Tax and marriage fallacy

Hey, ho, here we go again. The Conservative party have rediscovered that married parents are better for children than cohabiting ones and therefore want to introduce tax incentives to encourage marriage. (see http://www.guardian.co.uk/guardianpolitics/story/0,,1969105,00.html). Let’s quickly point out the obvious problems with this:

1) Are cohabiting couples readier to split up because they’re not married, or do they not marry because they’re readier to split up? In other words, is a ceremony and a bit of paper really going to make a difference to couples who are not particularly committed to one another?

2) Why do the Tories presume that relationships and family matters are influenced significantly by economic considerations? The fact that they are not is clear from the divorce figures. If people behaved in an economically rational way, 99% would not get divorced, because in 99% of cases both sides lose out financially with a divorce (The one exception would be where there are few assets and one spouse spends substantially more than they bring in).

3) How do they plan to use the tax incentives to encourage marriage? The only easy way to do it through the tax system is reintroducing the married couple’s allowance. However, this would involve a massive waste of money, because most of the money would go to people who would be married anyway (we would benefit, for example), and the income tax system cannot distinguish those who have children and those who do not. In addition, tax allowances benefit those on higher rates of tax most and those with very low incomes least. The only alternatives are to try and bolt it onto either child benefit (which would make a simple and effective payment more complex) or to use the child tax credit system. This would be the most targeted approach, but given the mess the system is in already (and the fact that the Conservatives object to the whole principle of this), this hardly seems a good idea.

So why are the Conservatives brining this old chestnut up again? Probably because they’re bankrupt of other ideas: there isn’t much more mileage in scapegoating lone parents for family problems and they daren’t look at issues of work and the family because they might then have to admit that modern capitalism is family unfriendly.

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