To Ezra’s and Lian’s friends,
From time to time, I always have well-meaning people express their hope that Ezra’s and Lian’s parents will get back together. Yet, the government subsidizes me $10,941 every year to stay divorced.
My 2014 salary was CDN$122,983.76. So if I was simply single with two kids, after basic deductions, I would pay 43.41% or $29,310 in federal and provincial income taxes. However, I also pay $26,400 a year in spousal support payments. So that drops my tax burden down to $18,369; a difference of $10,941. If I was to re-marry Ruth, claiming the spousal tax credit would mean I would pay $24,475. So depending upon how you want to look at it, thanks to you Canadian taxpayer, you are subsidizing my divorce every YEAR between $6106 and $10,941.
Of course, the higher the income and the bigger the support payment, the bigger the subsidy. Wealthy divorcees are the biggest beneficiaries of this system. Poor working class singles or wealthy married are all involved in the massive transfer of wealth every year to people like me. If I was making $180,000 per year and paying $40,000 per year in spousal support payments, that would save me upwards of $19,031 a year in income tax. http://www.ey.com/CA/en/Services/Tax/Tax-Calculators-2015-Personal-Tax
Of course, I believe in crazy things like, “If you subsidize it, you get more of it. If you tax it, you get less of it.” A divorce rate over 50% is the logical outcome of Canada’s income tax system. Why any politician would make this public policy choice is beyond me. There are few things in Canada that can compete with divorce for the economic and societal damage it causes. Why we would want more of it, beats me.
So for the first time, a government took a small step towards fairness. For the 2014 tax year, parents with at least one child under the age of 18 can effectively shift up to $50,000 of taxable income from the higher-earning spouse or common-law partner to the lower-earning one. The maximum credit is capped at $2,000. That is married couples with at least one child under 18 could income split; just like divorced couples do now.
The local NDP candidate was at my door this evening. She gave me her campaign flyer. In it, she writes, Prime Minister “Stephen Harper is giving $2 billion a year in tax breaks to Canada’s wealthiest families through income splitting.” What she doesn’t mention is that many billions of dollars more goes to wealthy divorced couples under NDP and Liberal tax plans. Whatever the top marginal tax rate; regardless of the the child benefit package; unless you offer income splitting to married couples or remove the income tax deduction for spousal support payments, divorced people like me will continue to make out like bandits.
This divorce subsidy is so large, that IF (big IF) Ruth and I were to ever re-marry, we would have to do it outside Canada (like before) and never tell the Canada Revenue Agency that we got married. That is the perverse and very large incentive that the NDP and Liberals want to continue. I’m sure there are couples out there who have “divorced” simply for the tax benefits.
So vote however you wish. You in turn, feel free to wish me to re-marry. All I ask is that, you don’t tell how much you hope Ruth and I will get back together AND then tell how me how you voted to penalize me $2000 every year if we ever did get back together.
All the best, happy voting.