Thursday, March 01, 2007

Tax breaks for married couples

David Cameron tries to fix society by re-introducing tax allowances for married couples.

It is clear that it is not the role of the tax benefit system to make people marry. A tax incentive surely won't keep a broken family together.

What the debate also neglects is that the tax allowance creates a disincentive for the second earner (typically the wife) to work. It drives up the marginal tax rate for the second earner.

Interestingly, academics blame the reduction in male employment for the increase in single households. This would imply that Cameron should support the male breadwinner model, rather than tax allowances.

I agree that middle class families should keep more of their money but this can be achieved in more efficient ways.

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