The FairTax project is funded by the European Union Horizon 2020 research and innovation programme 2014-2018, grant agreement no. 649439

Gender and Taxation in the EU –

From Taxing for Grow th to Taxing for Sex Equality

c 2016 by Kathleen A. Lahey

Faculty of Law , Queen’s University, Canada Tax is a Feminist Issue!

Greens/ EFA Conference, European Parliament Brussels, June 29, 2016

Getting to gender and income equality through tax and expenditure policies:

I It is the law now – Gender equality, poverty reduction, and environmental sustainability are law for the EU and all members II ‘Taxing for economic growth’ has reduced most state revenues, but has not reduced gender inequalities, poverty, fiscal austerities, tax competition, or international tax havening III ‘Taxing for equality’ calls for gender impact analysis when reshaping revenues, gender equality, income security, environmental, and development strategies at the macro, meso, and micro levels IV Taxing for gender equality requires unwinding complex tax and spending policies that lock economic gender inequalities in place

2015: recognition of importance of gender impact of tax and fiscal laws: SDGs confirm that gender equality and biosphere sustainability are core

outcomes

UN Financing for Development includes gender equality and life sustainability in all macroeconomic and other fiscal policies

Beijing+20 outcome documents confirm that tax and other fiscal policies need direct detailed analysis in all policy contexts

The SDG indicators include almost all the indicators and data commitments needed to carry out comprehensive GIA of tax and fiscal policies -- *more action is needed on this issue*

CEDAW, UN Rapporteurs, and major international organizations are all

recognizing the binding status of commitments to tax and fiscal gender equality (CEDAW cases of Blok and Canada; Sepulveda)

Equality = parity in relation to -- Regional or national economic development initiatives, including

urban vs rural, poverty, and income inequality divides

Business innovation and productivity incentives

Policies designed to ameliorate the impact of recessions

Gender effects of austerity, recovery, and adjustment policies, as between women and men

Fiscal and redistribution instruments: Taxes on income, consumption, assets Cash transfers (taxable or tax exempt) Subsidies to consumption, inputs, credits, and tax expenditures In kind transfers via fully or partly public provisioning Transnational relations

‘Going for grow th’ and ‘tax ing for grow th’ drive detaxation and income inequality -- ‘Going for growth’ claims that tax cuts will accelerate business investment,

increase employment, and grow GDP

‘Taxing for growth’ reduces business taxes and local costs and leaves human and social costs on the ground -- with national governments

The formula for ‘taxing for growth’ combines detaxation, flattening tax rates, reducing employment benefits and security, increasing income inequalities – and making a ‘business case’ for women’s increased involvement in paid work –

1 Reduce corporate and top personal income tax rates 2 Increase local taxes – property, VAT, and environmental taxes 3 Reduce benefits for retirement, disability, unemployment 4 Eliminate subsidies for housing costs 5 Use tax subsidies only to reward business investment (eg, SEZs) 6 Eliminate sector and trade subsidies and barriers to capital flows 7 Implicit acceptance of offshoring, tax havens, and illicit flows 8 Increase married women’s involvement in paid work

Tax ratios and gender equality ranks, EU and NA, 2014

GII 1995

HDI 1995

GII 2014

HDI 2014

Tax % 1995

Tax % 2013

Change/tax %

Sweden 1 9 4 12 45.6 42.8 (2.8)

Finland 2 5 11 24 44.5 44.0 (0.5)

Norway 3 7 9 1 40.9 39.1 (1.8)

Denmark 4 14 5 10 48.0 40.6 (7.4)

US 5 2 47 5 26.7 25.4 (2.3)

Canada 9 1 25 8 34.9 30.6 (4.3)

UK 13 18 39 14 31.9 32.6 0.5

Nether. 20 4 7 4 39.0 36.3 (2.7)

Distribution of $47 billion in 2016 revenue lost due to all 1997-2016 personal federal tax changes, by decile and gender Range of total family incomes in each decile

Net tax cuts received in each decile ($millions)

Net tax cuts received in each decile (%)

Men’s shares of cuts within decile (%)

Women’s shares of cuts within decile (%)

1: up to $19,700 $ 330.5 0.7% 52.1% 47.9% 2: $19,701-$29,100 $ 946.4 2.0% 42.1% 55.9% 3: $29,101-$39,500 $ 1,298.6 2.7% 50.0% 50.0% 4: $39,501-$50,500 $ 2,135.8 4.5% 59.0% 41.0% 5: $50,501-$63,400 $ 2,891.5 6.2% 61.2% 38.8% 6: $63,401-$78,900 $ 3,736.0 8.0% 68.8% 30.2% 7: $78,901-$98,700 $ 4,809.2 10.2% 69.6% 30.4% 8: $98,701-$125,800 $ 6,111.8 13.0% 73.5% 26.5% 9: $125,801-$168,800 $ 7,979.9 17.0% 73.8% 26.2%

10: $168,801 and up $16,708.9 35.6% 72.7% 27.3% All $46,948.5 100% 69.7% 32.1%

Top 20% $24,688.8 52.6% of all cuts 73% 28.2% Source: Statistics Canada SPSD/M v. 22; deciles and results have been rounded; personal federal tax cuts are from personal income, payroll, and commodity taxes.

