Reaction to income splitting plan.

A hotly debated issue in the year leading up to the next federal election. The Conservatives announced a new tax cut for families Thursday.

But it’s finding a lot of opposition as a targeted attempt at buying votes. We take a closer look at the family tax cuts and income splitting and get reaction from those who will be affected.

A promise Prime Minister Stephen Harper made to growing families during the 2011 election will come into action this year: “Couples with children under 18 years of age will for the purpose of calculating federal taxes, be able to transfer up to $50-thousand of income from the higher earning spouse to the lower earning spouse thereby save up to a maximum of two thousand dollars a year of federal taxes.”

On top of the “family tax cut,” Harper expanded the Universal Child Care Benefit pact. Parents with children under 6-years old will receive $160 per month, up from $100. And instead of a tax credit, households with kids age 6-17 will get a monthly cheque worth $60.

Jenn: “The added child care funding is a great idea that could help some of those ‘on the bubble’ families that might need that extra little bit of money.”

Or is it?

Some believe that this $3-billion plan only benefits families that are already well-off. Marvin Ryder from the DeGroote School of Business says otherwise: “Let’s say you’re lawyers or doctors and you have a really good income, again, you’re at the highest margin of tax rate and sending one dollar to somebody else won’t make a difference. So this is why it’s aimed much more at the middle class.”

Jenn: “Definitely be a bonus for those families in that middle range where that added bit of money during tax time could be useful for things for their kids.”

The first cheques will arrive in July and they’ll be quite hefty. Marvin Ryder believes that isn’t a coincidence: “All these cheques aren’t going to appear for the first six months, you’re going to get six months worth six times of 160 dollars which is 960 dollars, just three months before we’re going to have a federal election!”

Speaking of, it seems the wheels of the federal election are already starting to turn. Liberal leader Justin Trudeau said in Whitby today that if elected prime minister he’ll repeal income splitting. While he said didn’t say whether he’d cancel it, NDP leader Thomas Mulcair said this is a step in the wrong direction and increase inequality.