.. to think it's about time we taxed *household* income

[sussexman]

Reading today about the Labour proposal to tax the top 5% more heavily in order to pay for public services. It just strikes me as very old fashioned thinking to not take account of the fact that most households have 2 earners and that it might be better to tax the household income, not the individuals.

Using Labour's top 5% - take a couple each earning £45k - they'll pay 22k this year in tax and NI. If one of them was a SAHP and the other on 90k they'd pay 30k in tax and NI. It seems to me that we could fund better services, both more fairly and without clobering everyone so hard if the household income were taxed rather than the individuals.

None of this is intended as a plea for the rich - or indeed a suggestion as to what the rate should be - just a suggestion on a fairer tax system. AIBU?

[Mummyoflittledragon]

Surely the threshold would have to be much higher though so the benefit of having two people earning 30k would be more similar to one earning 60k. At the same time, make childcare far more affordable as it is in some countries. I remember reading something on a recent thread a poster said something about parents in her locality were complaining about paying something like £35 a month for full time preschool care.

[namechangedtoday15]

No - even if there is a difference in tax (ie the "one big earner + SAHP pays more tax") you've completely ignored that chances are, the working couple are probably paying £15-20k a year (net) in childcare costs (2 children in nursery).

[TFPsa]

with all tax you have to take into account a whole bunch of things, e.g. Impact on incentives, fairness, administrative simplicity, etc.

[Strikhedonia]

I agree that it's very unfair to penalise households with a higher earner. Look at how you miss out on child benefit when 2 salaries, each not reaching the threshold still qualify. How can this be right?

I think the current tax rates are completely wrong anyway, but have little hope on things improving any time soon

[Secretsquirrelclub]

Could be done in the same way entitlement to benefits is calculated. Married, or cohabiting couple pay tax on their combined income.

[Fab39ish]

Yeah that fab poll tax. 3 are us living in a shit council house paid more than someone living in a mansion. Our four incomes were low as teens. Can't remember if my retired parents paid too.
The system at the moment is odd. My dsis is entirely to nothing as her retired partner has savings.
I hardly get any child benefit as dh is a high earner .
Yet my tax allowance remains unused.

[Fab39ish]

Sorry when I say 4 I included my retired dad.

[MrEBear]

I have to agree we should pay tax as a couple not as individuals, in exactly the same way as if we claim benefits people claim as a couple.

Maybe the way to do it is give people the choice, Individual or joint. So if you have a SAHP the working parent could make full use of their tax free allowances and lower income tax bandings. The government aren't going to change it because it will result in less tax being paid.

It totally gets to me that two couples with the same income, one gets child benefit, one doesn't. The argument that if you have a SAHP they don't need to pay for childcare doesn't really wash. We don't receive child benefit but I still work, way below the 40% threshold and pay child care for the days I work, other people who both work might be avoiding paying child care by relying on grandparents etc.

Children's income / tax allowances should not come into it. It would make the system far too complicated on the basis that children move out, go to uni, some stay at home for uni. It would make things far too complicated for a kids paper round to be taken into account for family taxation.

[Want2bSupermum]

Here in the US the thresholds are doubled so not a disincentive for the lower wage earner. It's only a problem when you have a significant difference in wage with the higher earner making huge amounts that take the couple into the highest tax rate.

I'm the only working spouse in dhs peer group but the woman stopped working years ago as soon as they married.

[SecretNetter]

Two people earning have two sets of working costs and potentially childcare costs

This.

We have the same gross household income as friends of ours, about £60k ish.

But we have two of us working ft so take home more net as friends wife is a SAHM. Meaning we also have childcare costs and 2 lots of individual work/travel costs which they don't.

If their tax was decreased to our level, I'd be happy for them...but if ours was increased to take the same, lower, net income as theirs, we would struggle.

[ChardonnayKnickertonSmythe]

It's already being done for benefit purposes. Households with one high earner are being penalised.

Also, no one will be denigrated as the "wife" is will be both as a household.

I would agree.

[Want2bSupermum]

I also think childcare should be 100% deductible when both parents are working or studying. This would help bring so many families out of poverty.

[RubySparks]

Round of applause firesuit for finding that info from 80s! I have no wish to be taxed as a household or couple, it would be a backward step particularly for women.

[Bluntness100]

No absolutely not. I have a right to work, a right to earn, a right to pay my own taxes, a right to financial independence and i will be absolutely fucked if I will go back to the good old days of losing that right if I chose to live with a man or get married. I don't want it for me, I don't want it for my daughter and I would bloody fight it every inch of the way.

Women fought for this. We should not give it up. I can't even believe your suggesting it.

[MissShittyBennet]

Women fought very hard for independent taxation. But it is bullshit that we're individuals for tax purposes and a household for benefits! Can see why people think it's unfair.

[LurkingHusband]

Whatever the taxation system is. the benefits system should match it.

Currently we tax on individual income, but then assess for benefits on household income (and savings).

Women fought hard for independent taxation.

Very true. So why allow it to be wiped away when being assessed for benefits ?

[Want2bSupermum]

firesuit why the assumption that it's the mans money? On our return it's joint meaning just that. The income isnt his or mine, it's ours.

Just trying to understand the argument here.

[JustKeepDancing]

I agree with one of the earlier posters - how would you define a household? A married couple? A cohabiting couple? Would flat sharing friends (or strangers who are renting rooms?) have to declare a household income? Or adults who are living with parents as carers if they have dementia etc? I suspect this system would benefit parents who cohabit but not sure how it would benefit anyone else!

[LurkingHusband]

I agree with one of the earlier posters - how would you define a household?

The DWP manages ....

[KavvLar]

I agree with independent taxation. Following that logic, why is it acceptable for the Government to use total household income for benefit assessment? The benefit system seems to take the absolute opposite approach, doesn't it?

[Shakirasma]

Let's not ignore the fact that the single earner is working Y hours a week to get that financal recompense but the couple are working 2 x Y hours and have 2 x the travel costs, plus other expenses that may come from not having somebody at home to run the home.

[KavvLar]

Sorry took too long to type what Lurking Husband wrote far more eloquently.

[HandbagCrab]

Absolutely agree about individual tax and household benefits. A sahm with a financially abusive, higher earning husband can't even get £80 a month child benefit now and so many people don't know about the link between child benefit and ni contributions for sahp. And then you have stuff you can't claim because of household income leaving a non working partner beholden to the working one until they can get a job.

[MissShittyBennet]

We do already have a mechanism for defining a household, however imperfect.

YY re two sets of working expenses. For normal rate taxpayers, the current personal allowance is £11.5k. 20% of that is £2300, or £190 a month. Not exactly unusual to spend that in working expenses, is it? Even some people without childcare costs have a dear commute.

[ChardonnayKnickertonSmythe]

I'm not assessed as an individual, independent woman for benefit purposes.

I'm seen as a past of a household.

That's not fair on me.