Why Women Should Pay Less Tax Than Men

Alberto Alesina (Harvard University, Department of Economics) & Andrea Ichino (University of Bologna, Department of Economics) have published an interesting op-ed in the Financial Times:  Why Women Should Pay Less Tax:

Normally, free-marketeers and those who are worried about the efficiency costs of taxation are in opposite camps from those social activists who believe you need extensive government intervention to achieve a range of social goals. Here is a policy proposal that should make the two camps agree: reduce income taxes on women and increase, by less, income taxes on men.

As surprising as it may look, this can be done while keeping total tax revenue constant and reducing average tax rates. Thus, this policy would at the same time reduce overall tax distortions and increase women’s participation in the labour force. It would achieve similar goals to affirmative action policies, quotas or subsidised childcare and could substitute for those policies. It would also make gender discrimination more costly for employers and would be fair because it would compensate women for bearing the brunt of maternity and for the fact that the possibility of having children can negatively affect their career prospects.

The op-ed is based on their article, Gender Based Taxation.  Here is the abstract:

Women elasticity of the labor supply is substantially higher than that of men. The theory of optimal taxation implies that tax rates on income should be lower for women than for men. We analyze this argument in detail and show that given existing estimates of elasticities the optimal tax rates on men and women could be quite different. We also discuss how gender based taxation would interact with other policies having to do with possible gender discrimination in the labor market, with equity and with the social costs and benefits of increasing women participation in market activities.

The Economist weighs in with Womenomics Revisited.  (Hat Tip:  Marie Siesseger.)