Here is an important article about how families with one parent working and the other looking after the children – the old model that worked well – is being more highly taxed in Britain than in other advanced countries.
People have concentrated a lot on the effect of benefits on the way families are. But tax matters, too. (In the book, there is a section on the combined effect of tax and benefits and how dramatically the effect of them has changed since the war.)
Millions of families with one working parent get a worse tax deal in Britain than anywhere else in the world, a survey found yesterday.
Compared with other western countries a traditional family – a working husband and a wife who looks after the children full-time – pays a third more proportionally to the taxman than a single person without children.
And despite Tory promises to help married couples and families, the plight of single-earner families is growing worse under the Coalition, the report said.
Worsening position: Under the Coalition the traditional family – where the man works and the woman looks after the children – is dealt an increasingly tough hand
The criticism, in a study for CARE, the Christian social policy charity, contrasts with repeated speeches from Work and Pensions Secretary Iain Duncan Smith speaking up for married couple families.
It said: ‘The picture is clear. The tax burden on the majority of families and individuals in the UK is not out of line with that in other countries.
‘However this is not the case with one-earner married couples with children. If their earnings are £25,000 or more, their tax burden is heavier in this country than other countries.’
The report found that since the 1960s the proportion of tax paid by a married couple with one wage close to average pay, and two children, has doubled – not least because of the abolition of the married couple’s tax allowance by Gordon Brown in 1999.
Over the same period a single person with no dependants has continued to pay the same share of their income in tax.
The development of a tax system that penalises couples when one chooses to stay at home follows years of a Labour government which tried to encourage all mothers to go out to work.
Despite the pressure on mothers to take jobs, there are still just over two million women who devote themselves full-time to caring for children and looking after the home.
But the CARE report, by tax analysts Don Draper, Leonard Beighton and Alistair Pearson, said: ‘The changes made by the Coalition Government will materially worsen the position of one-earner couples on an average wage, although they will improve the position of some other families.’
It added: ‘In 2009, a one-earner married couple with children on a wage of £33,745 paid over a third more in tax in the UK than in the average developed country, and a fifth more than in the average EU country.’
The authors said the shifting of the tax burden from single people with no dependants on to families with children ‘seems to have gone almost unnoticed, if indeed it was intentional’.
Under changes introduced by the Coalition, they said ‘one-earner families on an average wage are likely to find that their tax burden will rise.’ This is because although their tax threshold will rise by £1,000, the gain is cancelled out by loss of tax credits and an increase in national insurance contributions.
They will by 2012 be paying nearly 80 per cent of the tax bill faced by a single person with no dependants, compared with 73 per cent now.
But, in the United States, for example, a one-earner married couple with two children, on an average wage, pays just 23 per cent of the tax paid by a single person.
The percentage in other countries such as the U.S. and New Zealand is so low because of the unusually high levels of family allowances and tax credits that are given out.
The CARE report also warned that the high levels of tax on couples are a threat to single parents who want to form a relationship.
The ‘couple penalty’, estimated by the Institute for Fiscal Studies to cost people as much as £200 a week if they choose to live together, has yet to be lessened by any Coalition policy.
The report said: ‘The major step the Government could take would be to introduce a transferable allowance for married couples. We urge that a start be made on this as soon as possible because of the time which is likely to be needed to make the administrative arrangement necessary to introduce it.’
The article was by Steve Doughty. So often the Daily Mail draws attention to stories like this which are important and which other newspapers and the broadcast media choose to ignore. On the BBC it is fashionable to talk about the Mail as though it is absurd and obviously hateful and wrong. The BBC itself should be ashamed for being, so often, wrong in its assumptions and propaganda and for ignoring stories such as this one. These kinds of tax rates shape societies and change behaviour. They matter. Perhaps the BBC does not like them when there is a hint that the moral of the story may not be PC.
Read more: http://www.dailymail.co.uk/news/article-1363642/UK-offers-worst-tax-deal-traditional-families.html#ixzz1FvM2U7Rk