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Tax and marriage
Jan. 20th, 2010 10:52 amI often realise that I'm marching to the beat of a drum no-one else can hear, or at least doesn't like the sound of. One of these moments was when listening to commentary on Conservative Party plans to give transferable tax allowances to married (and I think civilly partnered) couples.
Lots of people have referred to it as bribing people to get married, with ripostes of "If I marry it will be for love, not tax efficiency". The conversation is about whether marriage is a good enough thing for it to be worth bribing people to join it or whether it's fair to people who aren't married. I think my approach is quite different. In my mind I have always separated out civil marriage/civil partnerships from religious/cultural/emotional marriage. Maybe it's because I spent my teen years dreaming of marrying a girl before that would have been recognised by the state. In the end I religiously and legally married on the same day. Marriage is complex institution with lots of cultural and religious significance, but stripped down, civil marriage is basically a way of getting the state to recognise a raft of rights and entanglements between two people: immigration, medical consent, claims on each other's property and, indeed, already tax exemptions. In this discussion I haven't heard anyone claim that inheritance tax exemptions are unfair bribes for people to marry. Whilst they were all also in love, I know several people who married to obtain these legal rights. Two people very happily lived with each other for over a decade with no urge to marry until one of them was offered a job abroad and a marriage was the easiest way to obtain a visa for the other. Another two friends went to a register office and signed the paperwork with two witnesses to secure their legal marriage. The £100 it costs to secure a civil marriage is much cheaper than the cost of writing wills, medical directives and financial arrangements with a solicitor.
So adding another way to the ways in which the legal and tax system recognise civil marriage/partnerships does not seem to me to be a great break from previous form. The question should rather be whether it is desirable. The people who would benefit from a transferable tax exemption would be couples where one earns less than their tax allowance and one earns more. The most obvious example of this are couples where one partner does not work to care for children, other examples would be couples where one partner is in full-time education, or unemployed. One argument that I can see against transferable tax allowances would be that it would encourage couples to specialise with one working doing the paid employment and one doing the unpaid work. Some people feel very firmly that all parents should engage in equal amounts of paid employment and housework, and having non-transferable tax allowances encourages this. I don't think that all couples should share all work equally. Lots of people have good reason to want one partner to do more of the paid work: one partner can earn more, one partner enjoys domestic work more or one partner enjoys their career more. In my own marriage we tend to see-saw a bit in terms of who brings in the money, mainly dependent upon who's had a lucky break and who's doing something low paid for the sake of their future career. To me the question is about whether to add the ability to share tax allowances to the things which can be obtained through signing some paperwork at a register office, not about bribing people to marry or punishing the unmarried.
In my ideal world the tax system would involve a citizen's income rather than a tax allowance and these questions would be irrelevant. In the mean time I'm not really sure what I think of the idea of transferable tax allowances. It would probably benefit me, but then I'm not in the greatest need. I'd much prefer to see transferable parental leave, but I don't see why we couldn't possibly have both.
Edit: Someone posted a link to this article on Facebook and I wrote a reply.
I'm not convinced of the merits of transferable tax allowances, but some of those arguments are stupid.
Independence: if you think that you currently maintain financial independence in marriage, try getting divorced and seeing how dangerously deluded you are over that issue. Even if you don't have children each partner can make a claim on the assets amassed over the course of the marriage, regardless of who earned the money to pay for them.
More insulting than a tax allowance is the suggestion that non-earning partners aren't part of the labour force. Most estimates find that stay at home parents actually do more work than their earning partners. Does Chris Giles think that children raise themselves whilst their mothers paint their nails?
Also more insulting than a tax allowance is the implication that civil partnerships between same-sex partners are second best to civil marriages between different sex partners, which is suggested by the claim that once you let gays have transferable tax allowances, of course you should extend them to everyone else. Heaven forbid two heterosexuals shacking up together weren't given all of the benefits awarded to two people of the same sex who've made a legally binding commitment to each other.
I'd also contest this preciousness about people's motivations for marriage. I'm only 26 but I've attended two weddings which were heavily motivated by immigration considerations. I've also seen two people marry to secure the other legal protections of civil marriage. I'm sure there are other cohabiting couples who don't have a strong religious or cultural motivation to legally marry but would if there were transferable tax allowances and one of them was planning to take a break from paid employment. Marriages in this situation protect the non-earning partner who would have a greater claim upon the others income if the relationship ended.
