Friday, July 17, 2009

A different approach in support of marriage tax breaks

Every time the suggestion of married tax allowances comes up in this country you can guarantee that the same arguments will be deployed both in its favour and against it. On the one hand, those that support it say that the institution of marriage is a good thing and should be encouraged and the best, and arguably only means a Government can acknowledge that is through the tax system.

On the other hand, the argument goes that it is naive to think that anyone would consider marriage, or a civil partnership, simply because they will get an extra £20 a month tax break. People get married for love, not for a tax break say the critics. Likewise they also point out that by having such a policy you are, indirectly, sending a message that you do not approve of co-habitation or single parenthood, and so are punishing them socially in some way.

What I never really understand is why there can't be a slightly different argument deployed. An argument that says marriage or civil partnership should be acknowledged by the tax system because it is right to acknowledge what those people choosing that path risk, and more importantly, lose.

When two people get married or enter a civil partnership, their relationship with the state changes fundamentally. They go from being two separate individuals financially to being viewed as a single unit. That carries quite a few risks that may or may not arise if they ever decide to split and divorce.

For example, it is not just assets that become joined, but debts can be joined too. True, debts incurred prior to marriage are not something that become jointly liable, but debts during marriage, even if not directly in both names, can be. That's a risk that cohabiting couples do not face. What's more, if a couple do go down a divorce route one side may get much less out than they put in at the beginning.

It seems to me that we should be dropping the moral arguments, be they the ones in favour of such breaks or those against, and instead be saying that those in legal unions should get a tax break to acknowledge the fact that they have lost elements of financial independence that those who are not in a legal union still have.

Tax breaks for marriage or civil partnership should not be framed in terms of moral judgement on what the "ideal" relationship should look like. We should be framing it around what those choosing legal union lose as they move from being financially independent individuals to a combined financial entity.

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