Income splitting is not about taxes; it’s about rights

Daniel Miller is a Physiatrist (Physical Medicine and Rehabilitation) in Lethbridge, Alberta

 

Income splitting has come under attack by the current Federal Liberal Government as an unfair tax advantage for certain individuals and several proposals put forward to eliminate certain “tax loop holes” may have a further reaching impact that revenue generation and impact our charter rights. We shouldn’t be discussing tax loop holes, but rather the effects of income splitting being a charter right for all Canadians. While I use the term marriage specifically, I would also include civil union and common-law partners to whom the same legal rights apply.

I recently met with my accountant to review the financial details of my medical practice. He told me and my wife that we would no longer be able to income split due to the proposed changes in Federal taxation legislation. My wife is my business partner, my office manager, fill-in receptionist, in addition to being my wife and mother of our 6 children. We are connected in everything. We have been married for more than 16 years, and she has been with me through all my training, which was all of our marriage to date. She has been raising our children, supporting me in my training, and is now my support as I practice medicine. I was told, she could be paid a "reasonable salary". I asked myself what is a reasonable salary for this person? What is she worth? The small sum recommended did not seem sufficient . So, what is my wife worth if she is my partner in life? The only salary I think reasonable is the same as my own.

The Civil Marriage Act (2005) defines marriage as “the lawful union of two persons to the exclusion of all others.” I would suggest that this should further extend to all aspects of their life including taxation. That is the nature of the relationship. If one spouse has property the other spouse has the same legal rights to said property. Consider the statutes and regulations regarding marital property. try to divide assets, properties, income or liabilities attributed to the union equally while maintaining the financial viability of both parties and their individual self sufficiency (according to The Divorce Act, Property Division and Debts, accessed September 10, 2017). If one spouse was a stay at home parent, that individual is entitled to 50% of the income of the other spouse, less child support. In divorce settlements where spousal support is to be paid by one spouse to the other, current taxation rules have spousal support deducted from the payor’s taxable income, while being declared as income by the payee. If you look at this for what it is, I believe it's clear that fundamentally this is income splitting. And so, if you are required to split your income formally after a marriage is dissolved, why are you not allowed to split your income while you are married? Isn’t this a discriminatory application of taxation law against all married individuals and therefore a violation of our Charter rights?

As a specialist in Physical Medicine and Rehabilitation, I often see patients faced with the financial consequences of disability and witness the impact of disabilities on families. I am also keenly aware of the severe dichotomy between care of individuals dependent on general governmental supports where available compared with those with private insurance. I recently had a lovely woman in my clinic with a diagnosed condition that leads to progressive disability. She is ineligible to obtain disability insurance because she is a stay at home mom with no definable income. One of my preceptors would often ask "What is the most important factor in someone going home after a stroke?" His answer, "Whether they had a wife - not a husband, but a wife". I can not emphasize enough how true this is. The primary income provider may have disability insurance to provide an income for the family while recovery is ongoing and if needed indefinitely. If the primary domestic care provider is affected, however, there is no way for any family to augment their current situation with additional in-house care supports for the children of the family because without the person has no definable income and therefore no disability insurance. Too often the disabled spouse will have to leave the family home to reside in an assisted care facility. I have seen the fear in the faces of mothers who have suffered a stroke during pregnancy as their husbands go back to work and they are left struggling to care for their young infant alone with limited supports. I think you will see that the opportunity to obtain disability insurance is essential in maintaining the security of the person guaranteed in our Charter of Rights and Freedoms.

How many domestic partners, mainly women, have foregone working or are only working part time and have foregone contributing directly to the Canadian Pension Plan in favour of raising children, yet volunteer substantially in the community and benefit society in many other valuable ways? Income splitting places a real and meaningful valuation of their efforts.

I can’t help but think about the impact income splitting would have for dependent partners in an abusive relationship, who stay because they feel they lack the financial resources to leave? How many women have been made to feel subservient to men because they lack a definable income? Income splitting negates this attitude, places real and meaningful value on the role women or primary domestic partners in the family society. Having years of defined income also allows women/domestic partners opportunity to obtain financial support immediately if they do need to leave the relationship for whatever reason. I think that universal income splitting may be the biggest policy change towards the equalization of the genders since the Suffrage movement and finally place men and women at equal positions financially.

Income splitting is not just about one individual paying more tax than another, it’s about equal rights for all who contribute to society. It’s about marriage rights and equality. It’s about empowering women and domestic partners to protect themselves from the very real dangers of disability and victimization. Income splitting shouldn’t be eliminated. Rather it should be extended to all Canadians.

And so, I ask the Honourable Prime Minister, Leader of the Liberal Party of Canada, a party reported to champion civil rights and equality, why are you eliminating a policy which advances equality, could mitigate the costs of severe disability and financial discrimination, and benefit all Canadian families? Why would you not extend this to all Canadians? Why do you support policies that discriminate against us?