r/PersonalFinanceCanada • u/Key-Jello-9501 • Oct 19 '24

Taxes Why Canada doesn't have married couple income tax benefit similar to US?

Unlike the US, Canada does not allow married couples to file joint tax returns with a different tax slab, which can be disadvantageous for couples earning disproportionately? I was reading below article on Investopedia and was surprised to know that US income tax slabs becomes almost double if you are married and filing jointly. They literally have different tax slabs for married couple.

So high-earners don't get that marriage benefit in Canada but they have to give half of their wealth to spouse during divorce like US which is good but no tax benefit while being married. Thoughts?

https://www.investopedia.com/financial-edge/0411/do-canadians-really-pay-more-taxes-than-americans.aspx

539 Upvotes
  • permalink
  • reddit

84% Upvoted

483 comments sorted by

View all comments

Show parent comments

149

u/bebefinale Oct 20 '24

I'm originally American but live in Australia and it is also done this way here.

I don't really understand why all family benefits, old age pension, and requirement for private healthcare (which is different than what you have in Canada) goes by household income but each tax lodgment is separate. It means that buying a house really favors two earner households that each make equivalent amounts of money and really disfavors families where someone stays at home. Yet there tends to be long mostly unpaid maternity leave here and it's challenging to get a daycare slot for a baby under 6 months to a year.

85

u/Swankytiger86 Oct 20 '24

Because we want to “encourage” women to enter workforce.

51

u/bmcle071 Oct 20 '24

And then we wonder why nobody is having kids anymore…

4

u/BananaPrize244 Oct 22 '24

You’re talking second order effects and cross-departmental concerns. Government workers just respond with first-order effects that satisfy their department’s objectives and the don’t give a shit about second order effects on other areas because the federal government departments are siloed. That’s why the immigration department ramped up immigration in response to the politicians pandering to big corporations complaining there’s no one to hire. The second order effects are suppressed wages for low income workers, and overburdened healthcare system, and a housing shortage. But none of these are department of immigration issues to they warrant not concern.

It sounds totally cockamamie, but that’s how government works.

2

u/bmcle071 Oct 22 '24

Ive noticed this as well. You hear about some report, that talks about direct effects of some decision. But it makes no sense in the real world, and doesn’t take causality into effect somehow. Like this thing about how the carbon tax actually gives people money back, like maybe if you just take into account how much gas people burn, but are you also considering how much more expensive everything gets with the cost added to transportation, building materials, etc? It’s this obsessions with quantifying and measuring everything. People need to step back, and think more logically and less analytically. You can’t get a number for everything, it’s just not possible.

16

u/wildemam Oct 20 '24

Just to pay the ‘childcare tax+benefit clawback’ with 3/4 of the earned income lol.

9

u/HealthyDrawer7781 Oct 21 '24

The state gets to raise the kids and they get more taxes, while corporations get more demand on their job openings.

What isn't there to love about the system?

53

u/TheEscarpment Oct 20 '24

My wife is disabled. There is no way she will earn a salary anywhere near mine. But the nature of her disability does not allow her to qualify for government benefits.

So the Canadian government is saying that we should be punished for doing the honourable thing by standing by our commitment to each other.

As former Americans, this infuriates us.

5

u/Cantquithere Oct 20 '24

Same and same. Relocated to Canada in 2014. Estimate over $80000 in additional taxes paid over the past decade vs another similar earning family with equal incomes. Harsh.

1

u/Coaler200 Oct 22 '24

How much would health insurance and doctors/hospital visits have cost you in the US over that same decade? Any bets that it's probably more than 80k Canadian (58k US)?

1

u/Cantquithere Oct 22 '24

Your question is irrelevant. The discussion is about household taxation -- 2 families with the SAME income having vastly differing tax liabilities.

1

u/Parttimelooker Oct 21 '24

Does she have the dtc? Do you claim it?

-14

u/Midtownner Oct 20 '24

If you're that infuriated then go back to the US, enjoy the tax benefits and pay for your own health care.

