So, what could governments do to make it easier for families to have one parent stay at home? The general cost of living is at the top of the list, and it is the primary reason why Canadians do not have as many children as they would want.Lowering taxes is the most apparent place to begin because taxes are the single largest expense faced by the ordinary Canadian family (which generally spends more on taxes than on necessities like clothing or food). The more taxes reduce a single earner's take-home income, the less practicable it is for parents to choose to stay at home. Other measures that penalize families with one parent staying at home could be repealed, notably the Trudeau government's decision to eliminate income splitting for families with children.The government may also shift away from a narrow focus on daycare, which does not help families that do not want to pursue that model. For example, some parents choose to stay at home because they prefer to have their children cared for by someone they know, such as a neighbour or family member. Others are unable to use it effectively due to shift work or other unusual employment arrangementsModern Canadian families require greater flexibility and nuance in childcare policy than the government's current one-size-fits-all approach. The government must develop a better approach that benefits a broader range of families, whether they prefer two working parents or one stay-at-home parent. Indeed, unless the government pays more attention to this choice, stay-at-home parenting will become a luxury option reserved for the wealthy — if it hasn't already.
One of the most significant societal achievements
of the last half-century has been women's liberation from having to face nearly the whole burden of raising children and households. Giving women greater options, however, is meaningless if they are under pressure to make the "right" decision. Stay-at-home parenting is a social good that is not measured in GDP, but that does not diminish its value. Government policies should reflect this.Aaron Wudrick directs the Macdonald-Laurier Institute's Domestic Policy Program. Jasmine Moulton has an MBA from the Rotman School of Management and is an entrepreneur turned stay-at-home mom.Aaron Wudrick & Jasmine MoultonAaron Wudrick directs the Macdonald-Laurier Institute's Domestic Policy Program. Jasmine Moulton has an MBA from the Rotman School of Management and is an entrepreneur turned stay-at-home mom.Writing about the British government's recent tax and spending package is a dangerous proposition. The political repercussions is still unfolding, including severe criticism from important Conservative MP Michael Gove that the proposed reductions to the top personal income tax rate were "a display of the wrong values" and the government's subsequent withdrawal from its contentious proposal.There are several grounds to question the government's strategy. Its failure to offset the significant tax cuts for firms and individuals with corresponding budget cuts would have bloated the annual deficit and greatly expanded the country's public debt. The independent Institute for Fiscal Studies estimated that Britain's debt-to-GDP ratio will rise from little over 80% to over 95% by 2026-27.
There are also the poor and ineffective
communications that the prime minister has acknowledged. Based on the government's presentation, it is unclear whether these specific tax cuts were optimal, or whether the costs in the form of increased government borrowing, eventual spending cuts, or even alternative policy choices (such as public investments in science and technology) were worth the short- and long-run economic benefits.However, if the government's proposal needs to be defended, it is against the weak and misguided argument that its tax cuts are inherently undesirable because they are not progressive. The International Monetary Fund's warning that the government's business and high-income tax cuts "will likely increase inequality" is an example of this poor line of reasoning.It reflects a new and unhelpful inclination to evaluate every policy option in terms of equity, as if the sole credible goal of governmental action should be to promote equality. According to this increasingly popular viewpoint, progressive taxation and transfers are no longer sufficient. Now, every policy must be "equity enhancing."While equality is an important argument for government decision, it is far from the only one. Economic efficiency, widely defined as the optimal distribution of resources in a market economy, is also an essential policy goal. But one might be forgiven for not knowing that recently. Over the last few years, policy issues regarding efficiency (or imprecise but popularized descriptors like economic competitiveness) have been pushed to the sidelines in politics.
A notable illustration is the vast difference between
the Chretien government's tax-cutting measures at the turn of the century and the present Trudeau government's tax-raising plans. The former's 2000 Fall Economic Statement outlined a series of pro-efficiency tax cuts, including lower personal income, corporation, and capital gains taxes, resulting in the "largest tax cut in Canadian history." While it was part of a larger set of broadly progressive tax and expenditure policies, the Chretien administration was not afraid to argue that tax policy should "provide incentives, not impediments" to achieving the goals of investment, entrepreneurship, and wealth creation.In contrast, the Trudeau government came into power advocating for higher tax rates on high-income earners and has since used an equitable lens to almost all of its policymaking. The Chretien government's justification for positive-sum growth appears to have been superseded by a zero-sum focus on redistribution.It is not even entirely accurate to state that the new emphasis is on equity. It is a type of equity that focuses on the distribution of taxes and spending across income groups. It isn't particularly concerned with horizontal equity, which represents the ideal that households with similar ability to pay should eventually pay comparable levels of taxation. The Trudeau government repealed its predecessor's income splitting scheme, which intended to equalize tax treatment for families with children, on the simple basis that it was a "tax break for the wealthy."
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