How Tax Systems Treat Men and Women Differently - Finance & Development - March 1997 - Janet G. Stotsky

AX SYSTEMS reflect a tapestry of decisions, made over many years. These decisions have been influenced by a variety of factors, including social attitudes about the respective roles of men and women. As a result, many tax systems exhibit gender bias— they treat men and women differently in ways that can negatively affect their decisions on whether and how much to work, their personal consumption habits, and their overall tax liability. While it is easier to detect gender bias in personal income tax arrangements, gender bias—explicit and implicit—may be present in other taxes such as consumption taxes and import duties. Gender bias may also be found in the way payments are linked to the receipt of benefits under social insurance programs. Prompted by changing attitudes, many countries in recent years have reformed their tax systems to reduce gender bias (see Box 1). In the 1980s, for example, several Western European countries reformed their personal income tax laws to eliminate provisions that explicitly discriminated against women. More generally, in industrial countries the personal income tax system based on joint filing by members of the same family unit has given rise to a discussion over how the income tax treats the incomes of secondary earners (generally assumed to be women) and the incentives the income tax has on their work patterns, child bearing, and other behavior. But reform has not been confined to the industrial countries. Although developing countries as a group have generally been slower to implement reforms than the industrial countries, some have also begun to change their tax systems to address gender bias. As in the industrial countries, these efforts have generally focused on the personal income tax. Yet, in examining the issue of gender bias, we should not forget that apparent bias may be acceptable in some societies because it accommodates typical social arrangements or encourages certain generally desirable social behavior. In these societies, such provisions are not discriminatory but simply reflect prevailing norms. Moreover, there may be grounds for discriminating between men and women in the tax code that are related to, for example, life expectancy, such as in the tax treatment of pensions and annuities.