The philosophy behind the proposals is to “level the playing field” and the example given in the summary overview is an individual living in Ontario and earning a salary of $220,000 versus his neighbour who earns the same amount through a private corporation and is able to reduce taxes through income sprinkling.
What is omitted is the couple, each spouse earning $110,000, which pays less in tax than their neighbours where one spouse earns $220,000 and the other spouse has no income. The issue is, of course, progressive tax rates which mean that the more you earn, the higher the rate of tax paid, not just the amount paid. In the U.S., couples file joint returns so there is no need for income splitting, unlike Canada.
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