Lots of people have referred to it as bribing people to get married, with ripostes of "If I marry it will be for love, not tax efficiency". The conversation is about whether marriage is a good enough thing for it to be worth bribing people to join it or whether it's fair to people who aren't married. I think my approach is quite different. In my mind I have always separated out civil marriage/civil partnerships from religious/cultural/emotional marriage. Maybe it's because I spent my teen years dreaming of marrying a girl before that would have been recognised by the state. In the end I religiously and legally married on the same day. Marriage is complex institution with lots of cultural and religious significance, but stripped down, civil marriage is basically a way of getting the state to recognise a raft of rights and entanglements between two people: immigration, medical consent, claims on each other's property and, indeed, already tax exemptions. In this discussion I haven't heard anyone claim that inheritance tax exemptions are unfair bribes for people to marry. Whilst they were all also in love, I know several people who married to obtain these legal rights. Two people very happily lived with each other for over a decade with no urge to marry until one of them was offered a job abroad and a marriage was the easiest way to obtain a visa for the other. Another two friends went to a register office and signed the paperwork with two witnesses to secure their legal marriage. The £100 it costs to secure a civil marriage is much cheaper than the cost of writing wills, medical directives and financial arrangements with a solicitor.
So adding another way to the ways in which the legal and tax system recognise civil marriage/partnerships does not seem to me to be a great break from previous form. The question should rather be whether it is desirable. The people who would benefit from a transferable tax exemption would be couples where one earns less than their tax allowance and one earns more. The most obvious example of this are couples where one partner does not work to care for children, other examples would be couples where one partner is in full-time education, or unemployed. One argument that I can see against transferable tax allowances would be that it would encourage couples to specialise with one working doing the paid employment and one doing the unpaid work. Some people feel very firmly that all parents should engage in equal amounts of paid employment and housework, and having non-transferable tax allowances encourages this. I don't think that all couples should share all work equally. Lots of people have good reason to want one partner to do more of the paid work: one partner can earn more, one partner enjoys domestic work more or one partner enjoys their career more. In my own marriage we tend to see-saw a bit in terms of who brings in the money, mainly dependent upon who's had a lucky break and who's doing something low paid for the sake of their future career. To me the question is about whether to add the ability to share tax allowances to the things which can be obtained through signing some paperwork at a register office, not about bribing people to marry or punishing the unmarried.
In my ideal world the tax system would involve a citizen's income rather than a tax allowance and these questions would be irrelevant. In the mean time I'm not really sure what I think of the idea of transferable tax allowances. It would probably benefit me, but then I'm not in the greatest need. I'd much prefer to see transferable parental leave, but I don't see why we couldn't possibly have both.
Edit: Someone posted a link to this article on Facebook and I wrote a reply.
I'm not convinced of the merits of transferable tax allowances, but some of those arguments are stupid.
Independence: if you think that you currently maintain financial independence in marriage, try getting divorced and seeing how dangerously deluded you are over that issue. Even if you don't have children each partner can make a claim on the assets amassed over the course of the marriage, regardless of who earned the money to pay for them.
More insulting than a tax allowance is the suggestion that non-earning partners aren't part of the labour force. Most estimates find that stay at home parents actually do more work than their earning partners. Does Chris Giles think that children raise themselves whilst their mothers paint their nails?
Also more insulting than a tax allowance is the implication that civil partnerships between same-sex partners are second best to civil marriages between different sex partners, which is suggested by the claim that once you let gays have transferable tax allowances, of course you should extend them to everyone else. Heaven forbid two heterosexuals shacking up together weren't given all of the benefits awarded to two people of the same sex who've made a legally binding commitment to each other.
I'd also contest this preciousness about people's motivations for marriage. I'm only 26 but I've attended two weddings which were heavily motivated by immigration considerations. I've also seen two people marry to secure the other legal protections of civil marriage. I'm sure there are other cohabiting couples who don't have a strong religious or cultural motivation to legally marry but would if there were transferable tax allowances and one of them was planning to take a break from paid employment. Marriages in this situation protect the non-earning partner who would have a greater claim upon the others income if the relationship ended.