Full womb, empty wallet

How the tax system treats moms
by Beverley Smith

Women who have been on the fast-track, getting an education and high-powered career are often shocked to discover how antiquated our social network is about parenting.

It is possibly the ultimate irony that women have made such great inroads into the traditionally male paid labour force, yet they still run up against a brick wall if they choose to play a traditionally female role. Embarking on motherhood is penalized by tax departments in most of the western world.

Maternity benefits exist only for a few mothers—self-employed mothers and mother employers can’t claim them. Neither can mothers who did part-time work totalling less than 600 hours in the preceding year. This means most new mothers already home with another child are out of luck. The realization slowly dawns that maternity benefit is not about maternity at all. It is tied to money earned—the male paradigm in economics.

The United Nations held a conference on women at Beijing in 1995. All member nations, including Canada, promised to begin to recognize and evaluate how much their economies take women’s traditional unpaid work, like child-rearing, for granted. Yet this evaluation is in Canada’s case minimal to date, with only a brief mention of it in the last two census surveys and with certainly few tax policy changes to recognize it. If you give birth, you notice.

Some countries give a birth bonus across the board. Tony Blair promised one for every child in the United Kingdom. Canada used to have family allowance for every child, but this program was quietly withdrawn in the mid 1990’s as was the $2,000 per child deduction on our annual tax return.

The irony is that now, in this enlightened age for women in paid labour, we are treating the roles women have had for centuries worse and worse. Yet society exists because someone plays these roles.

Oddly, the time spent carrying a child is viewed as a medical disability by some employers, with the emphasis on “dis”ability. The view that pregnancy is an obstacle, hindering performance.

In the 1960’s with birth control widely available, women did feel liberated from accidental pregnancy. But some went the next step and spoke of pregnancy itself as the burden. Government statistics still use this assumption, writing of a drop in pregnancies as a good thing.

The federal government brags that it now offers parental leave for newborn care that is gender-neutral and shareable. The woman for instance, can transfer her benefits so the man can be home with the baby. Yet this claim is misleading. A man’s employment insurance benefits cannot be transferred so that his wife can be home with the baby. It only works one way.

The result is that there are two tiers of parents—those who get federal financial help and those who do not. And this has nothing to do with financial need. It is based solely on lifestyle. Many feel this bias is no business of the government’s. As soon as a couple has unequal income, they pay a penalty for it. Figures provided by chartered accountant Heather Gore-Hickman have pointed out, for instance, that if three couples as a household each earn $60,000, they are taxed differently depending on who earned the money.

If the income was earned by two salaries of $30,000, the tax is $6276. If the income is $36,000 and$24,000 the tax is $7049. If the couple has one spouse at home full-time with the baby and the other earner makes $60,000, the tax on that household is $8783—42% greater than the tax on the first couple. Yet all three couples have identical ability to pay tax.

Government also plays favourites about how you take care of this baby once it is a toddler. If your maternity leave has ended, you have a choice. Yet it is a catch-22. You can get federal financial help to pay for your child care expenses while you earn a salary or study, but to do that you have to leave the child. Or you can be home with the toddler and not miss out on those years, but for that you must sacrifice not only salary, but federal financial help for costs of taking care of the child.

Many creative women are trying to work around this by having home-based businesses, by operating their own day homes, by working in the daycare their child attends. But most of the time the choices produce an income less than the woman could have earned elsewhere, so even then there is a sacrifice that the state does not recognize.

What the state cares about in care of a child is apparently not the care at all, but the transfer of money. Only receipted costs paid out are eligible for federal help, so that means if you lose salary, even if you gave up a $40,000/year job, it is not viewed as a cost and you are viewed as wealthy. If you get the child’s grandma to take care of the baby, you also can’t help
her with the costs she may incur, because the state also assumes that relatives incur no expenses.

A much fairer system would be for private and public school funding—benefits that flow with the child. The Royal Commission on the Status of Women recommended such a policy back in 1970, but it was ignored. Yet the idea had merit. “No tax receipts would be required as the evidence of child care expense. The contribution made by mothers who stay home to care for their children would be recognized and fewer mothers would b e forced to work outside for financial reasons.”

The enemy of women’s liberation is not being home with the baby. The enemy is being where you don’t want to be. In third-wave feminism, there is praise for women who want to use daycare, and for women who prefer tag-team parenting, dads at home, grandma care, even home-schooling. There is a powerful movement among women to create more of a win-win scenario. Yet it is a difficult struggle. Mothers who work outside the home have lobbied to get more time with their babies and be paid for it. This is how they got maternity benefits and paid time off to care for a handicapped or dying child. But sadly, all these benefits require the mother to be earning money. If you already are home to care for a sick or dying or handicapped child, or any child, and you have no income, the state does not assist.

Many argue that mothers in the home deserve parallel help. In their case, not more time with the baby since they already have that, but more money. Nobody is asking for them to get a salary, but there is a strong lobby to get them the same child-rearing financial help that employed moms get, the same pension access, and the same financial help to care for the sick, handicapped or dying as other moms get. Pregnancy should not reduce the value society places on women. The women’s movement is about valuing all aspects of women’s work. Sure we can do any role men can do from judge to astronaut, ditch-digger to professor. But women have always been the nurturers and we should not be penalized for fulfilling that role.

To get the state to value the role at all was step one, and it now does this for home-care, daycare and palliative care. But step two is to get it to value the role played by unpaid workers, not just by professionals. The government must recognize that those who nurture children are saving the state money. The savings accrue now because we give without taking and later because a well-adjusted child does not enter the criminal justice system or have serial unemployment. Let’s not forget that having babies in the first place is the very foundation of society, of maintaining the tax base from generation to generation.

Some provinces are taking “baby steps” in the right direction. Alberta raised its spousal deduction to a full personal deduction, making it clear that the spouse in the home is an equal partner and a full adult. Quebec parties running in the spring 2003 election were offering four-day work weeks, flex time and provincial help with holiday costs to demonstrate they value the raising of children. But the federal government has made few moves toward equal treatment of all parents.

~Beverley Smith is a long-time researcher and activist supporting men and women in their roles, paid or unpaid.