Income Splitting Still the Best Option for Parents

Tax Reform is back in the spotlight. During the next 18 months the opportunity exists to empower parents by allowing income splitting for tax purposes. Parents Choice is reviewing its plans for 2009 and is seeking expressions of support from regional contacts around the country.

If you are willing to distribute newsletters or act as a regional contact for Parents Choice we would like to hear from you. Just email us at parentschoice08@gmail.com

Parents Choice 08 Succeeds in Raising Income Splitting

The value of parenting has again been underscored. This time through a United Nations Report expressing concerns about the impact of childcare centres. More on this at www.roger-ellis.blogspot.com

Parents Choice was formed in early 2008 to campaign for income splitting for tax purposes and other reforms which would provide greater recognition of the value of parenting. Ten months, several media interviews, several blogposts and many letters to MPs later we have succeeded in bringing the idea of income splitting to the fore. Several articles have subsequently appeared in the mainstream press about income splitting.

The election result did not show significant support for the one party promoting income splitting - United Future. However, the poor election result may be due to factors other than one of its policies. For example, the two large parties clearly drew more support from the smaller parties as voters tried to express their preferences regarding a centre-left government or a centre-right one. Despite the low vote for United Future the incoming government has agreed with United Future to support the Introduction of a new Bill into Parliament for income splitting. While this falls short of guaranteeing income splitting it does at least get a draft law into Parliament and will get it to the Select Committee stage so that the public can have its say. This is a significant step in the right direction and represents the best hope yet of securing income splitting here in New Zealand.

Parents Choice 08 also gave renewed hope to parents around the country who understand the importance of the parent-child relationship and the need for it to be valued by society. Indeed many hundreds of these parents have written to express their support for the campaign this year. Parents Choice appreciated that feedback and wants to take this opportunity to thank you for your support during this year and to wish you and your families/whanau a Merry Christmas and a fantastic 2009.

Strong Support For Income Splitting

New Zealanders from all walks of life have given an overwhelmingly positive response to the idea of Income Splitting. Over 205 written submissions were received by Inland Revenue, 90% of which supported the proposal and only 7% opposed it.

Seventy percent of submitters said income splitting should be optional and income should be split on a 50/50 basis.

United Future Leader, Peter Dunne, said "UnitedFuture has long championed income splitting as an option for families who want to be able to have one parent stay at home and carry out the vital duties of raising children and strengthening families.
This level and tone of response shows that New Zealanders also support income splitting."

Parents Choice '08 believes that Income Splitting provides greater flexibility to parents and enables parents to determine work and child care arrangements.

Parents As Partners - Valuing Parenthood

Parents As Partners is a Waikato-based lobby group that has been leading the charge for better recognition of parenting for many years. When the time comes for congratulations to be passed around when Income Splitting is finally enacted then a huge congrats would be owed to Christine of Hamilton. She has been a tireless worker for the right of parents to be treated as equal partners in parenting.

Her group Parents As Partners aims to enable parents to "establish a partnership for the support of their family;

that we as parents are workers, and that our work is vitally important for the well-being of our society and the economy.

the value of "mother or father-in-the-home". In the context of a recognised partnership they would achieve economic visibility.

the right of parents to share their income for tax purposes by means of the partnership.

that the tasks of income earning and care giving are of equal importance for the family, and that the parents should be free to divide those tasks between them as they see fit, without economic constraints on one or other choice."

Parents Choice '08 wishes the team at Parents As Partners every success in the movement towards greater recognition of parenting. Check out their website at: www.parentsaspartners.org.nz

Income Splitting Discussion Paper misses main point

It shouldn’t really have come as a surprise. The government’s Discussion Paper on Income Splitting couched the issue in terms of what single tax policy is best for families in New Zealand. Almost as if it was Income Splitting or everything else the government is doing.

The real question should have been “Would Income Splitting be a helpful option for parents?” You don’t have to abolish all other measures to introduce Income Splitting.

At the moment we have a variety of welfare payments, income support and Working for Families programmes in place. These cater for most low and middle income families where both parents work. However the group that is visibly overlooked at the moment are at home parents who choose to forego career development and wages or salary to invest in the next generation of New Zealand citizens. Not all of these families by any means are high or even middle income earners. Income Splitting would provide an option of paying tax as a couple rather than individually and thereby recognise the work of the at home parent.

In its recent submission Parents’ Choice ’08 set out some of its reasons for supporting Income Splitting:

Negative impact of overemployment on families: in recent years there has been a growing understanding about the longer term costs of overemployment. Today it is not uncommon for parents to be jointly working 90 hours or more per week. Such absence from the home takes its toll on families.

Large numbers of ordinary NZ families would benefit: Two parent families with children who would benefit from Income Splitting numbered 447,894 in the 2006 census.

