Last week David Cameron mooted the idea of introducing tax breaks for employing domestic workers. Like many things beloved of both this and the previous government, the scheme already exists in Sweden, and aims to encourage women back into work by subsidising the cost of childcare, housework and cooking. It’s instinctively hard to like a policy that helps rich people hire servants; it’s almost certain to be economically regressive. Conversely, it’s far more radical on gender than at first it seems. How we use scarce resources to achieve progressive ends is going to be the question that dominates politics for the foreseeable future, and we’re going to have to work out ways to balance competing goals. In this spirit, I’m going to spend a couple of posts exploring these tensions inherent in this policy. The rest of this post will suggest that any good feminist should support ‘maid credits’, tomorrow I’ll look at their problematic economic implications.
When trying to get women back into work after having kids, taxes matter. Matt Yglesias has a good post on this. As he points out, when one half of a couple with kids doesn’t do paid work, she (and it is almost always a woman) obviously isn’t doing nothing. On the contrary, she’s doing lots of things: looking after the kids, cooking, cleaning, ironing and the like. However, if she returns to work these things still have to be done. It might be that the she, or the couple, reduce their leisure time. But it’s not unusual, even for relatively badly-off couples to pay for some of these services: whether that’s ready meals, a child-minder or a cleaner.
Because of this, the money a woman makes by going back to work is often significantly less than her nominal wage. But at the same time, that woman will have to pay tax on the whole of that wage, not just what she takes home after paying the child-minder. There are therefore situations in which a couple is better off if one of them isn’t in paid employment, and – uncomfortably, for those of us on the left – the higher the marginal tax rate, the more women this will effect.
But there is an implicit gender bias in the tax-code that exacerbates this problem. Compare how we treat women returning to work to how we treat the self-employed, who are taxed on income minus expenses. Why should a shredder be tax deductible but not child-care? Similarly, even if you’re employed by someone else, there are a significant number of tax-deductible expenses. But even though childcare and housework are things that families have to do if the parents are to work, our tax system doesn’t recognise this. The tax-code assumes that most people live in single-earner families, and that someone will be staying at home to look after the children. This was the case when the majority of the tax-code was written, but it isn’t any more.
‘Maid credits’ recognise the economic value of jobs such as childcare and cleaning, and empower women by removing from our tax system the sexist assumption that these things should be done by them for free. It’s also entirely compatible with Conservative values. Last month The Observer ran a feature on the emergence of ‘Tory feminists’ like Louise Mensch and Joanne Cash, to a certain amount of derision from the left (after all, it is also the party of Nadine Dorries). It’s policies like this one that Tory feminists should be championing… but what about everyone else? Tune in tomorrow for another look at the same coin.