The polit ical economy of gender -- Women are not considered to have the same entitlement to fulltime

fullyear sustainable wages on the same terms as men

Employment, pay, retention, promotion, and benefits discrimination is only weakly discouraged by governments even when they have strong sex equality rules on their books

Women are socially presumed to be responsible for child or other care and even for unpaid support of spouses/partners who are in paid work

Only one country has taken steps to fully socialize care resources so women engage in paid work as free of childcare costs as men

Women work more combined hours of paid and unpaid work per week than men everywhere, but have – Globally, between 10% to 50% lower earnings than men Higher rates of part time, seasonal, family business, and precarious work Smaller entitlements to unemployment benefits, pensions, and employment benefits Unequal access to care resources as compared with men Inadequate maternity leave pay to support selves without spouse/partner Lower lifetime earnings, capital accumulation, and private or public supports Less financial capacity to save, borrow, or raise business finance capital and profits

Taxation and the status of women: Tax laws reflect and magnify women’s longstanding economic disadvantages in

monetized systems, and under-benefit women with low or informal incomes: Lower incomes, precarious paid work, little wealth, leisure, or governance power Substantially more unpaid work than men – especially unavoidable care work Exacerbated by poverty, race, Indigenous heritage, disability, low levels of income

Men’s much larger shares of good paid work, incomes, capital, social benefits,

leisure, tax incentives, and governance power ensure that existing gender distributions remain remarkably durable

Effective anti-discrimination laws can enforce rights to equal market incomes, property rights, and political voice as well as dismantle tax laws that take more work and tax revenue from women as compared to men

Tax-transfer systems can be restructured to redistribute economic power and to remove fiscal, poverty, and care traps block gender equality

Detaxation, tax expenditures, joint fiscal laws, offshore, and unreported incomes all reduce national revenue capacities -- and then justify government austerities that hit women first, hardest, and most permanently

Women’s shares of total earnings vs total work hours, EU averages, 2010

Unpaid work hours: 75.0%

Paid work hours: 44.3%

Total incomes E:

37.1% 7/13/2016

Women’s shares of total incomes vs total work hours, Australia, 2014

Unpaid work hours: 67.2%

Paid work hours: 34.1%

Total incomes $:

36.8% 7/13/2016

Females

Males

$-

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

$100,000

Under 20 20 - 24 25 - 29 30 - 34 35 - 39 40 - 44 45 - 49 50 - 54 55 - 59 60 - 64 65 - 69 70 +

Average total income, by gender and ageAustralia, 2013

7/13/2016

$-

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

$90,000

$100,000

16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90

Average total income, by sex and age, Canada, 2012

Male - V. 16.1

Female - V. 16.1

Male - V. 18.1

Female - V. 18.1

Tax measures w ith known negative gender impact: In the global north, the total tax load remains somewhat progressive as

between women and men

Consumption and commodity taxes are regressive (sales, VAT, excises, envir)

Social contribution taxes over-tax and under-benefit low-income individuals

Personal income tax cuts and expenditures significantly benefit men at the expense of women – but will always bypass substantial numbers of women

Joint tax measures reward men at women’s expense, and income splitting in various forms mainly benefits rich single-income couples, and artificially qualify high-income taxpayers for poverty relief

Continued cuts to corporate and investment taxes are major drivers of overall income inequality and benefit men far more than women

Social transfers cannot meet women’s needs adequately

Evolution of the main components of tax revenue in the EU-28, % of GDP, 2002-2014

Participation tax rate [PTR] and childcare costs [CCC] for second or lone parents, 2012

Second parent PTR+CCC

Second parent no CCC

Second parent CCC

Lone parent PTR+CCC

Lone parent no CCC

Lone parent CCC

Korea

10.4%

10.4%

---

60.0%

60.0%

---

Sweden

30.9%

22.2%

8.9%

61.7%

57.2%

4.2%

EU Average

55.4%

32.3%

22.9%

70.2%

55.6%

14.6%

Australia

73.1%

41.9%

31.2%

69.2%

52.7%

16.5%

Canada

77.9%

31.4%

36.5%

94.1%

52.7%

41.4%

US

80.0%

27.3%

52.7%

90.8%

53.0%

43.8%

UK

88.3%

21.2%

67.1%

78.9%

70.4%

8.5%

7/13/2016

Joint tax measures impose numerous tax penalties on low -income women: Tax exemptions for dependent spouses create tax barriers to women’s

paid work

Low income allowances or credits to those with small earnings are not enough to ‘make paid work pay’

