Why Canada should adopt the family as the basic taxing unit instead of the individual
Canada’s top-end personal income tax rates are too high and they must come down, but there are many other tools that governments have to tax you in ways that chip away at your ability to minimize taxation.
For example, eliminating indexation on personal credits and/or tax rate brackets — as some provinces have historically done — is an easy and effective way to increase tax revenues and taxation burdens on people since inflation continues to increase, but your ability to shelter taxation from such increases does not when indexation is suspended.
Another way is to force you and your spouse/common-law partner to combine your income for purposes of eligibility of certain credits — such as GST credits — but force you to report your income and pay the resulting tax separately from your partner.
Such separate filings have the effect — especially if one spouse has a much lower income than the other — of increasing overall family taxation burdens since graduated taxation rates are not available on a combined family income basis.
Yes, there are some limited exceptions to shift income (commonly referred to as income splitting) to another spouse/common-law partner (such as pension-income splitting, paying reasonable salaries to family members from a business and other limited abilities), and in some cases — if your partner’s income is very low — you can claim a small credit for them, but, overall, it is almost non-existent.
In 1966, the Royal Commission on Taxation — the first and only time Canada has ever had a complete and comprehensive review of its taxation system — stated the following in chapter 10 of its report:
“Taxation of the individual in almost total disregard for his inevitably close financial and economic ties with
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