Equal Opportunities International

Women and Tax

Margaret Wilkinson
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 Women and Tax
by Margaret Wilkinson
Margaret Wilkinson is a lecturer in economics at Bradford
University. Her research interests include taxation and so-
cial policy, housing economics and economics education.
The Present System and its Shortcomings
Sex discrimination is embedded in the personal income tax
system of the United Kingdom which favours married men
and operates against married women, single people oc-
cupying a middle position. The view that women are men's
dependants, institutionalised in the tax system, offends
very many women and should have no place in a society
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committed to equality between the sexes. The things most
frequently complained of, matters such as a wife's lack of
privacy in financial affairs, correspondence with a husband
on his wife's affairs, the sending of a woman's tax rebate to
her husband and so on are merely symptoms of the problem
and have been dealt with, as far as it is possible to do so
under the present system, by recent changes in Inland
Revenue practice. The fundamental inequity, however,
remains and will remain as long as the principle of aggrega-
tion and married man's allowance continue to exist.
On marriage a woman loses her independent status as a
taxpayer; a husband and wife become a single tax unit, for
tax purposes the woman's income belongs to her husband,
and he is assessed for tax on their joint income. (The 1970
Taxes Act expresses the aggregation rule thus '....a wo-
man's income chargeable to tax shall ....be deemed for
income tax purposes to be his income and not to be her
income [l]). At the same time the husband becomes en-
titled to the married man's personal allowance to help him
support his 'dependent' wife, this is 1.56 times higher than
the allowance received by other taxpayers. In 1983/84 the
married man's allowance of £2,795 compares with the
single person's allowance of £1,785; a man who pays tax at
the basic rate therefore retains an extra £303 in the year, or
£5.83 per week. He obtains this relief on marriage even
when, as is usually the case today, his wife continues to
work outside the home receiving the married woman's
allowance, equal to the single allowance, on her earned
income. This duplication of allowances, which was in-
stituted during the Second World War when the Govern-
ment wanted to encourage married women to work, means
that the working couple together receive an allowance of
£4,580. This is higher than that applying to two single
people (2 x £1,785 = £3,570) though a couple living to-
gether can live more cheaply than two single people living
separately. Within marriage an earning husband is more
favourably treated than an earning wife, his tax allowance
is larger than hers and he can have privacy in his financial
affairs whereas she must disclose hers to him. Finally, some
critics find it inequitable that couples with a single earner
receive less in tax relief than two-earner couples [2].
Criticism of the present system comes from along the
whole political spectrum, and though the bases of their
criticism of the system differ, all critics, from Conservative
women to the National Council for Civil Liberties and
some of the unions, claim to dislike discrimination on the
grounds of sex and marital status. They all, therefore,
propose mandatory independent taxation (so that the indi-
vidual, not the couple, becomes the tax unit, hence aggre-
gation disappears) and the abolition of the married man's
4
allowance. Taxation is an instrument of social policy as well
as a means of raising revenue so that all reformers are
concerned with the social effects of what they propose to
put in place of the old system, in particular the effect on
women's decisions about work outside the home. There
are, broadly, two sets of proposals which we have labelled
'conservative' and 'progressive' according to the stand-
point of their critique and the social implications of the
reforms they propose. The conservative proposals are so
called because they have disincentive effects for women
earners and would reinforce the traditional role of the wife
at home. Though nominally they get rid of sex discrimina-
tion, they would not lead to greater equality between the
sexes, the money saved by the abolition of the married
man's allowance would be used to benefit husbands of
non-earning wives - the mechanism being tax allowances
transferable between spouses. Hence, though in name
there would be separate taxation, in effect the couple re-
mains the tax unit. The proposals in the recently published
green paper, The Taxation of Husband and Wife [3] (Cmnd
8093, 1980), fall under the conservative head and will be
discussed there [4]. The progressive critique supports the
role of women outside (as well as inside) the home, its
proposals would be neutral in their effects on women's
choices between paid employment and work at home, and
the money saved by the abolition of the married man's
allowance would provide higher cash benefits for families
with children.
