Want to reduce the overall level of income taxes and see more women taking home paychecks?
Lower income-tax rates for women while raising them for men, according to Harvard University economist Alberto Alesina, who calls the idea "discrimination, the good kind.
"The female tax rate should be no greater than about 80 percent of that of males and possibly much less," Alesina and a co-author wrote in a recent paper that's grabbing attention among those concerned about the persistent gap between the sexes, both in workforce participation and average earnings.
The provocative notion hasn't taken long to draw skeptics, who doubt whether politicians ever would - or should - follow the advice.
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Alesina and Andrea Ichino of Italy's University of Bologna argue that tax codes in the United States and around the world already apply different standards to all manner of people - the single and the married, for example, and families with children and those without.
At last count, 73 percent of U.S. men had jobs or were looking for work. In contrast, 59 percent of women were in the labor force. While many factors affect a woman's decision to work or stay at home, multiple studies have shown that part of the explanation is that women are often more sensitive to changes in tax rates than men.
In other words, if they believe they'll be able to keep more of the wages earned outside the home, they're more likely to take a job or retain the one they have rather than leave the workforce for family or other reasons.
Alesina and Ichino conclude that a small increase in income taxes for men would finance the larger cut in income taxes for women because as more women chose to work, they'd pay more as a group in income taxes. They project that the overall tax burden would decline, as income-tax rates on women fall more sharply than income tax rates on men rise.
Married men would also benefit from the change, Alesina contends, since they would share in the extra income and lower tax rate on the earnings of their wives.
"Single men may not be too happy about it," Alesina conceded. "But you can't make everybody happy."
The economists argue that their ideas are aimed at current social goals, in the United States and throughout the developed world.
"These effects are consistent with the stated goal of affirmative action policies geared toward correcting discrimination and inequities in the labor market against women," Alesina and Ichino wrote. Lowering income-tax rates on women would be a more efficient way of bringing women into the workforce than anti-discrimination policies imposed on business, in their view.
Taxing the income of women at a lower rate than that of men, they argue, would have side benefits, as well:
- As women work outside the home more, men would stay at home a little more. "Given that men spend relatively little time with children, the marginal benefit of time spent at home by men may be higher than the marginal loss of an hour spent by a woman away from home," they wrote.
- Children will gain from a mother's example in taking work outside the home. "With the possible exception of some religious groups, almost anybody would agree that a working mother is a positive role model," the paper argued.
- Women would gain power, and options, from a paycheck. "The welfare of women stuck in bad marriages would certainly increase."
Not surprisingly, Alesina and Ichino's proposal is not a hit with all labor-market watchers and economists.
"Translating sensible economic arguments into equally sensible policy decisions is a huge hurdle," said Steve Hine, labor market information director at the Minnesota Department of Employment and Economic Development.
"Finding that balance which is both politically expedient as well as economically sensible would have to be a part of that discussion," he said.
The idea of lowering tax rates to coax more women into the labor force may be deceptively simple, said Sharon M. Danes, family economist at the University of Minnesota.
"It's really a very complex issue," Danes said. A woman's decision to stay at home involves "a whole bunch of other things" besides money, she said.
Most single women and women in low-income families already are working, Danes said, while female professionals, such as doctors or lawyers, are in most cases already in the workforce.
In other words, most of the women who either have to work or want to work are already doing so, and it could take more than a tax break to coax the others into the workforce.
Minnesota state economist Tom Stinson also raised doubts.
"The logical extension of this is changing the sales tax ... to have extremely high rates on kidney dialysis and insulin (where taxes are unlikely to deter buyers) and have very low tax rates on diamond jewelry" since there are plenty of competing indulgences, Stinson said.