Income splitting is a tax policy that allows couples to share their combined taxable income, spreading the tax burden over two individuals in order to take advantage of lower marginal rates.
It provides a real financial benefit to families — particularly families with a single income earner — through a lower tax bill, and introducing income-splitting is Conservative Party policy.
Shared tax arrangements such as income splitting are not uncommon around the world, with about half of all OECD countries having some form of shared tax arrangements for parents and children.
The Australia tax code currently disadvantages single income families.
Families with a single household income are required to pay tax on earnings above $18,200, but dual-income households are not require to pay tax until reaching their combined income of $36,400, double of that of the single income household.
This reduces the disposable incomes of single income families.
It also pushes up the price of early childhood education, as stay-at-home parents are pressured to enter the workforce, despite the added cost of finding a suitable childcare centre.
The Conservative Party's South Australian Senate candidate Rikki Lambert says this is an example of the big government, 'tax and churn' approach to public policy:
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