Autism Tax — More examples of reductions in Childhood Budgets larger than a year’s net pay

In Axe the Autism tax, I gave an example of where a parent going back to work would see their Childhood Budget (which covers the child until age 18) decrease by an amount larger than their net take-home pay for that year. I highly recommend reading that article first, to see how the numbers are calculated.

Here’s the example from that piece, in chart form:

Example 1: Primary Earner = $61,000/yr, Secondary Earner = $50,000/yr. 1 child on the spectrum under the age of 2.

Here we’re comparing a year’s pay to a Childhood Budget, which could last several years. If we wanted to think of this clawback in direct terms of a tax, we’d need to know how much the family could spend of that budget in that year. Unfortunately, the government hasn’t released the full-set of those rules, despite this new plan going live in 2 weeks!

In Axe the Autism Tax, I use the assumption that the family could spend 20% of their budget in year 1 (which appears to be allowable). In that case, we would have an effective autism tax rate of 14.28%.

Under the Ford Plan, a Mom earning $50,000 with a spouse earning $61,000 would see her effective tax rate rise from 30.35% to 44.63%, thanks to the autism tax. This is a higher tax rate than a married man with no kids who earns $400,000/yr would face.

I think I’ve found a simpler way to express this:

It would take our Mom over a year’s worth of income (just over 1 year and 1 week), just to pay back the lost Childhood Budget.

That is assuming the Mom didn’t pay a single cent for anything else. And there’s a big expense we haven’t factored in here: the increased childcare costs from returning back to work.

Returning to work would be so cost-prohibitive for this parent, I don’t see how they could possibly pull it off. If you were trying to design a system to prevent women from re-entering the labour force after the birth of a child, you’d have a hard time doing better than this.

To show this is pretty common, here’s 3 more examples.

Example 2: Primary Earner = $85,000/yr, Secondary Earner = $40,000/yr. 1 child on the spectrum under the age of 2, 1 child not on the spectrum, age 5.

By taking a $40,000 job, the family’s net after-tax income rises by $27,443.96. But they lose $29,400 in Childhood Benefit, for a loss of $1956.04

It would take almost 1 year and 4 weeks worth of income just to pay back the lost Childhood Benefit.

Example 3: Primary Earner = $55,000/yr, Secondary Earner = $52,000/yr. 1 child on the spectrum under the age of 2, 1 child not on the spectrum, age 8.

Note that the one earner family pays almost no net tax, thanks to the Canada Child Benefit (as well, the new Climate Action Initiative payment is reflected in the income tax amount). When the 2nd parent joins the labour market in a job that pays $52,000/yr, their net after-tax take-home is $34,061.97. But their Childhood Benefit is reduced by $37,800, a difference of $3,738.03!

It would take over 1 year and 1 month of this parent’s income just to pay back the lost Childhood Budget.

Example 4: Primary Earner = $100,000/yr, Secondary Earner = $73,000/yr. 1 child on the spectrum under the age of 2, 1 child not on the spectrum, ages 9 and 3.

You would think having the 2nd parent get a $73,000/yr job would be a financial windfall for this family. However due to taxes and lost CCB, their net after-tax take home pay is $46,339.72 and their lost Childhood Benefit is $52,500, a difference of $6,160.28!

If this parent re-entered the workforce on January 4, 2021, they’d have paid back the lost Childhood Budget by February 16, 2022 (over 1 full year later). Assuming they didn’t spend a nickel on anything else, like driving to work or childcare.

That is a wholly unrealistic thing for the provincial government to ask parents to do.

I could keep going, but you get the idea.