Reformers dwell on the economic and social benefits to
individuals, to families and to society which would arise
from their proposals and tend to ignore the implications for
public revenue and expenditure. Even in the Green Paper
aggregate costs and savings are not given a comprehensive
treatment. The most recent estimate from the Inland Re-
venue shows that for the year 1980/81 the cost of the
married man's allowance was £8,430 million [5]. If it were
abolished, and married men received allowances at the
single rate only, the Exchequer would receive an estimated
additional £3 billion (1980/81 figures, see row 1 of Table 1),
a possible increase in revenue from personal income tax of
about 12 per cent. In what follows, after outlining each case
against the present system and proposals for reforming it,
we give estimates of their cost and revenue implications, we
also attempt to assess the real advantages and drawbacks
they would yield. The financial estimates are made from
published Inland Revenue data and are set out in Table 1.
From them we shall find that the revenue raised by the
abolition of the married man's allowance cannot do all that
either group of reformers desires. Nevertheless we shall
still find change desirable, change which would eliminate
sex discrimination from personal tax system and improve
family welfare.
Conservative Criticism and Proposals
Outline of proposals
Conservative reformers have made their views known in a
variety of ways - in responses to an Equal Opportunities
Commission consultative document [7], in responses to the
Green Paper analysed by Kay and Sandler [8], and through
the publication of pamphlets. They include several wo-
men's organisations of conservative views, for example,
the National Federation of Women's Institutes and the
 Table 1 A Summary of the aggregate effects of the various proposals for the reform of the personal tax system, including accompany
changes U.K.1980/81[6].
£million
Revenue/
Expenditure expenditure
Revenue balance

Effect (increase, +, or decrease,-) on tax payable by:

Change Aggregate cost Overall effect
in of child bene- on government
Married Married Married Single total fit increases finances of
Proposed men, women, men, people tax made possible tax and
wives earners wives revenue by proposed benefit
reform earning not reform (where changes
earning recommended)

(1) Abolition of the + 1,482 no change + 1,466 no change +2,948 +2,948

married man's
allowance
Conservative proposals:
(2) fully transferable + 1,471 no change -1,044 no change +427 0 +427
tax allowance of
£1,375
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(3) partially transfer- + 1,471 no change no change no change + 1,471 0 + 1,471

able tax allowance
(56 per cent of
£1,375 transferable)
(4) fully transferable +483 -714 -2,301 -1,006 -3,538 0 -3,538
tax allowance of
£1,760
(5) partially transfer- +483 -714 -1,087 -1,006 -2,274 0 -2,274
able tax allowance
(56 per cent of
£1,760 transferable)
Progressive proposals with
tax allowance of: (per week)
(6) £1,375 + 1,482 no change + 1,466 no change +2,948 2,950(£4.25) -2
(7) £1,455 + 1,312 -154 + 1,313 -224 +2,247 2,256(£3.75) -9
(8) £1,535 + 1,144 -303 + 1,163 -431 + 1,572 1,561(£2.25) +11
(9) £1,650 +903 -513 +947 -725 +611 624(£0.90) -13
(10) £1,760 +672 -714 +740 -1,006 -308 -308

National Council of Women; women's political bodies -
Liberal and Conservative; and some professional bodies
including the Law Society and the Institute of Taxation.
The proposals put forward in the Green Paper are identical
to the recommendations of these organisations.
The Conservative women stated:
'.... one of our objectives is to enable women to be
treated as independently as they wish to be treated, but
at the same time, to encourage and support the family. In
particular we wish to end the discrimination which at
present exists under our tax system against the married
woman who stays at home, either because she is engaged
in caring for a family, or dependent relative, or simply
because she prefers to do so.' [9]
The view that the housewife is discriminated against is
based on the fact that she has no tax allowance, and that the
couple have only the married man's allowance which com-
pares with the two allowances of the earning couple. Sup-
porters of the views expressed by the WNAC recommend
separate taxation of every individual, hence the end of
aggregation, and the abolition of the married man's allo-
wance and a personal tax allowance for every adult. Where
a person has no income to set the allowance against, then it
may be transferred in full or in part, to the spouse. Hence,
husbands with non-earning wives would have tax allow-
ances up to twice those of other people. In consequence the
tax system would favour the traditional married couple
5
where the husband earns the income and the wife is a
full-time housewife.
If allowances were fully transferable married men with
wives at home would have two single allowances so that
their allowances would be twice those of other people,
rather than 1.56 times higher as at present. On the other
hand couples who both worked outside the home would
find that with the abolition of the maried man's allowance
their aggregate allowance would fall from 2.56 times to just
twice the single allowance. Partial transferability would
mean that the transferable allowance would be limited to a
proportion of the single allowance, for example to that
proportion (currently 56 per cent) which would take the
single allowance to the old married allowance.