Even refundable income tax credits and taxable allowances will interfere with making paid work pay, especially if they are based on couple incomes or household incomes

If a joint family or couple income threshold is used as a condition for getting benefits, paid work will not be permitted for women

Joint tax penalties that depend on relationships without regard for the economic realities of those relationships raise women’s ‘dependency wall’ as well as their ‘welfare wall’

‘Tax ing for sex equality’ and structural equality measures – ‘Taxing for equality’ that takes gender and racialization, Indigenous,

disability, poverty, and other inequalities into consideration can promote economic equality

Solutions with proven track records include -- 1 Restore progressive taxes on incomes and capital -- ability to pay 2 Individualize all spending and tax measures completely 3 Eliminate inequalities in hiring, wages, promotion, and benefits 4 Invest in affordable education and skills training at low costs to all 5 Secure full affordable early childhood and child care services for all 6 Reduce taxes on low earned incomes and provide earned income credits 7 Increase income security, pension, and other economic supports for low

and middle income individuals 8 Guarantee income security for single parents, low-income, and low-skill

workers 8 Reduce imbalances of capital incomes at high income levels 9 Eliminate residual tax/benefit penalties that penalize women’s paid work 10 Reduce tax loads on low-income self-employed

Fiscal individualization, by decile, sex, and disposable incomes, all Canada, 2012

Income decile

Individuals in decile (000s)

Change in average disposable income, per individual ($)

Male Female Male Female Both

1 523 1,263 147 2,989 2,168

2 478 1,298 919 4,441 3,493

3 660 1,119 1,189 3,606 2,609

4 740 1,036 -137 3,594 2,040

5 858 920 -644 3,696 1,602

6 975 802 -883 3,431 1,065

7 1,007 767 -1,368 2,443 280

8 1,120 660 -1,719 2,052 -320

9 1,178 598 -1,701 1,980 -461

10 1,384 394 -1,938 808 -1,330

Total 8,923 8,857 -920 3,182 1,124

7/13/2016

Change in women’s activity rates vs childcare spaces, Spain, 2008-2010 (Alarcon and Collino)

2008 2010 2008 2010Andalucía 73,2 80,7 62,9 76,8 Aragón 83,9 84,3 76,6 75,8 Canarias 74,6 81,9 61,8 62,8 Cantabria 78,3 81,1 68,5 69,2 Castilla - La Mancha 74,8 76,6 62,0 78,8 Castilla y León 79,4 83,1 68,5 68,8 Cataluña 83,1 84,5 75,7 77,3 Ceuta y Melilla 58,1 55,8 62,6 61,2 C. Madrid 85,2 89,4 80,1 80,1 C. F. Navarra 82,9 83,8 74,9 74,8 C. Valenciana 80,3 82,6 65,5 69,1 Extremadura 70,8 77,6 63,9 63,1 Galicia 83,8 82,4 69,3 72,0 I. Baleares 82,4 85,2 62,6 66,4 La Rioja 81,2 80,9 60,9 60,8 País Vasco 84,3 85,5 87,4 88,5 P. Asturias 82,2 82,1 66,2 65,2 R. Murcia 75,3 78,9 68,1 67,4 ESPAÑA 79,8 83,2 70,2 74,6

Grado de cobertura%Tasa de actividad

Mujeres 25-39 años

Value Added Taxes (Goods and Services Taxes) Flat-rated VAT (GST) taxation is highly gender and poverty

regressive VAT tax credit refunds or low income allowances only offset part

of the VAT paid by those with low incomes

Introduction or increase in VAT rates increases prices

Unlike inflationary price increases, VAT-induced price increases are not accompanied by increases in wages or business profits

VAT-induced price increases reduce demand for goods and services, or businesses absorb some of the cost of the VAT

Thus business profits fall, unemployment increases, and social assistance needs increase – and women are more vulnerable to the effects of forced price increases with fixed or falling incomes

Economic gender equality indicators:

Women’s and men’s employment rates, plus Shares of all fulltime paid work Shares of all parttime paid work

Women’s and men’s shares of total work time, plus

Shares of paid work hours Shares of unpaid work hours

Women’s and men’s shares of incomes, consisting of

Market incomes, by sources ) Total incomes ) by gender, Taxable incomes ) household, and After-tax incomes ) dependents Consumable incomes )

Women’s benefits from education: Size of gender gap at each level of educational attainment Gender gap expresses women’s incomes as a percentage of men’s

incomes at each level

7/13/2016