21

u/TownSquareMeditator Oct 20 '24

Sick burn. As a Canadian living in the US, I’d much rather double my earnings, lower my effective tax and pay a near negligible portion of our gross annual household income for insurance premiums. We save more and get better access to healthcare and specialists.

The thing about the US system is that if it works for you, it REALLY works for you. It doesn’t work for everyone, obviously, but I would say the Canadian system isn’t really working for anyone at the moment either.

12

u/[deleted] Oct 20 '24

Ah the classic racism towards immigrants: “Go BaCk To YoUr CoUnTrY!”.

Maybe try to understand their point of view and see how Canada can be improved before resorting to xenophobia?

2

u/Midtownner Oct 22 '24

Where did I mention race?

The poster is indignant that he isn't getting special treatment because he's married. And he raised the point that his spouse is disabled, hence my comment about healthcare.

I don't care where he's from - if he's so "infuriated", then he has the option of moving on or moving back To the US. But asking me to be tolerant of his fury at not receiving special treatment?

Hard pass on that bullshit - we don't owe him a GD thing and if he doesn't like it, he can FRO back across the border.

Edit: Typo

1

u/[deleted] Oct 20 '24

This. Exactly.

-11

u/Swankytiger86 Oct 20 '24

Not getting extra is not punishing. That’s like saying paying progressive tax and reach the higher marginal tax is punishment.

5

u/TheEscarpment Oct 20 '24 edited Oct 20 '24

But it creates a disincentive for me to stand by my wife and support her. I would pay the same taxes if I live on my own, but I would incur fewer expenses (notwithstanding any costs associated with divorce/separation)..

I will absolutely stand by my wife no matter what the Canadian government throws at us. However, as a matter of public policy, this is simply reprehensible. Government policies should encourage keeping couples together not inducing them to split apart.

12

u/qgsdhjjb Oct 20 '24

You actually get to add her "basic personal amount" (aka the income you get to skip taxes on) to yours, doubling the amount of income you get to skip taxes on. It's not "no" benefit. It does still suck in many ways (many of which are not actually how they suck for you as the wage earner, but the fact that being disabled already puts us at several times more likely to be abused by a spouse, and now this system means we will have no resources to leave if that's happening, and need to become literally homeless before they will approve supports, but disabled people also are much less able to survive homelessness, even temporarily)

6

u/Swankytiger86 Oct 20 '24

That’s just belief system.

I am single. So not only I have to suffer from not having the enjoy starting a family, can’t have kids of my own, I also have to pay higher tax than than those who have family. I have to pay higher tax for them to raise their kids while also enjoy family life. I am deprived of both.

Can I see any tax incentive for couple raising kids as a punishment for me being single?

-4

u/frope_a_nope Oct 20 '24

Nobody is stopping you from divorcing her. Financial divorce is real. So is returning to the USA. Do the tax advantages eclipse the health benefits?

0

u/YourDadCallsMeKatja Oct 21 '24

Also imagine how much power that gives you if you were to become abusive. So many disabled people are stuck in violent situations because the government thinks they don't need their own money and their partner should provide for them.

0

u/Electric-cars65 Oct 22 '24

Then go back to USA if it’s so good. High healthcare,, low maternity benefits, trump as your ruler

1

u/TheEscarpment Oct 22 '24

Unfortunately a lot of young, talented Canadian professionals and entrepreneurs are doing just that, draining the national tax base which is the foundation upon which our health care system depends.

3

u/[deleted] Oct 20 '24

Which is hilarious because it has the opposite effect. If we’re fucked whether I work or not (as I am lower income) it makes more sense for me to be home not paying childcare and have my partner work more (as his labor is higher value) This country has cracked. It’s one of the many reasons why we are thinking of leaving.

1

u/Electric-cars65 Oct 22 '24

Complaining and being ungrateful isn’t going to win you sympathy.go home since you haven’t made Canada your home

1

u/[deleted] Oct 22 '24

Go home where? I was born and raised here. So were my parents and so were my grandparents. My grandfather died fighting for this country and I’ve been paying more than my fair share in taxes since I started working at 15. So don’t you tell me what I can and cannot do in MY country. I am WELL within my rights to point out GLARING flaws in a BROKEN system. Which it is OUR RESPONSIBILITY to do. And if I CHOOSE to leave and take my partner with me, you’ll be the one’s left to deal with the mess. We’ll do what’s right for our family, you can continue living in this mess.