With a system of transferable allowances single-earner
married couples would either gain (full transferability) or
stand still (partial transferability), but two-earner married
couples would lose. Some reformers therefore propose a
measure which would maintain the working couple's allo-
wance at its present level by setting the new uniform
personal allowance at a figure midway between the single
and married allowances. The single tax allowance would
rise in order to keep unchanged the aggregate allowance of
married couples who both worked outside the home. An
effect of this measure would be that the allowances of
single-earner couples and single people would rise.
Estimates of savings and costs
At one time the Treasury stated that the information on
which to make an estimate of the cost of the transferable
 tax proposal was not available [10] and the Green Paper
gives no comprehensive estimates of aggregate costs or
savings. Precision is not possible but rough estimates can be
made which indicate the magnitude of the sums involved.
The results of such estimates for the year 1980/81, made
from data available in published Inland Revenue statistics
are given in rows (2) - (5) of Table 1.
The effect of the abolition of the married man's allowance
(£2,145 in 1989/81) and its replacement by an allowance
at the single person's rate (then £1,375) fully trans-
ferable between spouses (row 2) would be to increase the
disposable income of couples where the wife had no job
and to reduce the disposable income of couples where both
partners worked outside the home. The tax allowance of a
husband with a non-earning wife would rise from £2,145 to
£2,750, the £605 increase being worth £181.50 to him at the
basic rate of tax, and the aggregate value to more than five
million husbands with incomes large enough to benefit
from the increased allowance being just over £1 billion
(£1,044 million) at 1980/81 values, including the effect of
the higher value of the allowance at rates of tax above the
basic rate. This cost, however, would be more than offset
by the gain to the Exchequer from the abolition of the
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married man's allowance and the consequent increase in
tax payable by husbands whose wives worked outside the
home who could not gain from the transfer of a wife's
allowance. The husband's allowance would fall from
£2,145 to £1,375, this £770 cut in the allowance reducing his
disposable income by £231 at the basic rate of tax. The
aggregate value of this loss to more than six million men
with wives working outside the home and with incomes
above the married tax allowance is estimated at £1.5 billion
(£1,471 million). This includes the effects of tax paid at
differing marginal rates, and the possibility of part-time
women workers having part of their tax allowances unused
and hence available for transfer (at an allowance of £1,375
this second effect was found to be negligible). Thus accord-
ing to this variant of the transferable tax allowance prop-
osal couples where the wife stays at home would gain (£1
billion), working couples would lose (£1.5 billion), single
people would be unaffected and the Exchequer would gain
(£0.4 billion).
A partially transferable allowance (row (3)), with £770 -
56 per cent of £1,375 - transferable would leave the single
earner couple in the same position as before the change,
the husband would have an allowance of £2,145. Married
men with earning wives would lose the same amount as
with the fully transferable allowance, for most taxpayers
£231 each and £1.5 billion in aggregate. Single people
would be unaffected. The Exchequer would gain £1.5
million.
Rows (4) and (5) of Table 1 show the effects on total tax
revenue of the variant of the proposal which would protect
the working couple from loss by raising the single allo-
wance. At 1980/81 allowances the married man's allowance
of £2,145 and the single allowance of £1,375 would be
abolished to be replaced by an allowance midway between
these at £1,760, this being fully (row 4) or partially (row 5)
transferable between spouses. Working couples would
have an unchanged tax allowance of £3,520 though it would
be differently distributed between them so that husbands
would pay more tax and wives less. Low paid women
(part-time workers) would transfer any unused allowance
to their husbands. The combined effects of these factors
means that earning married couples would in aggregate pay
over £200 million less tax. Partial rather than full transfera-
bility would have no observable effect on this aggregate
figure. A man whose wife did not work outside the home
would find his allowance increased from £2,145 to £3,520
(full transferability) or to £2,746 (partial transferability).
With full transferability the increase of £1,375 is worth
£412.50 at the basic rate of tax. With partial transferability
the increase of £601 is worth £180.30 at the basic rate of tax.
