Divorce Is Hard On Our Taxes

I found this little article kicking around in the London Free Press after searching for a “disappeared” article in the Toronto Sun. The premise is simple enough: family breakdowns and divorce cost the Canadian taxpayers nearly $7 billion a year, according to a study by the Institute for Marriage and Family Canada. With a name like that, it’s little surprise that the findings are amenable to the organization, but it doesn’t negate the inherent merit of the claims.

As Andrea Mrozek, manager of research for the organization, says, divorce is “one pathway to poverty”. The report released today outlines the financial burden that single-parent families put on provincial welfare programs.

Before even looking at the study, it’s rather self-evident that divorce can have a harmful financial effect on society, as well as the anticipated social one. Two working parents who live under the same roof can consolidate their expenses and their income simultaneously, reducing their overall reliance on social security, and building their income toward things such as assets, equity, wealth, and stability. By separating, which is not to say that it isn’t often necessary, parents are still forced to pay all the same expenditures, but often double them by needing two separate homes, food for children supplied in both households, and a variety of other shared costs that become individual burdens. A single parent, even one who shares responsibilities with their separated partner, is still vulnerable to poverty. The median family income for two-adult households is more than double that of a single-parent.

What the report focuses on is the financial cost of family breakdown to Canadians for the fiscal year 2005-06. Funding directed at “poverty alleviation” costs $7 billion annually serving broken families. In their calculations the report looks at programs that fall under housing, child care and welfare. It even excludes associated financial burdens such as family courts, child service agencies, and child support enforcement. The study concludes that children fare better when raised in a married, two-parent home, and links divorce to poverty, and particularly child poverty, since when guardians fail to provide, the government needs to step in to ensure a level of social security. The social costs of family dysfunction and divorce are also evident, with children winding up in gangs or teenage pregnancies.

As Canada has strengthened social security for those in danger of “slipping through the cracks”, people affected by divorce and poverty have been partially cushioned. For instance, the report points to the fact that a century ago government spending per capita was 10% of income; today it is roughly 42%. But a century ago divorce and family breakdown was less common as it is today, with about one quarter of all families estimated to be single-parent households now. The study also looked at the cost burdens to other nations, such as the 6.3% of total government spending in the United Kingdom, and 2.1% in the United States [$140 billion in Canadian dollars].

The report has numerous charts and statistics, including regional breakdowns of costs, and it provides an FAQ at the end. In summary, it recommends ways in which family breakdown and divorce can be avoided: education in school; pre-marital counseling; tax breaks for families; and finally to incentivize marriage over cohabitation to create stronger bonds. It makes a compelling argument for the social and financial costs to governments that do not promote marriage as a basis for personal wealth and security.