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| ITALICA NEWS |
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| Why is useful to tax women less than men |
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| [ Italica - Sabrina Patota ] - Italy's new premier Mario Monti has just taken office and among the social reform of his new government there is a proposal known in labour literature as gender-based taxation or GBT. This reintroduces the debate on “why it is useful to tax women less than men”? According to taxation theory, a benevolent government should tax less individuals who have a more elastic labor supply. Therefore, as labour supply of women is more elastic than men's, tax rates on labour income should be lower for women. This happens when different elasticities between men and women are taken as exogenous. Studies show that males and females are identical in terms of innate abilities, preferences and predispositions, but men have more explicit bargaining power at home, therefore they assume fewer unpleasant and tiring home duties.They partecipate more in the labour market, exercise more effort, earn more and engage in carriers that offer “upside potential” like higher salaries and promotions. Thereafter, men commit to a career in the market and take less home duties than women, and their market work become less substitutable to home duties and their labour supply respond less to changes in the market wage. This argument is a hotly debated issue in the academic literature but currently it is hardly taken seriously as a political proposal. It is surprising that while the simple proposal of taxing women less than men has never been serioulsy considered, a lot of other gender-based policies as gender-based affirmative action, quotas, different retirement policies for men and women, child care subsidies and maternal leaves are routinely discussed and often implemented. For istance, gender-based affirmative action is common in the US. Spain and Norway have recently introduced stringent quota system for women, and Sweden has recently reformed its paternal leaves with the goal of inducing men to stay more at home with their children. A government who wants to reduce the pressure of taxation in order to stimolate economic growth could obtain better results if its actions are focused mainly on women. A reduction of tax/fiscal burden on female labour supply will cut down female labour cost and will increase their labour demand. Economic studies show that female labour supply, especially for low professional profiles, has a different reaction from men labour supply when there is a variation of wages: men do not reduce their labour supply when salary decrease while women start to work and work better when their salary increase. Therefore, it is possible to tax a little more men in order to tax much less women so that they could have more chances to work and work better. It is important to underline that it is not the lack of welfare services to keep women away from labour market, but an unbalanced division of family chores. In countries where care duties are more balanced among family members, the rate of female employment is higher and a GBT policy could increase family’s resources (because of the lower taxation), allows families to ask for more welfare services and this indirectly increases the demand for female labour. It is true, that even in northern Europe where states offer care services in abundance there is a strong occupational segregation by gender but the reason in simple: child care is primary a women duty and kindergartens “allow” only some type of jobs (compatible with their opening and closing time) and again women look for jobs that allow them to be absent when children are sick. However, thinking that efficient welfare services are the only solutions for female employment means giving for granted that are necessarily women and not men to look after children, while the starting point of the problem is the unbalanced allocation of family chores and the GBT aims at hitting this unbalance. Women can not express at work the same energy than men because of all the housework they have to take care of, and the result is that women work 80 minutes more than men each day. Gender based taxation reduces tax distortion, improves welfare and increases gross domestic product and total employment, but in particular contributes to speed up a process of gender equality that is in progress but it is still to slow. GDP contributes to gender equality because it raises the bargaining power of women within the couple, it generates a more equitable allocation of house vs. market work, changing spouses’ bargaining power and reallocating the last hour spent with children from the mother to the father, which means to improve family's welfare. If women were less taxed, they could finally say to men: “It is 4 o’clock: go to pick up our children from school, stop at the grocery store and start to cook, it is more convenient for all the family if I stay at work and you stop working at 4 p.m.” Gender based taxation is a proposal at zero cost for the national budget and this is what country needs at this time. [ Italica news from Italy and San Marino – Sabrina Patota ] |
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