Treasury papers have alluded to research which points to the negative impact on 0-3 year olds of having both parents working full time. “Nechyba, McEwan and Older-Aguilar (1999) briefly reviewed a range of studies using the US NLSY that consistently (but not without exception) relate early maternal employment to poorer behavioural and cognitive outcomes during early childhood for most children” http://www.treasury.govt.nz/publications/research-policy/wp/2003/03-26/03.htm
Treasury also mentioned that there was “…some evidence suggests the effects of parental employment on adolescents may be harmful, and may be arise from reductions in parental supervision” (Lopoo 2002, Paxson and Waldfogel 1999) http://www.treasury.govt.nz/publications/research-policy/wp/2003/03-26/03.htm

Many OECD countries provide tangible support and recognition for the work of at home parents without harming their economy. Indeed countries that usually tax couples rather than individuals (such as Ireland, Germany, and Norway) tend to be countries that also perform well in a range of social and economic performance indicators. While there may or may not be a causal link we can say that income splitting does not appear to have hurt the countries economic performance.

National doubtful about Income Splitting

National Party Finance Spokesperson, Bill English,has responded to a letter from Parents Choice indicating that while National would continue to discuss the issue at this stage they did not support it on the basis that under Income Splitting the benefits would not get to the right people.

Parents' Choice '08 will continue to lobby a range of political parties, including National, to promote the value of parenting and to push for Income Splitting as a valuable addition in a progressive tax regime.

Income Splitting Moves Step Closer

Income Splitting Moves Step Closer
Monday, 28 April 2008, 9:55 am
Press Release: Parents Choice '08

Parenting lobby group – Parents’ Choice – welcomed the release of a Discussion Paper on Income Splitting by Revenue Minister, Peter Dunne.

“Parents’ Choice welcomes the release of this document as another move towards the introduction of Income Splitting and recognition of the work of “at home parents” said Chairman, Roger Ellis.

“Income Splitting is the missing element in New Zealand’s tax system. It provides greater fairness for families who would like to have increased flexibility so that at least one parent can spend more time with the children” said Mr Ellis.

“New Zealand has failed to keep pace with recognising the value of at home parenting. More than a dozen OECD countries allow some form of joint tax assessment. New Zealand needs to catch up with the more progressive countries that recognise the value of parenting and allow parents the freedom to choose how they will parent” said Mr Ellis.

The advantages of income splitting go beyond the purely financial. Creating a level playing field for parents to choose whether they wish to be at home with the children, or return to work, could have substantial benefits for children and for society in general. Attachment between child and adult, especially during the first five years, is believed to be vitally important in terms of a child’s development. These factors should also be considered when deciding whether to introduce income splitting.

Parents’ Choice will be canvassing supporters and providing a submission on income splitting. We urge all other parenting groups to make their views known on this very important aspect of tax reform.

Submissions close on June 30th and can be sent to the IRD Deputy Commissioner. The IRD Discussion Document can be found online at:
http://www.taxpolicy.ird.govt.nz/publications/files/incomesplittingdd.pdf

The Parents Choice blog can be found at www.parentschoice08.blogspot.com

ENDS

Income Splitting Moves A Step Closer This Month

Income Splitting moves a step closer to implementation this month with the public release of a Discussion Paper by the Minister of Revenue, Peter Dunne.

Income Splitting is a way for parents to split their combined incomes so that they collectively pay less tax. It is also a way for governments to give recognition to the role of at home parents. If Income Splitting is to win sufficient support in parliament then we need to have as many parents as possible write to their local MPs asking them to support income splitting.

Parents' Choice 08 encourages parents who believe in the value of parenting to also write to the Minister of Revenue and ask for a free copy of the Discussion Paper when it is released. Postage is free. Just write to : Hon Peter Dunne, Minister of Revenue, Parliament Buildings, Wellington.

Support growing for Income Splitting

We have received a tremendous response to our campaign for parenting to be given greater recognition by government. Supporters from across New Zealand - Northland, Auckland, Hamilton, Wellington and the South island have emailed to indicate their support for Parents Choice and to wish us well with the campaign.

We have been asked many questions several times so I thought it would be helpful to cover off a few of them here.

We are not tied to any political party - we are independent. We hope to persuade a range of parties to support Income Splitting at the next election. At the moment only one parliamentary party has indicated its support for Income Splitting and that is United Future. We will be approaching representatives of the other political parties to ask them for their views and to see if they will consider Income Splitting as part of their election year platform.

Supporters have also asked how they can help. Apart from emailing us at parentschoice08@gmail.com and letting us know you support the campaign the next thing to do would be to write to the Minister of Revenue, Hon Peter Dunne MP, Parliament Buildings, Wellington to let him know you support Income Splitting and want to see progress this year.

Other actions that could be taken are to right to your local MP or your local paper, or promote Parents Choice among other parents. We are also considering launching a petition. If you would be keen to help collect signatures then please let us know and we will be in touch.

Income Splitting - An Idea Whose Time Has Come

During the last two weeks Parents Choice has received a significant number of emails and comments from people supporting income splitting and from news media interested in the campaign. The tide is coming in and support is rising for income splitting.

