Gender-based taxation: A response to critics

Alberto Alesina, Andrea Ichino, Loukas Karabarbounis 15 February 2008

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The idea of taxing women less than men, which we have suggested in a series of Vox columns1, newspaper articles and in one academic paper2, has received some negative reactions worth discussing. One is expressed in the strongest possible terms by Gilles Saint-Paul (see Vox, 9 February) who accuses us of rolling back history to the French Revolution. His position amounts to saying that any policy that favours an historically disadvantaged group is reactionary. For instance, policies that helped blacks to integrate in the American society after the abolition of slavery should receive the same condemnation by Saint-Paul. 

Many existing Constitutions, which take inspiration from “the people of the Enlightenment”, say not only that all citizens were “created equal before the law”, but also that it is a duty of the State to remove the economic and social obstacles that de facto prevent the freedom and the equality of citizens, the full development of their personality and their successful participation to the political, economic and social life of a country. And this is precisely the reason why tax systems in many countries effectively do not treat all citizens equally, via progressivity and tax deductions, but no one seems to worry that this is bringing us back to Louis XVI.

Many, if not Gilles Saint-Paul, believe that men and women are not equal for biological, cultural and historical reasons, which do not need to be spelled out here. What we claim, specifically, is that the way in which family chores are currently divided across genders within families may generate obstacles to free and egalitarian participation of women in the labour market. This is enough to consider seriously our proposal, in the light of the Constitutional principle outlined above, without worrying that it opens the door to a sensational come back of the Ancién Regime.

Our proposal should be judged on other grounds: those of economic efficiency and political feasibility.

Feasibility, in particular, has been grounds for a second type of negative reaction to our proposal, summarised by terms like “impossible”, “unrealistic”, and “it will never happen.” These phrases have been used even by those who are sympathetic to our idea in principle. Reality has turned out a bit different. The opposition party in Spain has made this proposal a part of its platform. In Italy, a country where low participation of women in the labour force is especially notable, two members of the Parliament, one from the right and one from the left, have jointly proposed a law that goes in the direction that we suggest but acts on tax deductions rather than tax rates. The Prodi government has adopted a somewhat convoluted policy that mixes tax incentives to hire women and incentives to move activities to the South. One of its Ministers, Emma Bonino, has initiated a study which includes an analysis of our proposal. Thanks to the bipartisan support that it has received, this analysis is likely to continue with the next government. Discussion about our proposal has been intense in Germany, Austria, France and Denmark.

Rather than reviewing the merit of this idea both from the point of view of efficient taxation and its social consequences (for which see our previous articles), let’s discuss what would make such proposals politically feasible. First, it should be introduced not “in addition to” but largely “instead of” a variety of other policies already in place that favour women, like quotas, affirmative action, publicly supported child care facilities and care for the elderly. Often people who object to gender-based tax rates as favouritism to women seem to happily tolerate these other policies that are likely to be much more distortionary and less effective. Second, it should be clarified that this is not a policy for women against men but a policy that may favour households as a whole by helping realise a possibly more efficient allocation of duties and market activities across genders, which will increase overall household disposable income. Third, and precisely for this reason, it is like to be successful because it has a “bipartisan” nature. Namely, it should not be feared (by the left) as a convoluted way of reducing taxes tout court to cut welfare spending, while it should not be viewed (by the right) as a feminist policy that imposes constraints on markets. Fourth, the policy can and should be adopted in a deficit neutral way (thanks to the existing difference in labour supply elasticities of men and women). But perhaps more interestingly, from the public deficit viewpoint, our proposal should be particularly appealing to those governments that are considering tax cuts, because by concentrating these cuts more on women than on men, the fiscal stimulus to the economy would be stronger. So the same average tax cut would generate a lower deficit if concentrated on women. Finally, gender based taxation does not conflict with the implementation of the degree of fiscal progressivity that each society prefers.

 


 

Footnotes

1 See here and here.
2 The articles have been published on Vox, LaVoce, Financial Times and Sole24ore. The academic paper is “Gender based taxation and the allocation of family chores”.

 

 

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Topics:  Taxation

Tags:  gender-based taxation

Comments

This article primarily addresses efficiency but it seems equity is equally important. Since the average woman lives twice as long as the averge man (after reaching retirement age) they receive twice the amount in social retirement benefits (ignoring discounting), thus it would seem that they should have to pay twice the amount of men into the social retirement system.

Robert C. Shelburne
Chief Economist
United Nations Economic Commission for Europe
Geneva, Switzerland

Nathaniel Ropes Professor of Political Economy, Harvard University; and Research Fellow, CEPR

Professor of Economics at University of Bologna and Editor-in-Chief of "Labour Economics". CEPR Research Fellow

Loukas Karabarbounis

Assistant Professor of Economics, Neubauer Family Faculty Fellow, University of Chicago, Booth School of Business.