the day because the kids are home. If I was at a paid job I could turn it down lower and save money because no one would be at home.
That is just one example, there are many more.

Write a comment

Related articles