In the past 14 days alone various media including "Norwester", "Challenge Weekly", "Shine TV", "Scoop", and overseas websites have all published articles and news reports about the Parents Choice campaign for income splitting. We have had expressions of support from Whangarei, Auckland, Hamilton, Tauranga, Waikenae, Lower Hutt, Wellington, and Christchurch. It has been amazing to see the widespread interest in a policy change that will show New Zealand values families and the investment of time and effort in raising children.

Please pass on the contact details to friends and relatives who might be interested in indicating their support for income splitting. We need the campaign to continue to gather momentum during March so that by the time the Government's Discussion Paper is relased there is already a strong movement for change. Email parentschoice08@gmail.com and show your support today. United Future has already pledged its support for Income Splitting. We believe that over the next few months National, Labour and other parties will also see the need to signal their support for the hundreds of thousands of full time parents who are busy investing in the next generation.

New Parents Group Wants Income Splitting

Media Statement

Saturday 9 February 2008

New Group Wants Income Splitting For Parents

A new lobby group – Parents Choice '08 – has today announced that it will campaign this election year for tax reform to allow parents to split their incomes for tax purposes thereby recognising the contribution of the "at home" parent.

"Parents want their role to be recognised by society. They are tired of being undervalued simply because they work with children at home" says Parents Choice Chairman, Roger Ellis.

"Income Splitting would allow a parent at home to share their partner's income for tax purposes. This means that a parent earning $60,000 per year could split the income with their partner so that each was taxed on $30,000. This could save the couple up to $123 per fortnight in tax" said Mr Ellis.

"We should not underestimate the importance of children bonding with parents – especially during the early years of development. Families today are being taxed without any recognition of the contributions made by at home parents. If Income Splitting were introduced it would restore some measure of value to at home parenting" said Mr Ellis.

"The pressures pushing both parents to hurriedly rejoin the workforce need to be relieved. Our labour force participation rates are already among the highest in the OECD. Better economic performance will come from higher productivity and improved social cohesion. Income splitting could help make the difference for many families. Families choosing to look after their own children at home should be free to make their own choice as to when they rejoin the workforce. Income Splitting will help them do that" said Mr Ellis.

Parents can show their support for Parents Choice by emailing: parentschoice08@gmail.com or comment via the blog at www.parentschoice08.blogspot.com

ENDS

For information:

Roger Ellis, Chairman, Parents Choice '08
ph: 021 526 264
email: parentschoice08@gmail.com
www.parentschoice08.blogspot.com

Five Reasons to Support Income Splitting

Income Splitting is a policy which allows parents to split their household income so that they pay less tax overall. It means that families which choose to have one parent at home caring for their children will have that worked recognised as being socially useful.

It sends an important signal that parenting is valued.

In brief there are five key reasons to support income splitting. They are:

1. It sends a signal via tax policy that parenting is recognised as valuable. Currently many policies such as subsidisation of child care for parents in paid employment, parental leave for full time employees, and the discrimination against working parents compared to self-employed parents regarding tax treatment, all combine to slant the playing field towards getting parents out of the home and into the workforce. Parents Choice believes that policies to encourage people back to work should not be at the expense of those parents who want to spend time at home with their children - especially during the crucial early years of a child's development.

2. It empowers parents and helps strengthen families. It allows parents to choose whether they will have one parent at home full time for a number of years or whether some other work pattern suits them best. Either way parents should make these decisions without government policies pushing them both into the workplace. It should be a parents choice.

3. It builds social capital. Having a greater number of parents choosing to parent fulltime means more opportunities for voluntary and charitable organisations to benefit from having bright, capable and often highly-educated people able and willing to volunteer to work part time in the community or in charitable or religious organisations - all of which is likely to build social capital - the glue that holds society together. Prof. Robert Putnam (author of "Bowling Alone") has provided substantial evidence on the benefits of boosting social capital in a community.

4. It boosts the economy. Income splitting holds the promise of helping strengthen families, strengthen communities and boost social capital. The cost of weak families, communities and the erosion of social capital is all too apparent when one looks at the social, economic and emotional cost of family breakdown, juvenile delinquency, vandalism, gang-related activity, crime, distrust and division. If we can go to the core of the social causes of such breakdown then the economic cost savings in police, social work, court time, and broader strengthening of social capital is potentially immense. In any case most economists now agree that the real solution to better economic performance is not in higher labour rate participation or longer working hours but in higher productivity. New Zealand already has one of the highest participation rates in the OECD. The solution is in working smarter not forcing more and more parents to get into the workforce or for those already there to have to spend even more hours at the office.

5. It places the wellbeing of children at the centre of economic and social policies. Good economic and social policies need to ensure that parents and children are kept "front and centre" when designing a sound policy framework. To ignore the development stage of the next generation of human capital is foolish in the extreme. People remain our greatest asset. We need to ensure that all children get off to a good start in life - through both their home life and school life. Income splitting says that the relationship between a parent and child is very important, at least as important as that between an employer and employee, and that our laws should recognise this and allow parents to spend more time with their families.

Its time for New Zealanders to join Parents Choice and show their support for income splitting in the 2008 election year. Now is the time to show your support. Email us today: parentschoice08@gmail.com