There has been much to-ing and fro-ing over whether this is a fair initiative or an attempt to start a Mommy war.
I must admit, as a single income family where my wife stays home and takes care of the kids, this appeals to us. If it even happens. But I acknowledge that what is good for my family is not good for all families.
A rationale supporting income splitting is that once you have a family, you don't really have individual incomes anymore, you have a family income. With our progressive tax system, income splitting is an attempt to smooth out the progressive tax rates for families with dissimilar individual incomes. (UPDATE: Further Argument found here) When it comes down to it, this is the purpose of RRSP tax deferral system. Defer your high income taxes now so that you pay less income tax when you retire when your income is supposedly lower. Problem with both income-splitting and RRSPs is that this progressive tax levelling either doesn't work for everyone or doesn't apply equally to everyone. So we have imperfect and complicated policies in place that serve to level out the progressive tax system and help you lower your declared income into a better bracket.
So what is the actual problem then? The problem is with our progressive tax system! Check out the breakdown here.
I am a flat tax supporter, (I also support eliminating tax credits and rebates too) but I think even progressive tax supporters can see the problem here. The tax brackets as laid out really stick it to the middle class. Why is the top bracket at an income of $128,800? While a 6 figure income sounds amazing, average home prices and the cost of living mean that $128,800 is only a decent middle class income. Differentiating between $40k and $100k really lets the true upper class off the hook and screws over the bulk of the middle class. I find it ludicrous that under progressive tax values that a million a year income is in the same top bracket as $128,800! So lets change the progressive tax system (if not outright eliminate it). To really help families, make the first $10,000 tax free, up to $40,000 the first bracket, up to $200,000 the next and over $500,00 the top bracket. These are only my top of the head suggestions, I don't want to quibble over the values presented here, come up with your own if you must. My only point is that the brackets we have are much too close together and biased towards the low and of the income range.
In any event, I am certain we can permanently level out our tax system in a revenue neutral way that truly benefits all low and middle income families, regardless of makeup. And that is the only fair way to do this without pitting working mothers and stay-at-home mothers against each other.