This thesis examines Canadian public policy in taxation law towards child care, specifically towards the decision as to whether child care will be provided in the home or purchased. It reviews the constitutional framework of income tax and family law legislation; the taxation of families historically; recent social changes altering policy assumptions underlying the ncome tax, specifically the movement of women into the labour force, the increased rate of family breakdown, and reduced fertility; and the effect of having the individual as the unit of taxation. The Cantax Personal Income Tax software is used to compare differences in 1995 after tax income of parents with varying marital status and number of income earners, but with the same total income and number of children. These situations are illustrated using economic analyses of the Supreme Court of Canada' decisions in the Symes and Thibaudeau cases. The CanTax experiment showed that the tax structure favours dual-income parents (and until the abolition of the inclusion/deduction provisions in ss. 56 and 60 of the ITA, divorced families also) who can income-split because the individual is the Canadian tax. It concludes that the promotion of secondary employment when child care must be obtained results in policies which further disadvantage stay-at-home parents, who are already economically vulnerable from sacrificing present and future benefits of employment. An alternative approach is advanced, based on the argument that child care provided in the home by a parent is at least an equivalent social good to having both parents work outside the home, and towards which taxation policy should at least be neutral. This thesis argues that social policy should try to protect the secondary earner through provisions targeted specifically at them by placing the tax relief in their name.
