An Income Splitting Maxim

The Maxim Institute has made a submission to Inland Revenue arguing the case for income splitting. Like me, they would prefer a flatter tax system but if this is not to be, then they say looking at a family as a unit in social and economic terms makes sense.

They also make a good point I had not considered before:

The approach taken to the assessment of welfare programmes like Working for Families reveals that we already accept that the existence of family relationships is relevant to the financial assessment of members of the family. “Working for Families uses the family, rather than the individual, as its basis for determining the appropriate level of assistance for families.”

If this logic is appropriate for the assessment of benefits—and we submit that it is—then it is appropriate for the tax system and supports the introduction of income splitting. It would be inconsistent to conclude otherwise.

Fair point. The point is made again when the submission goes on to state that "income splitting" is an assumed obligation if couples part - assets are divided, with a 50-50 share being the starting point. There are other interesting points made in the submission. I'll save that for another time.

Related Link: Maxim Institute and Income Splitting

[Aside: I wonder if they should also have submitted copies to the Families Commission and the Children's Commissioner?]