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  • Emilie Dye

Tax cuts don’t need to be pink to help women

Updated: May 19, 2021

With the announcement of the 2020/21 budget, the myth that the tax cuts are sexist has begun to circulate. After all, if businesses maliciously pay women less, then women have less to gain from increasing the income tax brackets to keep up with inflation. In reality, income tax cuts are key to getting women back to work. 

The high-income tax rates that kick in at relatively low salaries, punish the women doing the most to eradicate the gender wage gap. By increasing the tax brackets, the budget promotes women’s workforce participation and will likely bring more highly educated and qualified women back into the workforce, and reward them with higher-paying jobs.  

It is women who have the power to take control of the gender wage gap. Not radical social engineers who think that imposing constraints on companies, or pushing unmeritocratic affirmative action policies are 

the answer. Women who are keen to work hard and get ahead in a  competitive world such as the one we live in are best equipped to do that when the beast of burdensome regulation and excessive tax is off their backs.

Men and women are different. Smart businesses understand that women are profitable, but not because they can get away with paying women less. In reality, they cannot.

Rather, it is borne out by empirical evidence attesting that women have unique value to add to a management team. A study done by the London School of Business shows that women working in tandem with men brings better ideas to the table and improves the efficiency of an organisation. This is being rapidly recognised by the private sector without the need for government encroachment. As noted by Claire Shipman in her book “Womenomics”, “A  McKinsey survey … determined that more than 70 per cent of companies  that made efforts to empower female employees in emerging markets either  experienced or expected to experience increased profits as a direct  result of those efforts.” 

While women complain that men are getting paid more, they simultaneously surpass those men in education. In economies demanding more specialised expertise, we will soon find more women at the top of the corporate ladder. 

Women need to understand their value. Only 34 per cent of women ask for a better compensation package after receiving a job offer in comparison to 46 per cent of men. You cannot complain about not having something which you never asked for.  

That fact that women are more risk-averse than men is a benefit to society. One wonders if the 2008 financial crisis would have happened if more women worked on Wall Street. However, risk aversion doesn’t pay well. There is a monetary value to risk; that is why stocks, which are usually riskier than bonds, have higher rates of return.  Women cannot expect a payout for risks they don’t take anymore than I can expect to win the lottery with tickets I didn’t buy. 

Women often make different choices than their male counterparts, and this unfortunately or otherwise, adds to the existence of stereotypes.  And authoritarian social justice warriors, as well as insecure women-hating ‘neckbeards’, may both be surprised to learn that women are rational human beings smart enough to understand the ramifications of their choices.  

If a mother chooses to stay home with her child, it is because doing so increases her utility. Put in less technical terms, it brings her a  greater degree of satisfaction and fulfilment than the other choices available to her. She may enjoy working at home more than in the office.  That choice may be the wisest financial decision in the moment. For other women, it may be the opposite. 

Only individual women know what will most effectively increase their utility. It is not the job of the government or society to impede women’s choices even in an attempt to decrease the gender wage gap. It is not the place of men or even other women to criticise and impede the rational choices made by other women.  

When organisations or governments enforce quotas, good work done by women is discredited. Women’s achievements are mistaken for handouts. When the state over-regulates businesses, women entrepreneurs are harmed. 

High taxes hurt high achieving women. The argument that only men benefit from the income tax cuts is simply false. Studies show women are more sensitive to tax incentives which affect their take-home pay, so taxes have a higher impact on the hours women choose to work.  

More women in the labour force adding their voices and varying perspectives helps society as a whole. Money in the hands of the people, instead of the government, benefits all groups.  

Instead of punishing hard-working women who do well; we should reward them with a flatter and fairer tax system. Instead of blaming men and society for the wage gap, women should take responsibility for their individual choices. Instead of impeding people’s freedom in the name of equality, we should accept the decisions other people make with their lives even if it alters the statistics.  

I will take my tax cut, thank you very much.

A version of this article first appeared in LibertyWorks on 24 June 2019. Emilie Dye is the Policy Director at the Australian Taxpayers’ Alliance. Find her on Twitter @Emilie_Dye.

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