War Between the State and the Family: How Government Divides and Impoverishes - Softcover

M. Morgan Patricia

Softcover

ISBN 10: 0255365969 ISBN 13: 9780255365963

Publisher: Institute Of Economic Affairs, 2007

Synopsis

In a new study, Patricia Morgan shows how tax and benefits policy has undermined family life in Britain and encouraged fraud and dishonesty. The study shows how the tax and benefits systems are particularly harsh on single-earner couples who have to earn over GBP50,000 before there is no loss from declaring their relationship to the authorities. This situation encourages couples not to marry and, if they are living together, to lie to the authorities about their family situation. In 2004/05, the government paid credits and benefits to 200,000 more lone parents than actually live in the UK -- fraud is widespread. The tax and benefits system encourages such fraud. In the most extreme case, a couple can gain nearly GBP10,000 a year by not declaring their relationship. Family life has been discouraged over 25 years by both Conservative and Labour governments. In the Thatcher years, the Conservative government gave lone parents special financial benefits and priority entitlement to council housing. In the Labour years, the state increasingly became the child-care provider.As Patricia Morgan comments, "Under Thatcher, the state became the bread-winner for lone parents; under Brown the state became the child carer. The consequences are obvious -- couples are strongly encouraged not to commit to each other because, by doing so, they will lose out financially. Both Conservative and Labour governments also removed any offsetting compensation in the tax system that had previously helped two-parent families." Government policy penalising two-parent families has had a disastrous economic and social effect. Couples who describe themselves as "closely involved" are twelve times more likely than married couples to split up in the first three years of a childs life. There are also higher levels of worklessness and benefit dependency -- lone parent families receiving an average of 66% of their income in benefits and tax credits. Morgan shows how it is clear from international evidence, examining trends over time and by looking at the behaviour of individuals on different levels of income, that the tax and benefits system has caused the increase in lone parent families.Where there are no incentives for lone parenthood, couples tend to stay together, marry and ensure that they can support their children independently of the state. Individuals and couples respond rationally to the incentives they face -- currently the government is giving families perverse incentives, encouraging them not to form stable family units. Major changes in the tax and benefit system are necessary. Benefits to lone parents could be reduced. Also, the perverse incentives in the benefits system that discourage couples from committing together should be offset by a tax system that recognises families. In particular, families should be allowed to allocate the income of the main earner to non-earners in the family for tax purposes. Reforms to the tax and benefits system should be bolstered by reforms to the "no fault" divorce laws that currently allow a guilty party to walk away from their marriage contract whilst imposing financial penalties on the injured party.

About this title

About the Author

Patricia Morgan has published extensively on crime, the family, adoption, and welfare policy over more than twenty years. Her most recent books are Family Structure and Economic Outcomes (2004), for the Economic Research Council, Family Matters: Family Breakdown and Its Consequences (a study in the New Zealand context, 2004) and Family Policies, Family Changes (based on Sweden, Italy, and the UK, published in 2006). She is visiting fellow at the School of Humanities, Buckingham University.

Review

Morgan pulls together overwhelming evidence and data showing the benefits to adults, children, and society in general of marriage and intact families, and the problems of non-marriage, single parenthood, and divorce.
-- Raymond J Keating, The Freeman

About this edition

• Publisher: Institute Of Economic Affairs
• Publication date: 2007
• ISBN 10: 0255365969
• ISBN 13: 9780255365963
• Binding: Paperback
• Number of pages: 160