6
Full transferability would cost an estimated £2,301 million,
or partial transferability would cost £1,037 million, and
these costs would not be offset by any reduction in the
allowance of two earner couples. Single people would also
gain from the increase in the tax allowance, the £385 rise
being worth £115.50 to the basic rate tax payer. The aggre-
gate value of the tax reduction is estimated at £1,006 for the
almost eight and a half million single taxpayers with in-
comes high enough to benefit. Thus the overall cost of the
transferable tax allowance proposal with the allowance at
the higher rate is estimated here to be £3.54 billion for full,
or £2.27 billion for partial transferability of the £1,760
allowance. These estimates compare with the only aggre-
gate figures given in the Green Paper of £3.75 billion for
full and £2.75 billion for partial transferability of the higher
allowance [11].
Assessment
Transferable tax allowances would, as has been shown,
impose considerable cost; this cost would be borne by
earning couples if the personal allowance were kept at the
lower figure, and by the Exchequer, and hence by the
whole community, if the personal allowance were raised to
the higher figure. They would also have disincentive effects
for married women workers, would be regressive, would
not 'protect the family', and would be extremely complex
to administer.
Transferability of allowances would act as a disincentive
to women's working outside the home, particularly to wo-
men considering a return to paid work after a time at home.
Full transferability would be the greatest disincentive, the
couple would get exactly the same amount of untaxed
income as when the wife was not earning, though it would
be divided between the two so that the husband's tax allo-
wance would be halved when his wife started work. As the
husband's take home pay would suffer it is not absolutely
clear what the effect on a woman's participation in the
labour force would be, but it seems likely that there would
be some disincentive. For this reason these proposals will
appeal to those who think that women should return to the
home, particularly at times of high unemployment.
Proponents of transferable tax allowances argue that
these will improve the position of the wife at home and
protect the family. Both these views may be challenged,
and the second does not follow from the first. Transferable
allowances would increase the disposable incomes of
husbands with wives at home, this may not necessarily
benefit those wives. Even if wives do benefit this does not
'protect the family' for 'wife' and 'family' are not synonym-
ous. The help would be applied indiscriminately to all
married men with wives at home whether or not they had
dependent children, and for men with high incomes paying
high marginal rates of tax the help would be proportion-
ately greater, so that this measure would be regressive. The
family's needs would be more appropriately looked after
by an increase in cash child benefits which would be paid to
the mother, would vary proportionately with the number of
children and would not distort women's choices between
home and outside employment. Higher child benefits
might well be more effective than transferable tax allo-
wances in encouraging to stay at home mothers driven out
to work solely by economic necessity. Larger child benefits
would directly boost a mother's housekeeping allowance,
whereas the tax allowance would raise the husband's dis-
posable income and would not automatically and in its
entirety go to the mother.
Finally, these proposals fall down on one of the Govern-
ment's own criteria - administrative cost. The Green Paper
explains some of the complexities of administering trans-
ferable allowances and states that 'the numbers of Revenue
staff needed to run the system would be significantly grea-
er than now'[12]. The manpower effects are not quantified
 but it is predicted that 'several thousands' of extra staff
would be needed.
Progressive criticism and proposals
Outline of proposals
The philosophy behind the proposals outlined below was
expressed by the Meade Committee which pointed out
that, 'The idea that a woman on marriage becomes a de-
pendant of her husband, who is then responsible for her
welfare and for that of the family, accounts for much of the
present treatment of the tax unit. They continued, 'this
notion is becoming less and less compatible with modern
attitudes to the relationship between men and women' [13].
Proposals which arise from such views, and which are here
labelled 'progressive', all involve the abolition of the mar-
ried man's allowance and the treatment of every person
regardless of sex or marital status as a separate tax unit
owning his or her own income and with the same non-
transferable tax allowance. They also recommend that the
new allowance be set at a higher real level than the present
single allowance in order 'to benefit people on low incomes
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as well as to cushion the cash loss to the married man' [14].
Finally, and most important, most of the savings arising
from the abolition of the married man's allowance would
be used to provide higher cash benefits, primarily for
children but perhaps also for other dependents needing
care; this it is argued, is the best way of giving help to
families. Some organisations make further proposals - for
cash home responsibility allowances and for special transi-
tional arrangements for the older wife who has stayed at
home looking after her family and who has 'lost or much
impaired her independence as an earner'. But there is no
general agreement on these and on the form they should
take, and so they will not be considered here.
Progressive reformers include charities concerned with
, the interests of families, children and the disabled, for
example the Child Poverty Action Group; a variety of
bodies concerned with the interests of women including the
EOC; the TUC and several unions; and Labour women.
Like the conservative group, progressive reformers have
made their views known by the publication of pamphlets
and in responses to the EOC and to the Green Paper.
