Top rate income tax cuts: 89 percent go to men, 11 percent to women

Sharing out the proposed tax cut from 45 to 40 percent

From The UK’s Mirror newspaper:

“If George Osborne [the UK Finance Minister] slashes the rate further in the Budget – from 45p to 40p for those on £150,000 or more – will put even more money in men’s pockets.

Analysis by the Tax Justice Network found there are 339,000 people (284,000 men and 55,000 women) earning above that level.

Cutting the rate to 40p would be worth £3.3billion to high-earning men (89%) but just £428million to wealthy women (11%)”

(Hat tip to Jolyon Maugham for that 339,000 figure, of which 83.8% are men.) We recently explained how a proposed cut to the UK top rate of income tax from 45 percent to 50 percent (for incomes over £150,000) would see 83.8 percent of the tax cut going directly to men, and 16.2 percent to women.

That’s counting the number of taxpayers affected. But now let’s ask how much of the £ value of this tax cut would go to women.

The answer is: a bit over £3.3 billion would flow to men, and £428 million to women.

That is, 11.4 percent of the tax cuts will go directly to women and 88.6 percent to men.

As in our simple picture here.

Here’s the calculation (scroll up to the top).

For the source data, and for some background discussion of what the numbers mean, please see our earlier blog.

Of course, households often include both women and men – so benefits to male higher earners will sometimes have knock-on effects that reduce the immediate gender inequality impact. We still lack good data on this point, but it’s clear that if you have any concern with gender inequality, you certainly wouldn’t start by cutting tax for the highest-earning men in the hope of some kind of gender ‘trickle-down’.

And of course this is based on latest available data which is from 2013-14, and this tax cut being mulled is for the future. If the threshhold for the top rate of income tax were changed, that would change the calculation too. So this is not a precise forecast, but we think it’s a pretty good indication.

[embeddoc url=”https://www.taxjustice.net/wp-content/uploads/2016/03/Gender-additional-rate-2.xlsx” width=”80%” height=”400px” viewer=”microsoft”]

Having said all this on the revenue side, it’s worth noting that women get hit by tax cuts on the spending side too. As the Mirror summarises:

“A House of Commons library analysis of Mr Osborne’s 2015 autumn statement found it hit women three times harder than men because of the cuts to benefits and tax changes.”

That study is summarised here. See more on our gender and tax justice page.