ABSTRACT

Growing family and household fragmentation is a major cause of higher government spending. The current level of public spending and the taxes to finance it would have been unthinkable early in the last century and, while this began to grow in the 1930s, it rose only slowly until 1960. While means-tested payments give people incentives not to work, declare income or marry, tax allowances reduce the perverse incentives to inactivity, family breakdown and male abdication created by targeted benefits. A further anomaly in the current tax system is that it treats family income earned by a second earner more favourably than, for example, overtime or promotion of the primary earner, assuming that the primary earner is in a higher tax bracket than the secondary earner. Marriage- and earnings-enhancing policies can together set off a virtuous circle, whose attainment requires an end to the denigration of fathers who work to support their children.