Dealing With A Taxing Problem Of Gender Equality

The Age

Wednesday May 2, 2007

Leon Gettler

WITH reports coming in of a widening pay gap between men and women, in Australia and overseas, two academics have come up with a provocative solution.

Economics professors Alberto Alesina from Harvard and Andrea Ichino from the University of Bologna say women should pay less tax, and men fractionally more.

Their argument boils down to this: the supply of the labour of women is more responsive to their wage post-tax, so a reduction in taxes would increase the labour participation of women substantially. Doing that, they reckon, would have the same impact as affirmative action policies, quotas or subsidised child care.

But isn't this unfair discrimination? "We do not believe so," they wrote in the Financial Times last month. "There is nothing more hypocritical than to invoke equal treatment in some areas (taxation) for those who are not treated equally in many other areas (the labour market; sometimes in the family allocation of tasks, such as rearing children or caring for elder family members).

"We already have a host of policies that are not gender neutral. We could eliminate many of them by adopting a simple differentiation of tax schedules for men and women. And do not forget that a large part of the redistribution of the tax burden implied by this proposal would occur within the same family: the husbands of married women who choose to work would also benefit from their wife earning a higher take-home salary."

I have a few problems with this. First, many women go part-time when they re-enter the workforce after having a baby. I'm not sure a tax cut would change that. Secondly, should single fathers also get a tax cut?

So what do you think of this idea? Could it work? Is it fair, bearing in mind that in many cases the husbands and families of the women would benefit from the cut? If it won't work, how would you fix the pay gap?

COMMENTS:

I AGREE. We need to make sure all men and women have full-time jobs. That way, children can be brought up entirely under state care, by professionals, as it should be. The world is evolving, parents have brought up their own kids for thousands of years, it's time we moved on. - Mishra

THIS is just humbug! For an entire generation women have fought to have equal conditions and there is still a way to go before that becomes a reality. For the labour marketplace to develop balance there needs to be no interference, not more interference. Just "laissez faire" and wait a while before we have to interfere again. - Michael

? Join the discussion at Leon Gettler's blog at blogs.theage.com.au/managementline

© 2007 The Age

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