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New research reveals extent of tax system bias against families

Marriage and Family
12 April 2016
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One-earner families in the UK are still getting a very raw deal, new research released this week has revealed.

The Taxation of families – International comparisons 2014 is published by the Christian charity CARE (Christian Action Research and Education) and shows one-earner families with two children on the average OECD wage for the UK (£35,633) bear a 25 per cent greater tax burden than comparable families across the OECD on average.

Single parents with two children on the average wage bear a tax burden that is 17 per cent greater than the OECD average but by contrast, the tax burden on single earners without family responsibilities is less than the OECD and EU average.

In fact, for one-earner married couples with two children on the average wage, the tax burden is 79 per cent of that of a single person compared with the OECD average of just 59 per cent.

The report also reveals that eye-wateringly high marginal tax rates are crushing aspiration amongst hard-working families at key income points.

One-earner married couples with two children on 50 per cent and 75 per cent average wage, which are two key income points at which aspiration should be encouraged, face an effective marginal tax rate (EMTR) of 73 per cent – the highest in the world. It means that for every additional pound earned they only get to keep 27 pence. By contrast, the super-rich – on Britain’s highest rate tax – get to keep 55 pence in the pound.

Even worse, under Universal Credit, this EMTR is set to rise to a staggering 76 per cent.

CARE said the report highlights the urgent imperative to take action to more adequately recognise family responsibilities in our tax system.

The report concludes by recommending the transferable allowance between married couples be expanded to 100 per cent to help ensure family responsibilities are properly recognised in the tax system.

CARE Chief Executive Nola Leach said:

“In the UK we have got a tax system that is biased against family responsibilities and if you look back at the eight reports we’ve produced in previous years, this is hardly a new problem.

“It is shocking that one-earner families with two children and single parents with two children should be asked to bear a tax burden that is significantly greater than that placed on comparable families across the OECD on average, while at the same time single people with no family responsibilities are asked to bear a tax burden that is less than that placed on single people across the OECD on average.

“Even more disturbing is the way our tax system discourages aspiration because of the absurdly high effective marginal tax rates many lower income families currently face.

“Surely a One Nation Government cannot content itself with this current situation and that is why our report makes some clear recommendations to address the problem.

“While the introduction of the marriage tax break is welcome, the fact remains it is simply not large enough to be of any meaningful use and it makes no sense that in the UK, we should be making marriage fiscally less accessible than is the case across the OECD on average.

“It is therefore vital the existing marriage tax break is expanded and made fully transferable so more one earner couples with family responsibilities are supported by the tax system.

“The Prime Minister said during the last election that he wanted to expand the marriage allowance and now he is freed from the constraints of coalition this report provides him with significant reasons for doing so.”

Notes to Editors:

For more information please contact James Mildred on 07581153693 / 02072274731 or email

You can read CARE's latest tax report here.

To read the interview with the Sunday Telegraph where the Prime Minister said he wanted to see the marriage tax break expanded see here:

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