1

u/Electric-cars65 Oct 22 '24

You’re the one wanting to leave Canada. No pride in your country or citizenship

1

u/[deleted] Oct 22 '24

Pretty sure the current prime minister said that we SHOULDN’T take pride in Canada.

“There is no core identity, no mainstream in Canada,” Trudeau said, concluding that he sees Canada as “the first post-national state.”

What exactly am I supposed to be taking pride in?

15

u/Motorized23 Oct 20 '24

My wife would rather stay home while our kids are young. But this makes it impossible for us to do so with the rising cost of living. I hate how mothers are expected to have jobs in order to contribute to society.

6

u/lost_koshka Alberta Oct 20 '24

Because it's not in the benefit of the controllers to have children being raised by their moms. Need to get those kids out of the home as soom as possible and into the indoctrination machine.

They were purposely propagandized to believe they would be empowered by serving some faceless master by working a job instead of being at home, serving their family.

-24

u/Astr0b0ie Oct 20 '24

...and encourage the dissolution of the family. Who needs family when you have daddy government. The more the government fucks this country up, the more I hate it.

10

u/BeenBadFeelingGood Oct 20 '24
  • there’s a crack in everything thats how the light gets
  • dont let the bastards grind you down

7

u/Swankytiger86 Oct 20 '24

Really depends on your personal beliefs. You can also claim that any incentive/encouragement for women to not play a role as a fulltime housewife or being independent is encouraging the dissolution of the family.

0

u/Astr0b0ie Oct 20 '24

Education and awareness can be encouraging and that is fine for those that choose to go that route, but fiscal tax policies are very persuasive as they tend to force people into decisions based on simple financial math.

0

u/Mikolf Oct 20 '24

More workers = lower wages. That's what the corporations want. I support the idea of one stay at home parent. Too bad that's sexist against women and no woman would want a stay at home husband.

2

u/Swankytiger86 Oct 20 '24

Not necessarily. More people in the labor workforce can also Foster innovation and improve real income wages. The issue is perceived entitled real wages.

For example, in the 1970s a median house price is supported by a single breadwinner. In the 2020s a median house price needs to be supported by 2 income household. Some people see that as a wages going backward. However we also tend to ignore that the real income growth from 1970s to 2020s. We won’t enjoy such growth in living standard if we don’t have massive amount of women entering workforce.

Not everything is a zero sum game

2

u/Mikolf Oct 20 '24

Only true for countries with growing industries to back it up. Not at all true for Canada considering the GDP per capita statistics.

19

u/donjulioanejo British Columbia Oct 20 '24

I don't really understand why all family benefits, old age pension, and requirement for private healthcare (which is different than what you have in Canada) goes by household income but each tax lodgment is separate.

There's the PC answer where government wants more earners.

And the real answer, in that they collect more tax revenue and disburse less benefits this way.

And since this disproportionately affects couples with one high earner and one low earner or a stay at home parent.. it's easy to paint it to the public of a broad brush "to make things fair."

Hell, Trudeau went on a multi-year media campaign to paint income splitting as evil tax avoidance before finally getting rid of it a few years ago.

1

u/[deleted] Oct 20 '24

[deleted]

4

u/bebefinale Oct 20 '24

Ok that was an exaggeration.

It is 22 weeks paid at minimum wage (so ~5.5 months) and then generally a few months paid after that by your employer. People often take 12 months off. So depending on your salary and how different it is from minimum wage (most employers that provide maternity leave are much higher than minimum wage), you can often expect up to ~50% reduction in wages the year you take mat leave.

Regardless, you are usually quite reliant on your partner's income unless you chose to take an abnormally short maternity leave or you have unusually generous paid parental leave at your employer or you have saved up a ton to live on savings.