It is important to view tax credits within the context of tax legislation in its entirety, and not as a separate, independent, perhaps feminist initiative. As Blumberg famously argued in 1972, the forces which conspire to prevent women from having the access to work that men enjoy are to be found in a variety of tax provisions.[816] Additionally, the progress towards tax credits over the second half of the last century reveals much about the position of women in this nexus between ‘state, family and the market’.[817]
The 1950s, with its norm of ‘male-breadwinner families’, produced a tax system in which joint taxation of husbands and wives was the rule, supported by deductions for men for their wives, and forms of relief for men and their children.[818] Amongst the changes the tax system has seen since the 1950s are the introduction of individual taxation and child allowances paid to the mother.[819]
The history of earned income tax credits reveals that they are very much conservative initiatives. Tax credits were first proposed by Edward Heath’s government in 1972, although the proposal was dropped when Harold Wilson came into power in 1974.[820] Tax credits were part of a movement towards tax reform under Heath’s government, which also included, in 1971, the introduction of the Family Income Supplement.[821] In the US, earned income tax credits were introduced during Gerald Ford’s administration in 1975.[822] Adler stresses that what distinguishes the early-style tax credits from their modern counterparts is the design of a system which seeks to ensure that a recipient receives more money by working within the marketplace than if s/he were to stay at home.[823] He explains that, ‘[c]onsidered alongside the continued decline of national (social) insurance, it represents an alternative social security approach to those that have hitherto been associated with any of the familiar welfare state
regimes’.[824]
The modern tax credit saw its genesis perhaps in 1988, when Harold Wilson’s Family Income Supplement was replaced by the Family Credit — which, in 1999, was replaced by the Working Families’ Tax Credit.[825] It is, in fact, the Family Credit which is the true ancestor of the current Child and Working Tax Credits, as the Family Credit targeted low-wage families, specifically.[826] The year 1999 also saw a significant increase in the amount of the credit, and, importantly, the introduction of a minimum wage.[827]
Tax credits within a system defining women’s financial independence
Part of the philosophy behind the Child Tax Credit is an assumption or hope that the tax system may provide a means by which women can choose to define a degree of financial independence. The idea of financial independence for women achieved much prominence in the 1990s, which, in addition to giving rise to the growth of the tax credit initiatives, also witnessed the end of the joint taxation of a married couple’s income. Joint taxation ended on 6 April 1990, after which date husbands and wives have had the option to be taxed separately.[828] This was a striking moment in feminist history, and in many ways all tax measures which follow in its still-early wake must be considered in this context. It was also a moment to challenge assumptions at the basis of tax policy more widely.
Traditionally, questions of attribution of income in tax systems are answered by determining who has ultimate control or authority.[829] This has particular resonance in the context of the wife whose income, until so recently, was compelled to be merged with that of her husband. Contributing to the delay in the adoption of individual filing is thought to be a 1980 study by Feenberg and Rosen arguing that, in a family, not only is a great deal of property jointly owned, but, even if not, then a system which remained focused on individual ownership would entice spouses to transfer ownership of property from one spouse to another in order to achieve the lowest possible tax burden.[830] These were dangers which were assumed as written in 1990, when the decision to allow independent taxation of couples nonetheless went ahead.
Independent taxation did not end the gendered biases in income taxation. Indeed, a criticism of independent taxation is that it reinforces marriage as a societal ideal. The reason for this is found in the basis of the tax system itself. The tax system in the UK is based upon income; a choice which may be justified, among other policy grounds, on the argument that taxing income is based in fairness. Put simply, if one is fortunate enough to have both ability and motivation, the extent of both may be taxed in a system based on income (which may be described as taxing the ‘sweat off one’s brow’).[831] Income taxation also incorporates progressivity more easily than consumption taxes, which have the potential to fall more harshly on lower earners.[832] So an income tax system is based on initiative, ability, and the individual. Joint income taxation moves away from that paradigm and into something else. This is potentially difficult, because it means that the taxation of families may not fit easily into the rest of the tax system, which remains based on the individual.
So where do tax credits fit within this redesign? Blundell has asked whether it is ‘possible to design an effective training incentive within an individually based tax credit system’.[833] More broadly, the construction of that individual, in taxation and in the marketplace, will not escape the patriarchy underlying society (and the tax system that supports it), especially within the context of liberal feminism.
Perhaps an answer lies in (traditionally defined) ‘liberal feminism’, submitting that people are both individuals and self-governing, and that the choices they make are self-directed.[834] In this design, the more options from which individuals may choose, the happier they will be.[835] ‘Sexism’, Becker argues, ‘operates by pressuring or requiring, sometimes by law, individuals to fulfil male and female roles regardless of their individual preferences’.[836] The female role is not subsumed within a system of joint taxation of income; rather, it is reinforced. Choices are denied in a system of jointly taxed income because the system itself is based on the model of the family, which itself is drawn along gendered lines. Jointly taxed income is derived from a family model which has been reinforced, even designed, by the tax system along lines of gender. What is being taxed are the gendered roles of male and female, joined together in the legal forms that define the family.[837]
Bennett proposes that the ideal of independent taxation should be taken a step further, such that ‘a fundamental step towards achieving [financial autonomy for women] could be to base benefit entitlements and obligations on the individual rather than the family or household’.[838] He explains this point cogently, suggesting that ‘the government often has a tendency to see couples as “one flesh”, rather than as individual men and women’.[839] This has the consequence of increasing the importance placed on the stresses faced by, for example, one-earner as opposed to two-earner families, and ‘working families’ as opposed to ‘out of work’ families.[840] This point also has been seized upon by fathers’ rights activists, who have enjoyed some success in litigation arguing that equal entitlement to tax credit is not superseded by any legitimate policy aim.[841]