No man is an island. The UK income tax system chooses to treat its citizens as though each were one; as though each were an autonomous unit without responsibility for, or need of, anyone else but the State; as though families no longer mattered.
Almost uniquely amongst OECD countries, the UK refuses to recognise family responsibilities in the tax system. The only ‘recognition’ of ‘family’ has been provided by inflated benefits (in the form of a multi-billion-pound annual tax credits bill), which in turn sustain ever more family set-ups dependent on the State while failing to provide the stability and security children need.
Were Philip Hammond to produce a Budget of vision, it is this, the reform of family taxation, that should be at its core. Were he genuinely keen to take on socialism, this is where he should start.
Given the fashion for apologies these days, he could well start with one. On behalf of successive Conservative governments since 1985, when independent taxation was introduced without any counter-measure to acknowledge the majority of single-earner couple families at the time, he could apologise for the family breakdown they are responsible for. He could apologise to the children without fathers for the blight of state welfare dependency they grew up in and the institutionalised child care inflicted on them which Conservative, as much as Labour, governments presided over. I am half-serious. If you don’t understand why, just read this heartfelt account of a father’s terrible doubts about putting his baby into long daycare.
Maybe Theresa May, Philip Hammond, David Cameron and George Osborne should all, in turn, apologise for making it so hard for people to be married, to make the right choices for the sake of their children.
I am not holding my breath. Politicians on the Right are as blind as those on the Left to the relationship between fiscal individualism, social breakdown and neglect of children. At best they see benefit reform – ‘making work pay’ – as the social cure-all when it is only one half of the story. Marriage is the other, and more critical, half. The few who dare mention this heresy do so with scared and hesitant voices when they need to raise them in anger.
Care’s devastating new family taxation report, The Taxation of Families: International Comparisons 2016, should stiffen their sinews to the task if nothing else does. Reading this meticulously researched comparison left me with a rising fury at the sheer immorality of the UK’s income tax system. No, not that the rich are hit too much or too little. But at the extent to which single living is incentivised and married family life and motherhood is penalised. Really, the Treasury might as well declare war on marriage. Be stupid enough to be responsible, to get a job, get married and plan your family, in that order, and you can expect to be punished, especially if you are poor already. Have the temerity to believe that your children need one stay-at-home parent and you can expect to be punished till it hurts, in fact till you give in and do what the State tells you, which is to go to work and offload your kids.
Whatever the squeals of protest from aggressive childcare campaigners, in the mix of what George Osborne once called ‘lifestyle’ choices, the choice the tax system tilts violently against is not the ‘right’ to childcare, but the right of one-earner married couple parenthood.
For the sin of wanting this – even if only for a while – such families are crippled by the highest effective marginal tax rate in the developed world. For this ‘luxury’ they pay in tax 70 per cent more than a comparable French family, more than twice as much as a comparable US family and 15 times as much as a comparable German family.
‘Whereas across the OECD on average the tax burden placed on such a family tends to be closer to half that on a single person on the same wage, the UK burden is more than 75 per cent of that placed on a single person on the same wage,’ the Care report states.
If Mrs May’s former aide Nick Timothy is still advising on her on those ‘just about managing families’, then he might put careful perusal of Care’s report at the top of his agenda, and ask himself what possible justification there is for a tax burden on one-earner married families that is 20 per cent greater than the OECD average. Forget austerity, is it any wonder that married families in all but the highest income brackets are struggling? Is it any wonder that married family life no longer beckons?
As for any idea that marriage is becoming fashionable again, forget it. It has taken less than 40 years for the male marriage rate to plummet – from 50 males per thousand per year then to a present-day 20 per thousand. What this means is that half of men no longer get married, and three million children living in lone-parent, mainly mother-led, families are doomed to fatherlessness in effect.
The family instability consequences of our marriage-lite society and the poor outcomes for children are well documented, as is the sociological evidence that marriage (or the lack of it) is the key predictor of poverty. If further confirmation were needed, Harry Benson’s study of 11,000 families published this week provides it. Having parents who split up is the strongest single negative influence on girls’ mental health. Mrs May, please also note, given the adolescent mental health repercussions, that cohabiting couples split at five times the rate of married couples.
There is nothing moral or pragmatic about the Conservatives continuing their policy of extreme fiscal individualism. It is immoral.
The Conservatives need to wake up. Polarising society on marriage lines is an own goal. It delivers an inequality and injustice that Mr Corbyn’s socialism can never mitigate but will forever thrive on.
