Transferable tax allowances
I generally hate the idea, but perhaps sometimes it is the right thing to do
There are two ways to run an income tax system - individual and household. In an individual system everyone pays tax according to their individual income, in a household system the aggregate household income determines how much tax the family pay.
In general I am a fan of individual taxation. If a man is a higher rate taxpayer, and his wife is considering returning to work after having children, a household system means that she will lose 40% of all her earnings.1 Take off the cost of commuting and it might not be worth working. Household taxation suppresses female employment - to the detriment of women, GDP and tax revenues.
I want to argue today for an exception to my general preference. The idea comes from a member of the public,2 who saw me on election day…