Guest Post: Splitting Hairs About Splitting Incomes

I'm stoked to publish this guest post on income splitting from Anna. Enjoy!

You might think that Peter Dunne has had some sort of feminist awakening. In his recently released discussion document on income splitting, the United Future leader claims his proposal will help families achieve work-life balance, giving parents – usually mums – a genuine choice between staying at home with their kids and going out to work. Families should not be forced by financial necessity into having two parents working.

Here's how income splitting works. Family A, a family with two working adults each earning $40,000, pays less tax than family B, in which one adult earns $80,000 and the other adult stays at home to look after the kids. Each family has the same gross earnings, but the single earner's larger income places him in a higher tax bracket. This is unfair, Dunne believes: where a parent (usually mum) has given up paid work for childcare, her family should not face a financial penalty. Feminists have long argued that behind every working man, there is a woman who irons his shirts, packs his lunch and raises his kids. Income splitting seems to recognise the value of women's unpaid work, and the fact that it supports men to do their paid work. So what's wrong with this picture?

Although families A and B earn the same, things are not equal between them. Family B spends only 40 hours a week in the workforce to make $60,000, whereas Family A spends 80 hours. The extra time available to family B makes a huge difference to its quality of life. Both Mum A and Mum B have domestic work to do, but Mum A begins hers after she knocks off from her paid job each day. Noticeably absent from Dunne's plan are solo parent families. Solo mums bear lone responsibility for all the paid and unpaid work in their households, but have no one to split incomes with, so cannot receive any tax relief. Income splitting is less about recognising women's unpaid work than about shoring up traditional nuclear families in the face of increasing solo parent, blended and gay families and whanau.

Income splitting is a tax avoidance proposal which favours the wealthy. Those who stand to do best from it are families with high incomes, since they will in effect receive the biggest tax rebates. Lower incomes families, whether they have one or two parents in paid work, will receive less. The very poorest – solo parent families, and families in which financial pressures force both parents to work full time for low wages – receive nothing at all, and thus bear the greatest tax burden. Even amongst those single earner families who get tax back, the extra cash goes to the only member of the family who is earning, not to his dependent wife.

Time and money stresses face all families – whether headed by one parent or two – and it is usually mums who bear responsibility for balancing competing pressures. As a working mum, I knock off late each afternoon to begin my second shift of the day: cooking tea, bathing kids, making school lunches and so on. Report writing and budget balancing segue with nose wiping and swimming lessons, and days come and go with little time spent in leisure. During frazzled moments, I wish I was a stay-at-home mum. Then I remind myself that my partner doesn't earn enough to support our family of four; and besides, I find paid work enjoyable and rewarding.

Stay-at-home mums do the same domestic chores but, depending on their financial situations, often trade off income for time. My friend Olivia looks after her boys while her husband works. He earns a good income, but it must be stretched a long way. Olivia winces at the rising costs of food, and finds economical recipes which will make her husband's pay go further. Her volunteer labour helps run a local toy library. Despite her lack of cash and her boys' propensity to drive her nutty from time to time, she finds her labour satisfying. I'd like to think that both working and stay-at-home mums contribute labour valuable to their families and the broader community.

Olivia and I are different sorts of mums with different work patterns. Her family might receive some small benefit from income splitting, whereas mine would get none. Still, as families on modest incomes, we have similarities. We get along from day to day, meeting our basic costs, but it is large or unexpected expenses which cause stress: doctor's appointments or school fees, for example. Perhaps, rather than offering a tax cut to the wealthiest through income splitting, Dunne and his colleagues in government might direct tax revenues towards those public services which benefit all families.

Parenting is genuinely supported when taxpayers contribute to children's wellbeing by funding services like health and education. Real recognition of women's childrearing work happens when responsibility for families is shared amongst society.