Tax cuts - judging panel
I was listening the other morning to a discussion on World Service Business Review – click here, you can listen again for the next few days – of a recent proposal made by Professors Alberto Alesina (Harvard) and Andrea Ichino (Bologna) that tax rates on men should be increased and tax rates on women lowered.

Initial reaction – astonishment. Then “the MRAs will have a field day!” – plus, it doesn’t exactly seem very respectful of women somehow, and more to the point if the purpose of this idea is to redress the pay gap, it seems likely to backfire. Employers will just assume they have a free pass to discriminate and pay women less, and governments and others will feel less pressure to do anything about the basic reasons for the pay gap.

Then, starting to listen as the proposal was explained and debated by Alberto Alesina, Ruth Lea* and Vicky Lovell**, I had a few more thoughts.

* Director of the Centre for Policy Studies, London. See here.
** Study Director at the Institute for Women’s Policy Research, Washington. See here.

Firstly – the proposal. Here is the written paper, although I warn you that it is primarily in economist gobbledy-gook, and that’s before you notice the frequent typos… I translate the key points as best I can, adding my own thoughts to supply gaps in my understanding and/or in the paper’s explanations:

  • Women are more sensitive to tax rates than men. If the tax rate goes up, men are unlikely to say “well, it isn’t worth me going to work at all” whereas women’s choices may well be affected by changes to tax rates.This is, I believe, because women are viewed primarily as providing an “optional” and “second” income, their main duties being of course to the home and family. Because the income is “optional”, because women often earn less than men, and because only the woman’s income tends to be balanced against childcare costs, the result is quite often that is it deemed “not worth it” for the woman to go out to work. Where it is often borderline whether a woman going out to work is “worth it” (especially but not only if she is a mother), the tax rates could make a key difference to her choice. Lowering taxes might make it worth her while, while higher taxes might stop work from seeming like an economically viable option.
  • Because women are more sensitive to tax rates, tax rates have a greater distorting effect on women’s choices to work or not. By reducing tax rate on women, you reduce this distortion and enable women to make better choices about what they actually want to do. The same argument does not apply to men who, given the current social climate, are likely to seek work regardless of the tax rates applicable to them.
  • Because fewer women than men are (currently) in the labour market AND because the result of altering tax rates is likely to be that more women who want to work will be able to do so – because the economic disincentives will have a weaker effect – the increase to male tax rates that would be needed to compensate for the reduction in female tax rates would be very small compared with the decrease in women’s rates.
  • One possible long term effect of this policy is to change family economics. If a woman earning the same amount will bring home more than a man, it will seem much more sensible to some families who view stay-at-home parenting as important to decide that the man should raise the children. Even where having a full-time parent with the children is less of a priority, it may be that the childcare burden will be more equally shared. Gradually, slowly, perhaps almost imperceptibly at first, men might realise that raising children is a valuable job. They might, even, start to value it. It might become as socially normal for men to be the parenting parents and women to be the breadwinners as it currently is for families to be organised the other way around.
  • Another possible long term effect for this policy is to change the face of the workplace, especially in countries where it is currently very uncommon for women to participate in the labour market on a par with men. Apparently, by reducing tax rates on women, the cost of hiring them will go down and employers will be falling over themselves to hire and promote women. (Does this assume we abandon the principle of equal pre-tax pay? I’m not sure. Maybe everyone’s pre-tax pay will go down, due to the increase in labour supply?) Either way, there would be more women in employment, more women with more money and potentially more bargaining power.
  • A further consequence of both of these changes might be to change the role models that our children grow up with. They may see a bit less of their mothers at home, and perhaps a bit more of their fathers. Boys will see more men who spend time with their families. Girls will see more women who are successful in the workplace. Gender roles in the family and wider economy may diminish, or disappear altogether.
  • When all this has happened – assuming rampant success of the policy, when combined with whatever other measures may be appropriate, since nobody suggests that this idea would cure all ills by itself – the need for differential tax rates will itself disappear. The reasons for women’s sensitivity to tax rates – their lesser status as earners, the difficulties they face in the workplace, the gender roles they grew up with – will have gone and thus the policy will have outlived itself.
  • Poof! Now we really can be equal in the family and at work.

Ruth Lea’s response was essentially that the whole idea was discriminatory (against men), and therefore wholly unacceptable, and fundamentally wrong.

She does see that there is disparity between men and women in terms of workforce participation, but sees this more as a problem for (ungendered) “parents”, because of their childcare needs, not for women as such. Why indeed should a single woman with two children be taxed less than a single man with two chlidren? She sees it as an issue about parenting, not about sex, and considers that the disproportionate effect on women is a function of their having unequal family responsibilities. Therefore, she believes that the appropriate intervention is not to introduce differential tax rates but to provide better support to parents of either gender.

She also questioned whether getting women into the workplace is itself a good thing, and here I lost the will to listen closely… soldiering on, I hear “downgrading the role of the mother”, “a lot of women just prefer to look after the children, they don’t necessarily want to go to work”, “there’s a correlation between children who are brought up without their mothers and antisocial behaviour”, “children that are brought up in childcare are not as well stabilised as children that are brought up with their parents”. “We are talking glibly about women going into the workplace and having more jobs for women because there’ll be more nannies and childcare… But where are the kids in all this discussion?… Young children do so much better if they are brought up by a parent, frequently it’s the mother… I’m trying to push the debate on from just the sheer GDP, the sheer tax take, the sheer economics to actually what makes people happy.”

