Sir Edward Leigh MP said in Parliament today that he had six key arguments that rebutted opponents of marriage tax breaks. We rebut the rebuttals below… (Sir Edward Leigh is in italics; we’re not)
1. ” First, the UK is out of line with international convention in not recognising marriage in its tax system. We are virtually alone of all big countries.
Fact. Lots don’t, including New Zealand, Sweden, Finland, Greece and Hungary. There’s been a move to individual taxation since the 1970s which France is currently considering.
2. “The second is the distributional argument: introducing a transferable allowance for married couples will disproportionately benefit those in the lower half of the income distribution.”
Fact. The IFS says eligible families tend to be around the middle and lower-middle of the income distribution: most are in the third to sixth income decile groups. Marriage tax breaks will not help the very poorest families.
3. “The third argument is about the married couples allowance, which was dismissed by some as something of an anomaly, but which played a key role in sustaining one-earner families.”
Fact. Um. It certainly doesn’t support working single parents who are, of course, one-earner families. And while we certainly don’t want to scoff at the difference £200 can make to some families, it seems a stretch to claim it would “sustain” them.
4. “The fourth argument is that a transferable allowance would help to make work more rewarding for many of the poorest in society.”
Fact. Um. Well. Marriage tax breaks actually makes work less rewarding if your spouse (probably the husband) already works.
5. “The fifth is that transferable allowances should be introduced as soon as possible to compensate for the attack on one-earner families resulting from the introduction of a higher-income child benefit charge.”
Fact. Any couple that is eligible for a marriage tax break is also eligible for the full amount of child benefit so it won’t provide any “compensation”.
Marriage tax breaks will go to couples where one spouse pays basic rate tax (earning between £9,440 and £41,451) and the other doesn’t pay tax. A spouse has to earn over £50,00 before lose any child benefit which would mean they were not eligible for a marriage tax break.
6. “The sixth and final argument is the stay-at-home spouse argument; most one-earner families do not have the option of becoming two-earner couple families.”
Fact. If the £700m cost of marriage tax breaks was spent on helping families with childcare or if there was more access to flexible working many one-earner families would have the option of becoming two-earner couple families. This argument also ignores the existence of couples who cannot afford not to be a two-earner couple family. They simply couldn’t pay the bills or rent on one income. And they won’t get a marriage tax break either.
This also ignores single parents, including widows, who not only won’t get a marriage tax break but also don’t have the option of becoming a two-earner couple family.