Marriage Tax Breaks

Nick Clegg has criticised Conservative plans to give tax breaks to married couples (click here).  The Conservative plan is to allow tax allowances of up to £150 per year to be transferred between spouses.  For example, an unemployed husband could transfer £150 of his tax allowance to his wife.  Are there good economic reasons why a government would do this? 




Well-raised and socialised children provide a positive externality (i.e., benefit) to society.  Mother or fathers who take career breaks to raise children typically do so at their own expense.  In other words, society gets the benefit, but a family bears the cost.  There is therefore an argument for subsiding parents through the tax system by allowing transferable allowances (although £150 is a paltry amount).

The next question is whether this should be provided to both unmarried and married parents.  The statistics and majority of evidence clearly show that the latter provides a more stable environment in which to raise and nurture children, whereas the former is more likely to produce children which impose negative externalties (i.e., costs) upon society.  Given this, tax breaks should only be given to married couples with children.  Although this may be against liberal / Liberal ideals, there is a good economic justification as to why the Conservative plan is a sensible policy.   

Popular Posts