Estimates of savings and costs
The revenues from the costs of these proposals are sum-
marised in rows (6) to (10) of Table 1 which show the
aggregate effects for a range of tax allowances. The range
of child benefit increases which are shown (from £4.25
weekly, which would cost £2,950 million for the year, to no
increase) are those which are possible out of the savings
arising from the abolition of the married man's allowance.
These savings vary according to the level of the personal
allowance which replaces the married allowance. The esti-
mate of £2,948 million for 1980/81 was based on the as-
sumption that it was replaced by an allowance at the (then)
single rate of £1,375. Many reformers, however, recom-
mend a higher real level of personal allowance and if the
new allowance applicable to all were above £1,375 the
savings would be less. An allowance of £1,455 would result
in a revenue increase from the aboltion of the married
allowance of £2,247 million; £1,535 would yield £1,572
million; £1,650 would produce £611 million; and an
allowance of £1,760 (midway between the single and mar-
ried allowances) would cost £308 million (the £1,760 is not
transferable between spouses as in the conservative pro-
posals; as has been shown, a transferable allowance would
cost much more). These possible alternative levels of
personal allowances were arrived at by making various
assumptions, based on ideas put forward by those advocat-
ing this reform, about the steps taken to abolish the mar-
7
ried man's allowance and establish the common allowance
for all. In no case is the married man's allowance abolished
by a reduction in its nominal value, rather, over two or
three years, inflation is allowed to erode its real value while
the real value of the single allowance is raised by increases
in its nominal value above the inflation rate. At the end of
the transitional period the new personal allowance is equal
to the married allowance.
Assessment
These proposals would get rid of the tax system's unfair
discrimination in favour of married men and its in-
stitutionalisation of the notion that women are men's de-
pendants; the position of the family is protected by the
increase in child benefits; and there is no disincentive to
women who wish to work outside the home. Child benefits,
the main feature of the progressive approach, have several
advantages over tax allowances for wives if the aim is to
help the family. The help they give is proportional to need,
need being measured by the number of children in the
family. Cash benefits are paid at the same rate to all
whereas tax allowances are worth more to those with
higher incomes and higher marginal rates of tax. Finally the
money goes, not to the working partner, but to the partner
at home who has day-to-day responsibility for caring for the
family.
Unfortunately the savings arising from the abolition of
the married man's allowance cannot do everything that the
proposers of progressive reform desire. They cannot pro-
vide both a substantial increase in child benefit and a sub-
stantial increase in the personal tax allowance. A child
benefit increase of £4.50 per week, which would just main-
tain the income of the one child family if the married man's
allowance were replaced by the single allowance of £1,375
(1980/81) would cost £3,124 million for an estimated 13.35
million children (1980/81) for whom it is paid, this is nearly
£200 million more than the revenue increase. An increase
of the personal allowance to £ 1,760 would cost £300 million
more than the revenue increase from the abolition of the
married man's £2,145 allowance. Within the limits of the £3
billion no balance between child benefit and personal
allowances increases could be struck which would improve
the welfare of the family with one worker and only one
child. The higher the personal allowance is raised, the less
is available for families with children. Only if the personal
allowance is kept at the old single rate can the position of
the one child family be maintained; families with more than
one child would, of course, be better off. (If we went
outside the savings made from the abolition of the married
man's allowance, as the conservative proposals do in re-
commending higher personal allowances for all then
everything could be done).
Despite these limitations, independent taxation, the
abolition of the married man's allowance and increased
child benefits are desirable. Families with children have
done badly from the tax and benefit system over many
years and these reforms could start to redress the balance.
The married man's allowance should not be cut in money
terms, rather it should be phased out over two or three
years during which inflation would erode its real value
while the real value of the single allowance would be
maintained, the real increase in child benefit would be
phased in over the same period. At the end of the phase-in-
period the differential between the single and married allo-
wance would have disappeared and a system of indepen-
dent taxation would be implemented.
Unlike the transferable tax system, this scheme would
cause minimum disruption for the Inland Revenue, no
disruption for the DHSS and should not impose any extra
administrative costs in the longer term. On the tax side this
is because the five million or so married women with earn-
ings above the PAYE threshold are already under the
 present system treated separately from their husbands.
'Although aggregation means that a married woman ....
is not required to make a separate tax return, in other
respects she is treated in just the same way as a single
person with earnings. She has her own tax file and her
own tax office, determined according to which employer
she works for. Often this is not the same one as deals with
her husband's affairs, so a certain amount of liaison
between tax offices is required' [15].
