Family Tax Cuts: How Inclusive a Family?
Jonathan Rhys Kesselman, November 2014

This study undertakes a systematic assessment of the Family Tax Cut for income-splitting by couples proposed in the Conservative Party of Canada’s 2011 electoral platform.  The analysis confirms earlier assessments of the revenue costs and distributional tilt of the policy favouring high-income families.  The average income of families that would receive any benefit from the Family Tax Cut exceeds $123,000; and this remains the case for the modified scheme announced by the government after the completion of the study.


Fewer than 13 percent of all households would receive any benefit from the Family Tax Cut, and most of them would receive less than $1,000; those facts remain true for the modified scheme.  Moreover, while the revised Family Tax Cut continues to claim its original $50,000 limit on the income that can be split between spouses, the cap of $2,000 on annual benefits implies that the effective amount of income shift has been reduced to about $14,000.


The original Family Tax Cut is found to suffer from many deficiencies in addition to the revenue cost and distributional tilt: faulty implementation of the horizontal equity criterion; assuming that couples fully pool and share their incomes; ignoring scale economies enjoyed by couples; lack of conditionality on the at-home spouse’s activity; barriers to women’s working and associated economic inefficiency; marital and cohabitation biases; and violation of gender neutrality and individual autonomy.  While some of these are moderated by the reduced cap on splitting in the modified Family Tax Cut, none of the deficiencies is eliminated.


The study canvasses a range of alternative tax cuts and benefit hikes for families having the same revenue cost as the Family Tax Cut.  It assesses their distributional impacts and other attributes.  The study concludes that numerous policy options alternative to the Family Tax Cut could distribute the benefits more widely and effectively in support of a far more inclusive notion of Canadian families.

ISBN - 1-55382-632-9

View full document in PDF format.

Copies of our publications are also available, upon request, in Microsoft Word format. Please contact the Caledon Institute for information.


-The Canada Child Benefit Needs to be Fully Indexed to Inflation -The Social-Policy-Is-Back Budget -Designing a housing allowance program -Some Implications of the Liberal Government’s Tax Changes -Farewell, Wizard of Oz -Ottawa Must Get Serious about Poverty Reduction -Ensuring Real Accountability on First Nation Reserves -Welfare in Canada, 2014 -We Are All Disabled -Child Benefits in Canada: Politics Versus Policy -Tax credits: great politics, bad policy -Disability Supports: Missing on the Policy Radar -The 2015 Deficit-of-Ideas Budget -Is Canada (Still) a Fiscal Union?: Michael Mendelson -Architecture of Federal Income Security in Canada: Ken Battle -Social Policy Challenges for Canada: Sherri Torjman -In Canada, the new solitudes are East vs. West -Picture - Sherri Torjman -Canada’s English-French divide giving way to East-West economic split, scholar says -May 19, 2016: Michael Mendelson Addresses the Standing Senate Committee on Social Affairs, Science and Technology on changes to the Employment Insurance program in the 2016 federal Budget -Video - Data Rescue -Video - Sherri Torjman: Five Good Ideas about Policy -Video - Sherri Torjman: Canada@150 address -Video - Sherri Torjman: Shared Space & Community Recreation -

Architecture of Federal Income Security in Canada: Ken Battle

Included are three papers presented by the Caledon Institute staff at the 20th Anniversary Celebration held on October 10, 2012. A compilation of all the speakers papers and speeches are forthcoming.

More >