Britain's married single earner families hit hardest by tax

Married British couples with children and only one earner in the household are paying a third more income tax than the same demographic in other countries, a report has revealed.

The report, ‘Tax Burden on Families 2008/09’ was produced by the Christian social policy charity CARE, taking into account income tax, plus national insurance contributions net of tax credits and child benefit. It reveals that middle-income families in Britain are paying 75% of the tax a single individual with no responsibilities pays. This is compared to US families who pay only 48.2% of the tax paid by a single person, and other countries in the Organisation for Economic Co-operation and Development (OECD) and EU countries where the average is 55%.

The findings show that Britain’s tax system is largely similar to the other 30 countries in the OECD. But while the tax burden on many types of households in the UK are similar to those elsewhere, one-earner married couples with children are the exception, and are hit hardest by Britain’s tax system.

In 2008, a one-earner married couple with children, on an average wage of just over £33,000, paid almost a third more tax in the UK than those like them in an average OECD country – and almost 18% more than the average EU country. This comes despite the tax burden reduction in 2008/09 for these families; even with the reduced rate they are paying significantly more than their counterparts in other OECD and EU countries.

The report adds that Britain has an individualistic tax system, with the proportion of income paid in tax for families earning up to £33,000 having doubled in the last 40 years, while for a single person with no dependants the rate has more or less stayed the same over the forty year period.

Despite the help of tax credits which acknowledge the financial needs of the children and the one earning parent, the UK tax system is unlike those in other countries where they conversely recognise marriage and take both family responsibilities and dependent spouses into account in setting the rate of income tax.

The report reveals, however, that single parents of the UK who are on two thirds of the average wage are not hit as hard by income tax rates. A single parent of two children pays just 13% of the tax a single person with no children on the same income pays. This is better than the average percentage of other countries in the OECD, where single parents pay 19% of the single non-parents’ rate. Additionally, for single parents with two dependants who are on 50% of the average wage (just under £17,000), the tax burden was negative.

The writers of the report claim that the UK tax system is resented for its bias against married couples who wish to look after their own children, by having one parent stay at home while the other earns for the household. The findings are part of increasing support for change in the British tax and benefit system and comes as Labour and the Conservatives are in disagreement over tax breaks for married couples. CARE also points out the failure of tax credits to take into account the financial needs of the second parent, a factor making it difficult to reduce child poverty.

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