She also seemed to be of the view that the reasons for women earning less were actually not much to with discrimination anyway, but was more about their own, free ” lifestyle choices”. They tend to prefer part-time work, seek work-life balance, and tend to be far more risk-averse, they prefer public sector jobs as being more secure and that is the reason for their lagging behind men in pay terms. “If we deny the differences between men and women and their lifestyle choices then we are going to have a rather barren discussion.” “Even though opportunities have been equal for men and women [for the over 30 years I have been in the workforce]… nevertheless women tend to go for different sorts of lifestyles… in the City of London it was so obvious, the women went for the less risky jobs, the men were the high-fliers… those were gender differences that I never see going away, and what’s wrong with that?” Why shouldn’t women who choose to stay at home and be good mothers to their children do so? Are we saying there is something wrong with their making that choice?

Essentially, her position is that if you have children then she understands that you may need help but (1) this should be gender neutral and (2) the same argument doesn’t apply to “supporting” women who don’t have children. She opines that women, when they have children, freely and naturally choose to drop out or shift down, while men, “taking on the responsibilities of being a father” start to work doubly hard and that this is why there is a pay gap. It is very little to do, she says with any actual discrimination against women.

Vicky Lovell was much more positive about the idea, without explicitly backing it. She described it as innovative, a possible means of providing incentives without regulation to reinvigorate moves towards the policy goal of complete equality, which might help to move things along where progress has stagnated.

Both she and Professor Alesina managed to take down a number of the criticisms and objections that Ruth Lea put forward. Rather than rehearse them debate-style, I just want to respond to each of Ruth Lea’s key points with a mixture of their thoughts and my own.

Discrimination against men is fundamentally wrong

Well, yes. All discrimination is wrong, in principle. But in practice, we are talking about affirmative action to correct an imbalance and that is a slightly different kettle of fish. The differential tax rates would be a “temporary” measure, until the balance was corrected. It would certainly result in some injustices to men. But would those limited injustices to some men really outweigh the injustice currently perpetrated on most women by the present system? These are questions that need to be answered.

We should be talking about supporting parents, not just women.

As Vicky Lovell pointed out, support for parents is really not the issue that this proposal would aim to address. It is more about the generalised pay and other discrimination that women do, in fact, face – mothers or not. Yes, parents need support – but that is another issue, albeit certainly a related one. The true issue is not about “supporting” women but about creating economic policies that will enable them to work if they want to, and that will aim perhaps towards a slow revolution in gender roles generally. This is about all women, not just mothers.

Women should be / want to be staying at home with their children

For one thing, as Alberto Alesina pointed out, this policy would increase women’s choices. It would go some way towards enabling them to work, but would not oblige them to do so. No mother who wants to stay at home will be forced to work just because tax rates are low. (Unless the differential is such that she “has to” work instead of the father – in which case, why not? The same argument has been used in reverse by men to keep their wives at home for as long as women have been allowed to work!)

And if Ruth Lea is suggesting that women would want to work when they should be staying at home then – as Alberto Alesina also pointed out – pshaw! Does she say women, if given freedom to choose, will make bad choices? That they will not consider their children’s welfare? That they do not know their own families’ needs best? Ruth Lea herself insisted that fathers make perfectly good stay-at-home parents, yet there was nothing in her argument to suggest that MEN should be encouraged to stay at home and/or discouraged from going out to work.

Moreover, as Vicky Lovell pointed out, women who are at home with their children do not make that choice in a vacuum – they are responding to all kinds of norms, expectations, pressures and economic incentives / disincentives. As she said, it might be appropriate to look at helping them to have an actual free choice by removing the burden of childcare from women and distributing it more equally between men and women, which can only happen if the economics of raising children and of being in the labour market become more equal between men and women. This policy might well achieve greater equality in those areas by changing family economics. Current policy manifestly is not achieving this greater equality since women’s progress appears to have stagnated and we still face discrimination of all kinds.

Women do not suffer (much) discrimination anyway – they just make different lifestyle choices

See the last paragraph above. Women do make different lifestlye choices, but they do not do it in a vacuum. Ruth Lea seems to believe there is something intrinsic (she used the word) about women that makes them opt for safer and more family-friendly employment. She has no objective basis for this belief, given the host of other factors causing women to make those choices and the lack of any evidence as to what women would tend to choose if those factors were removed. “Different lifestyle choices”, to me, is code for “let’s not analyse this”. By not analysing the choices themselves, we are doing a disservice to women. We are assuming that they are BIOLOGICALLY programmed in some way to make the choices that they are oppressed into making, which is another way of saying that it’s OK that they are oppressed, because they choose it. Here I am, and I say it’s not OK, and I say that it is not possible to volunteer for the consequences of your own, unchosen oppression.

See also, all the continuing evidence for discrimination against women – the women who are sacked because they are pregnant or who are paid less than men doing the same job, the women who can’t get promoted because their commitment to the job is questioned, the women who get passed over because their face doesn’t fit, the experienced and talented women who are told they can’t be on TV any more because they are no longer young and pretty.

So what does Maia think of it all?

I think, with Vicky Lovell, that this is a great idea worth talking about. It could stimulate debate and spur us on to fresh ideas about the ways in which we can efficiently – and perhaps rapidly? – move towards the goal of complete equality.

I also think that because it would involve some initial “corrective” discrimination that will or may disadvantage some men, this idea is never going to be put in practice.

I think that supporting this kind of proposal will be like supporting the notion of reparations for descendants of slaves – noble but pointless and, possibly, self-defeating. Because you know what they will say about us if we come out in favour of this, ahem, blatantly anti-male discriminatory policy. They will accuse us of self-serving hypocrisy. You know they will.

Maia also thinks it would be cool to get a tax break.
But that’s just me – self-serving hypocrite to the bone.