“The personal income tax cuts proposed by the government will make very little difference to many women,” Melbourne University tax professor Miranda Stewart told Women’s Agenda. “The bigger issue is the combined impact of family payments, the childcare subsidy and income tax. While the new subsidy improves matters for some families it still does not eliminate the high costs of going to work.”
The effective marginal tax rate for women with children would remain as high as 95 per cent after all three stages of the tax cuts and the changes to child care benefits due to begin on July 1 set in.
Work to barely pay for returning mothers, even after budget changes, tax inquiry told: https://t.co/QufcCWzGqW @smh @theage #auspol #ausecon pic.twitter.com/3JJo22kXPq
— Peter Martin (@1petermartin) June 17, 2018
In news that will surprise no one familiar with the cost of childcare, Stewart told Fairfax Media that families lose income when mothers move from working part time to full time.
By way of contrast the proposed tax cuts will reportedly benefit 1.894 million men compared to 767,000 women.
The final stage of the tax changes are estimated to deliver $30.35 billion to men over four years compared to $11.25 billion to women.
In its own Women’s Budget Statement, the National Foundation for Australian Women concludes that stages two and three of the government’s income tax cut plan “reduces the progressivity of the tax system and represents a major and inequitable turning point”.
There is no doubt that the three stages of tax cuts that government has put on the table will substantially benefit men more than women. The gap is galling. But what’s worse is that pointing this out, as Labor did, has been pitched as some sort of vexatious ‘identity politics’. The fact tangible proof of gender inequality is regarded as an inconvenient nuisance is rather telling.
Something from #insiders on women and tax ICYMI 🤓 https://t.co/mMIsOUKk96
— Annabel Crabb (@annabelcrabb) June 10, 2018
In an ideal world the impact of any tax policy changes would be equally distributed between men and women but in the real world that ain’t so.
It ain’t so because of a number of stubborn structural issues that mean men and women in Australia still occupy vastly different footing.
Men earn far more than women do. Yes, more men work full-time than women do but that does not explain the income differential. A substantial pay gap still exists even when men and women work the same hours, in the same fields, in the same roles.
Many women aren’t able to work as much as they would like because of issues including the cost of childcare and the expectation that they will fill the gap at home, not to mention pregnancy discrimination which impacts one in two women. The fact women can’t access full-time employment to the same extent men do is not always a choice.
Some enlightened employers offer generous parental leave policies and flexible work arrangements that make it far more feasible for men and women to split their work and family responsibilities but that is not the norm.
Australia’s paid parental leave policy is among the least generous in the OECD and remains geared at ‘primary carers’ which perpetuates the notion of mums being largely responsible for the child rearing.
Women still undertake the lion’s share of the caring and the duties on the home-front. Women are the ones who take extended breaks from work to care for young children and men aren’t encouraged or supported to do the same, even when they want to.
As it stands a second earner – usually the mother – working two days a week with two children in childcare may produce a net financial benefit, but working three, four or five days may not.
“It was extraordinary that second earners went back to work full time at all,” Professor Miranda Stewart told Fairfax Media of her analysis. “The reality has been that a proportion of women do go back to work, and the family is essentially bearing the net cost, unless they can use grandparents or friends for care or a cheaper option such as family day care.”
It is why, as maddening as it is to read headlines about the cost of ‘mums returning to work’, rather than ‘parents’, it is, in many cases, factually accurate.
In Australia there are effectively two employment tracks for parents: one for full time working dads and another for part-time working mums.
It means that the impact of tax changes aren’t spread equally and, to my mind, it presents the government with three choices.
- Get angry that this is pointed out.
- Change the tax policy.
- Address the structural issues that create the inequality.
The utility in option one is non-existent but I suspect that might not deter some from running with it.
By way of contrast the potential utility in options two and three is vast but it would require leadership and commitment.
Professor Miranda Stewart says income tax cuts aren’t the best way to deliver economic benefits to and from women.
“Income tax cuts don’t address the work incentive problem for women and women benefit less from tax cuts than other types of government spending,” she says. “If we want to deliver more equal government spending and we want to encourage more women in to full time work there are better ways of doing it.”
Making childcare more universal by removing the means-testing or using the mother’s income as the determinate, would be one place to start.
“That would essentially deliver a tax cut to families in middle income with kids and in a way ensures women benefit more equally,” Stewart says.
Any chance of that being considered? A Women’s Budget Statement would – at the very least – make the divergent impact of any proposed change on men and women harder to ignore.