Taxation: are we going to correct the systems that disadvantage women?

This may be a detail for you… but it is undoubtedly the beginning of an awareness that something is wrong – or not – in our tax system.

It is in fact the first time that a government has announced that it wants “mobilize the tax tool to promote professional equality between women and men”. Included in the interministerial plan for equality between women and men, presented on March 8 on the occasion of International Women’s Rights Day, a measure provides for better taking into account income disparities within couples.

This measure echoes the bill aimed at accelerating tax and inheritance equality between women and men, tabled the same day by Marie-Pierre Rixain, Member of Parliament for Essonne, President of the Delegation for Women’s Rights and to equal opportunities between men and women.

Based on the observation that there are still many tax systems “marked with a past conception of the family, which prevent the economic and financial autonomy of women”the MP proposes to overturn the current principle according to which married or PACS couples are subject by default to a single rate for the calculation of the withholding tax to establish an individualized rate by default.

Read also: What future for income tax?

A brief step back is necessary to fully understand the scope of this measure.

Negative consequences on the employment rate

Married and PACS couples are subject to joint taxation for income tax. This has no effect on the amount of tax to be paid by the couple when the spouses or partners have comparable incomes. But when there is a significant income gap between the two members of the couple, joint taxation has a strong impact on the tax rate of the person with the lowest income.

However, women in a couple receive an annual income 42% lower than that of their spouse. Consequence: taxing the two members of the couple jointly increases the marginal tax rate of the person with the lowest income by 6 points on average, while that of his spouse decreases by 13 points (Insee References“The joint taxation of married couples and PACS couples” in “France, social portrait”, 2019).

Consequence: women’s income is taxed more than it would be in the absence of joint taxation, which has negative consequences on their employment rate, according to the MP

Read also: Investing in the forest: how does the new tax credit work?

This phenomenon is not new since joint taxation dates back to 1945. But it has become more visible since tax is deducted at source from everyone’s income. By default, the applicable rate is the couple’s average tax rate. Whoever has the lowest income – the woman in three quarters of cases – then finds herself with a “net to pay” lower than what she would have received if she had been taxed separately and sometimes has the impression of ” work for nothing.

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