Separate taxation would mean that these women would
submit separate tax returns and the need for liaison with
husbands' tax offices would end, a saving of Inland Re-
venue resources. The Green Paper considers that such
savings would be offset by the additional work accruing
from their separate 'returns, assessments and related cor-
respondence', though it is not made clear why this should
be so when it is admitted that married women are already,
in effect, treated separately. On the benefit side, no addi-
tional civil servants would be required by the DHSS to
administer higher child benefits, all that is required is that a
larger sum is printed in each payments book.
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Conclusions
Until recently, the Government appeared to be against
changing the system. The Chancellor of the Exchequer, in
his introduction to the Green Paper, seemed satisfied with
what we have now: 'The surprise, to most who study the
matter, lies in discovering how difficult it is to find a better
system than that which we have today' [16]. However, of 37
organisations submitting their views to the Inland Revenue
following the publication of the Green Paper only four
(representing country landowners, farmers, divorced men,
and Catholic women) agree with this [17]. The other 33
bodies would prefer independent taxation, and to com-
pensate families for the loss of the married allowance 13 of
these favour transferable allowances, the other 20 going for
higher cash benefits for children.
It is now reported [18], however, that a White Paper will
be published in 1983 which will favour the Conservative
option of partially transferable allowances (row 3 of Table
1, if the single allowance is unchanged). This is the system
which would increase the tax burden on earning couples
while protecting the disposable income of husbands with
wives at home. Hence a 'reform' in the name of sex equality
could act as a discincentive to married women workers. It
would also be regressive (relief would be at the marginal
rate of tax) and it would offer no help to children - the
incomes of families with mothers at work outside the home
would be reduced, while the incomes of husbands with
wives at home would be protected whether or not they had
children.
The only hope that the scheme may founder comes from
another of its drawbacks, its extreme administrative comp-
lexity, which was emphasised in the Green Paper, presum-
ably in an attempt to persuade for no change at all. For
women who are permanently at home the administrative
problem is small, the transferable part of their tax allo-
wance is permanently transferred to their husbands. But
there are millions of women[19], who work part time, or
who work intermittently, or who have small unearned in-
comes, who would use part of their personal allowance all
or some of the time but who would have some available for
transfer (all or some of the time) to their husbands. The
Green Paper then comments 'Looking at the operation
from the tax office angle, the issue and examination of the
extra returns required, the consequential "in year" coding
changes, end-of-year assessments and appeals work would
represent a substantial additional burden' and '....the num-
bers of Revenue staff needed to run the system would be
significantly greater than now'[20]. ('....thousands of extra
8
staff'[21] are referred to).
These administrative problems do not apply to the prog-
ressive proposals. As has been explained, earning married
women are already treated separately from their husbands
by the Inland Revenue, having their own taxfilesand their
own tax offices. Independent taxation without transferable
allowances could reduce administrative expense by getting
rid of the need for liaison between husbands' and wives' tax
offices which is necessary under the present system because
two taxpayers are treated as if they are one.
Though administrative simplicity is greatly to be wel-
comed it is the real benefits which could arise from the
implementation of these reforms which lead us to favour
them. Truly independent taxation and higher child benefits
would eliminate sex discrimination from the tax system and
maintain or raise the welfare of families. Parents need help
to support their children, but sex equality is hindered by the
notion that husbands need help to support wives. In a
family the mother may stay at home to care for the
children, foregoing a wage in doing so, but it is the exist-
ence of children not the incapacity of the woman which
means that extra help from the state is needed. As their
children get older women return to outside work, in the late
1970's 69 per cent of married women aged 45 to 54 were
economically active[22]. Help should therefore be directed
to the support of children, not to the support of wives. In
the past 20 years there has been redistribution away from
families with children, a case documented by the Child
Poverty Action Group: 'In the two decades up to 1980/1,
the tax burden for a childless couple on three-quarters
average earnings increased by 122 per cent: that for the
same couple with two children increased by 382 per
cent.... In the 1950s, child support for a two child family was
worth nearly three-fifths of a retirement pension; today it is
worth barely more than a fifth'[23].
One final argument against the substitution of the mar-
ried man's tax allowance by higher cash child benefit must
be dealt with. This is that the substitution of cash benefits
for existing tax allowances 'increases public expenditure'.
