Women’s earnings should be taxed at a lower rate than men’s earnings. No, I’m not being completely sexist and going crazy feminist on you, there is a real economic rational behind my claim.
According to tax theory goods with more elastic supply curves should be taxed at a lower rate than goods with more inelastic supply curves due to the dead weight loss to society. In real person terms, that means that the same tax on two goods can lead to a greater loss to society with one good than the other.
Look at it like this:
I have two goods that I want to tax, apples and bananas. Let’s say that at the moment 10 apples and 10 bananas are being sold for $2 each. Conventional wisdom would say that if I tax apples at $1 each I will make $10, and if I tax bananas at $1 each I will make $10 each. So, what is the problem? Unfortunately for the government nothing is quite that tidy, changes in supply and demand will change the equilibrium.
For the sake of simplicity I’m going to assume that the demand curve is flat (that consumers will only pay $2 for apples and bananas regardless of how many they purchase), this isn’t usually the case but it will make the explanation a little easier.
So when I put a $1 tax on apples the price that producers receive drops from $2 to $1. At $1 producers are only willing to supply 9 apples, not ten. So, now only 9 apples are sold, which means that the government gets $9 in tax revenue, the producer gets $9 in sales, and there is another $2 that is not accounted for. Part of the loss is taken away when the producer doesn’t make the 10th apple, but $0.5 is lost.
Banana producers can choose to produce pineapples instead of bananas, so when there is a $1 tax on bananas the production drops to 8 bananas. This results in a $1 loss to society, twice the loss resulting from the apple tax. The difference in social loss is due to different changes in quantity due to a change in price (elasticity).
Labor is very similar. Men have few options aside from working so when their labor is taxed not many men exit the labor market. Women, on the other hand, have historically been the secondary wage earners and the primary homemakers. When wages drop, or taxes increase, more women will choose to exit the work force in order to stay home and run the house.
It is true that women’s labor supply is becoming less reactive to changes in wages, but it is still true that women’s supply of labor is more reactive than men’s, so women should be taxed less. It is for the good of society…
And I wouldn’t mind it either
But don’t worry guys, this would be an amazingly unpopular political recommendation so despite it’s economic validity it will never come to pass.
-m-
I couldn't follow this all the way through lol, but I am a woman, and I dislike taxes, so if you think I should be taxed less then that is -okay by me. =]
simply because we have a lot of expenses men don't have, such as tampons, birth control (largely, women worry about and pay for whatever type of birth control is used,) bras, vaccines against cervical cancer and numerous other expenses and headaches men are thanking their lucky stars they don't have.
Love ya,
Carrot
I can definitely see the logic behind women being taxed less... but I can also see that leading to women being paid even less, because then employers have an excuse: "She pays less taxes, therefore she should be paid less." If women are to have equal rights to me, it might be in ALL areas. If they were taxed less, that's not equal rights, and that will, in the long run and possible in the short-term as well, end up harming the feminist/humanist movement. Same reason why I believe that women should be drafted and in combat units as well as men (if there is a draft, which is a whole other subject for debate).
Very convincing and thought-provoking argument though!
-----------------------------------------
Please see my recent blog post, "Genocide and Student Activism": http://www.progressiveu.org/041447-genocide-and-student-activism
...is behind all government efforts to micromanage the ecconomy. It fails to have the calculated effect because complexity renders the calculation useless.
Suppose more women leave the work force, does that make fewer jobs? Probably due to fewer wage earners buying fewer products, but suppose the effect was to create a greater scarcity of labor, and drive the cost (wages) upward. Another side effect of a labor shortage is increased investment in capital equipment since the fewer workers need to produce as much as the larger number once did. Another possibility is that some tasks are outsourced overseas. It is generally not possible to predict which of these will happen.
This type decision is best left to a free market. People that are actually affected make their own choices based on their own values. The government trying to make these choices for them does not serve anyone very well, generally has unintended concequences, and promotes ineficiency. This is done in thousands of pages of the US tax code over and over again. Other than creating thousands of jobs for tax preparers that add NOTHING to the wealth or enjoyment of society as a whole these rules help no one.
A sales tax such as the Fair Tax being currently proposed by a grass roots movement would remove this ridiculous mess of attempted social engineering, and improve the efficiency of the ecconomy and freedom of US citizens.
A Fact is Always Better Than an Ideal.
Good blog, though I don't see this happening anytime soon. When does anything good ever happen in a speedy timeframe?
Congrats on being Featured!!
~ *~
Visit my blog! I'll even provide a link for ya:
Comments are always appreciated! :)
It'll never happen. The point is more a commentary on tax theory than a real policy option.
Thanks.
-m-
You are starting from the assumption that it is a good thing to have women in the workforce rather than at home making babies. Taking women out of the workforce would certainly lower GDP but not all economic utility is measured in terms of output. There is a lot to be said for women being at home barefoot and pregnant. Population in the first world is falling and we are not making enough babies to maintain our population or support our pyramid schemes like Social Security. We are having to import immigrants because our women are working at the wrong job.
It seems to me that women should be taxed higher then men so that they would get their priorities straight. :-)
Very true. However, taxing women at the same rate as men makes more women stay at home and make babies and taxing women more will get all of the feminists up in arms. What you should really do is ban all kinds of birth control, make it so that women can't plan pregnancy.
But then there are people who would argue that more women in the workforce creates new jobs in child care.
-m-
I highly agree with the anticipated blog, due to women do have a more logical reason being of not being as taxed as much as men. Women hold on the responisiblity more of taking care of home, and managing their home, and majority women are single parents, or divorced parents, who recieve little or no help at all.