Understanding Tax Progressivity as a Mechanism of Gender Difference in Tax Payment Patterns and Post-Tax Income
Gender difference in taxation is generally understudied. However, existing scholarship, largely country case studies, suggests men pay higher tax rates where income tax progressivity is higher, due to their higher average income. Men’s higher rates should then increase gender equality in income post-tax. However, many rich countries reduced income tax progressivity starting in the 1980s-90s during “taxing for economic growth” reforms, including over half of the high income countries included in this study. These changes have previously unexplored implications for the extent to which the current (versus past) tax systems of rich countries reduce, leave unaffected, or compound gender disparities in pre-tax income. Further, some literature suggests that the use of less progressive taxation might be preferable to support more generous and stable social welfare systems (Steinmo 1993; Wilensky 2002; Kato 2003; Lindert, 2004). However, we know little about whether or not changes in transfers from potentially more generous or stable welfare states compensated for any gendered effects related to tax progressivity reductions. After situating this research within existing literature in this introductory chapter, I offer four empirical chapters designed to answer these questions about how progressive taxation, including changes in levels of tax progressivity over time, produce gender differences in tax payment patterns and post-tax income and whether the contribution of taxes and transfers to gender differences in income changed over time. Throughout, the primary data are the Luxembourg Income Study (LIS) databases, including a mix of high and low income countries for Chapters 2-3, and narrowing to the high income countries mentioned in the literature on taxing for growth for Chapters 4-5, which examine change over time. Chapter 2 presents a conceptual framework for understanding gender difference in income tax payment patterns and how taxation adjusts for market-based gender disparities in income. I validate the conceptual framework against 33 countries, including high and middle income countries from Europe, North and South America, and Asia. Chapter 3 uses hierarchical linear modeling to examine the relationship between tax progressivity and individual men and women’s tax payment patterns and changes in income pre-to-post tax. I find that women’s tax rates are lower relative to men’s rates where tax progressivity is higher, but men and women pay more similar rates (women even pay higher rates in some instances) in countries where taxation is less progressive, largely regardless of the size of pre-tax gender income gaps. I also find that women in countries with greater tax progressivity also experience larger increases in the gender income ratio (the ratio of women’s to men’s income) pre-to-post-tax. Chapter 4 examines how changes in tax progressivity over time relate to changes in gender differences in tax rates. Fixed effects regressions reveal that reductions in tax progressivity are associated with increases in women’s tax rates relative to men’s rates. Chapter 5 explores the implications of changes in tax progressivity on post-tax-post-transfer gender disparities in income. I find that decreases in tax progressivity are associated with smaller post-tax-post-transfer gender income ratios (net of pre-tax gender income ratios). Similarly, tax payment contributed less to increasing gender income ratios (sometimes even yielding smaller ratios) in most countries where tax progressivity reduced over time. Transfers only compensated for the reduced contribution of taxes (meaning the combined gender equalizing effect of taxes and transfers remained the same or greater over time) in a third of the countries with tax progressivity reductions. Based on this evidence, progressivity changes have reduced the gender equalizing potential of the tax systems of a number of study countries, without consistent compensation from transfers. These findings raise concerns that growth-oriented tax policy decisions may be problematic from a gender equity lens. The concluding chapter provides a framework for more fully assessing the tradeoffs between tax revenue generation, spending, economic growth, and gender equity, while outlining additional research necessary to round out our knowledge of these tradeoffs. In examining these changes in the distribution of burdens (tax payment) and benefits (transfers) between men and women and how they related to tax progressivity, this research fills a gap in the fiscal sociology literature on gender differences in taxation and generates a fuller understanding how tax policy can create more gender equitable outcomes.
Economic Policy, Gender and Sexuality, Inequality and Stratification, Policy Design, Analysis, and Evaluation, Politics and Social Change, Social Policy, Work, Economy and Organizations, women, gender, taxation, welfare state, inequality
City University of New York - Graduate Center
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