Friday, April 20, 2007

gender taxation

Alberto Alesina of Harvard University and Andrea Ichino of the University of Bologna argue in the FT that optimal taxation requires men to be taxed more than women, the paper can be found here.

They show that since women have higher elasticities of labour supply, they should be taxed less. They also argue that such an approach could be cost-neutral, in the sense that men could be taxed more. This policy would achieve that more women seek work.

The Tories would argue that this would lead to family breakdown, as women don't need men anymore. However, we always should be cautious with fiscal effects on family formation.

The proposal is also questionable from a discrimination point of view. Why should women take home more pay than men, for the same amount of work?

One could argue that many women already receive tax breaks (child benefits etc) and in-kind transfers, such as childcare.

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