CARE’s research looks at how government fiscal policy impacts marriage and family policy in a number of areas:

1. International Tax Comparison

2. Couple Penalty

3. Marriage Support

4. Fiscal Solutions – ‘Supporting marriage and encouraging couples to come together’

 

1. International Tax Comparison

CARE has recently published its annual assessment ‘the taxation of families 2010/11′ which analyses the impact of the UK tax system on different household types from both a domestic and international perspective and it calls for the implementation of a transferable allowance for married couples.
This latest report builds on the findings established in previous reports over the last 5 years, highlighting the fact that in 2010, a one-earner married couple with children on an average wage (£35,212 per year) had a tax burden (defined as income tax plus employee contributions minus cash benefits) that was more than 50 per cent greater than the OECD average. In addition, this year’s publication discloses that a one earner couple with two children on 75 per cent of the average wage (£26,409 per annum) have a tax burden that is 85 per cent greater than the OECD average.
Domestically speaking, this year’s report shows that due to the way the UK tax system operates, a one earner couple with two children on the average wage is better off than just 40 per cent per cent of the population whereas a single person without any children is better off than 83 per cent. Furthermore, the report points out recent proposals to raise the personal income tax threshold to £10,000 will disproportionately benefit those in the upper half of the income distribution, whilst a transferable allowance for married couples with disproportionately benefit those in the poorer half.
The paper is co-authored by CARE’s Fiscal Policy Consultants Don Draper, Leonard Beighton and Alistair Pearson, who write about this year’s review:

“This review is our fifth annual assessment of the way in which UK families are taxed. It examines the tax burdens of different household types and compares them with those of similar households in other developed countries. It looks both at the current situation and also at changes that have been announced but have yet to take effect. This year we consider not only families with an ʻaverage wageʼ but also, for the first time in detail, those with incomes above and below this figure.”

The report is available to download in PDF format or you can read it online using the viewer below:

Previous year’s papers can also be downloaded in PDF format using the links below:

2009/10 Report

2008/9 Report

2007/8 Report

2006/7 Report

2. Couple Penalty

CARE provides an annual assessment of the “Couple Penalty” – the unwelcome fiscal incentive for couples with young children, on low to modest incomes, to live apart, which results from the tax credit and wider benefits system.

Over the last three year financial years, CARE Fiscal Policy consultant, Don Draper, has conducted an annual review of the couple penalty and sadly the numbers of families negatively affected is increasing. The last thing a country wrestling with the unfortunate consequences of family breakdown needs is the creation of fiscal incentives for parents to live apart.  From the year 2009/10, the analysis of the couple penalty will be incorporated into the report ‘The Taxation of Families’, available in the section above.

To access past reviews, use the links below:

2008/9 Review

2007/8 Review

2006/7 Review (Link currently unavailable)

3. Marriage Support

CARE’s Director of Parliamentary Affairs, Dr Dan Boucher, provides an overview of the erosion of government’s use of taxpayer’s money to support marriage in recent years.

To download a copy of the report, Marriage Support Services Review (2008), click here.

4. Fiscal Solutions – ‘Supporting marriage and encouraging couples to come together’

CARE’s research paper, ‘Supporting Marriage and Encouraging Couples to Come Together’ looks at options for reforming the tax system and tax credit system in order to provide better support for couples with children. The report was originally published in 2007.

Background to the report

Leonard Beighton and Don Draper, CARE’s fiscal policy consultants, were approached by the Social Justice Commission and asked to provide a report on the impact of welfare benefits and the tax and tax credit systems on family income. The Commission was particularly interested in changes which could be made to the tax and tax credit systems with the aim of supporting marriage and making it easier for couples to come together and stay together.

Beighton and Draper explained, ‘We considered two main options for improving the treatment of families – enhanced tax credits for all couple families and a transferable personal tax allowance for married couples. A transferable personal tax allowance would provide specific support for marriage and both proposals would reduce the “couple penalty” and make a significant contribution to reducing child poverty.’

The need for reform – highlighted by a number of previous CARE papers – results from the tendency of the tax credit and wider benefits system to provide a fiscal disincentive for parents choosing to marry or cohabit. This disincentive can be worth several thousand pounds per annum in lost tax credits and other benefits for those who wish to come together. This is profoundly ill-judged for at least two reasons. First, it is widely recognised that a stable two parent environment is the best place for the bringing up of children. Second, the majority of poor children live in two parent families.

To download a copy of the report, click here.