On this the Green Paper states 'In the Government's view
more than accounting conventions are involved here; the
distinction between cash benefits (which increase public
expenditure) and tax allowances (which do not) is an im-
portant one'[24]. It was on such arguments that the scheme
to replace tax allowances for children (received mainly by
the father) with cash benefits (payable to the mother)
nearly foundered. The distinction between public expendi-
ture and tax allowances may be challenged. There is an
argument that tax allowances should be viewed as 'tax
expenditures' to make explicit their effect. Allowances and
reliefs from income tax, for example for wives, for age, for
blindness, provide 'similar benefits' and express 'similar
social purpose in the recognition of dependent needs'[25]
as do direct cash payments such as child benefits or retire-
ment pensions. These allowances and reliefs are 'tax ex-
penditures', equivalent in terms of revenue foregone to
direct government expenditure, and they should be judged
by the same standards. Could the £3 billion a year allowed
to married men for their 'dependent' wives be better spent?
The answer given here is 'yes', it could go for the benefit of
those who may truly be regarded as dependent - mainly
children. At the same time the much resented notion that
women are men's dependants would disappear, and the tax
system would treat all people equally without regard to
their sex or marital status.
 Notes and references 9. Women and Tax, Report of the Committee on Women and Tax,
Women's National Advisory Committee of the Conservative Party,
1. Income and Corporation Taxes Act (ICTA), 1970, Section 37. London, 1979, p.6.
2. The discussion in this paragraph has concentrated on the tax system 10. Reported in Income Tax and Sex Discrimination, EOC, Manchester,
as it affects the large majority of taxpayers i.e. it is concerned with 1977, p.41.
earned incomes only (investment income is assumed to be negligi-
ble) and it assumes that these are not high enough to be taxed at rates 11. Cmnd 8093, op.cit., p.38.
above the basic rate. It may be noted that marriage confers no
advantage where unearned income is concerned, indeed the married 12. Cmnd 8093, op.cit., p.48.
are penalised, nor where a couple's joint earned income is sufficiently
high to make them liable to pay tax above the basic rate. For the 13. Meade Report, op.cit., p.377.
highly paid a decision to be taxed separately, which is possible by
choosing the wife's earned income election, eliminates the disad- 14. National Union of Journalists response to the EOC published in
vantage of aggregation though it loses the husband his married man's EOC, 1979, op.cit., App.C.
allowance.
15. Cmnd 8093, op.cit., p.45.
3. The Taxation of Husband and Wife, Cmnd 8093, HMSO, London,
1980. 16. Cmnd 8093, op.cit., p.iii.
4. The Green Paper put forward two sets of proposals, but thefirstset 17. Kay and Sandler, op.cit., Appendix I.
represents mere tinkering with the present system and for the
purpose of this article will be disregarded. It is the second set of 18. Frances Cairncross, The Guardian, 29 November 1982, p. 1.
Green Paper proposals which are discussed here.
19. Cmnd 8093, op.cit., p.47.
5. Inland Revenue Statistics 1981, HMSO, London. Table 1.5.
20. Cmnd 8093, op,cit., p.48.
6. This table summarises estimates made from the Inland Revenue
data. Greater detail and explanation of how the estimates were
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21. Cmnd 8093, op.cit., p.27.

calculated is given in "The Discriminatory System of Personal Taxa-
tion: Some Proposals for Reform', Margaret Wilkinson, Journal of
Social Policy, July 1982; and an 'Estimates of the Effects of Proposals
for the Reform of the Personal Tax System in the U.K.', Margaret
Wilkinson, mimeograph, University of Bradford, 1980.
7. The responses were published in With All My Worldly Goods I Thee
Endow Except My Tax Allowances, EOC, Manchester, 1979.
8. John Kay and Catherine Sandler, 'The Taxation of Husband and
Wife, a View of the Debate in the Green Paper', mimeo, Institute of
Fiscal Studies, June 1982.
22. General Household Survey 1978, Office of Population Censuses and
Surveys, HMSO, London, Table 54.
23. Child Poverty Action Group Submission to the Inland Revenue on
Cmnd 8093, p. 12. Quoted by Kay and Sandler op.cit., p. 10.
24. Cmnd 8093. op.cit., p.29.
25. R.M.Titmuss 'The Social Division of Welfare: Some Reflections on
the Search for Equity', reprinted in Essays on the Welfare State,
Allen and Unwin, London 1958, p.44.