The Problem of Discriminating Tax Allowances
And how Basic Income solves it.
Like many people in many countries, I get a personal tax allowance. This is the amount of money I can earn each year, before I have to pay any income tax. But tax allowances are rife with discrimination.
The problem
Let’s consider an imaginary country where the personal tax allowance is $10,000. You only pay income tax on any money you earn above that amount each year. The first $10,000 is tax-free.
But what happens with married couples?
Consider Couple A. Each partner works 20 hours per week. This means both partners are able to make full use of their personal allowances. So between them, they can earn $20,000 free of any income tax.
Couple B, on the other hand, operate a traditional division of labour in which only one partner has a job and works 40 hours per week, whilst the other partner takes care of housekeeping and childcare. Despite working the same hours between them as couple A, they only get $10,000 free of income tax each year, because they can only make use of one person’s tax allowance.
This seems ridiculously unfair. So it would seem reasonable to allow a married person to transfer some or all of their personal allowance to their spouse. And…
