It was 11 p.m. on the evening of the UK’s 2017 general election. The polls had been closed for one hour, and a rumour had started doing the rounds on social media. Youth turnout had gone up. A lot. People were pretty excited about it. ‘My contacts are telling me that the turnout from 18-24 year olds will be around 72/73%! Finally the Youth have turnedddd out!! #GE2017’ tweeted1 Alex Cairns, CEO and founder of The Youth Vote – a campaign to engage young people in UK politics. A couple of hours later, Malia Bouattia, then president of the National Union of Students, put out the same statistic in a tweet that went on to be retweeted over 7,000 times.2 The following morning David Lammy, Labour MP for the London borough of Tottenham, tweeted his congratulations: ‘72% turnout for 18-25 year olds. Big up yourselves #GE2017’.3 His tweet received over 29,000 retweets and over 49,000 likes.
There was just one problem: no one seemed to have the data to back any of this up. Not that this stopped news outlets from repeating the claims, all citing either unverified tweets or each other as sources.4 By Christmas Oxford English Dictionaries had named ‘youthquake’ as its word of the year, citing the moment ‘young voters almost carried the Labour Party to an unlikely victory’.5 We were witnessing the birth of a zombie stat.
A zombie stat is a spurious statistic that just won’t die – in part because it feels intuitively right. In the case of the UK’s 2017 general election we needed an explanation for why, contrary to nearly all polling predictions, the Labour Party did so well. An unprecedented increase in youth turnout fitted the bill: Labour had courted the youth vote, the story went, and it had almost won. But then, in January 2018, new data emerged from the British Electoral Survey.6 There was some debate over how definitive the data was,7 but the famous youthquake was downgraded to more of a youth-tremor at best. By March no one credible was talking about a ‘youth surge’ without substantial caveats, and the 72% statistic was firmly on life support.8
The British youthquake that never was had a fairly short life for a zombie stat. This is partly because while secret ballots preclude the possibility of absolutely conclusive polling data, we do at least collect data on them. A lot of data, in fact: elections are hardly an underresearched topic. But when a zombie stat emerges in an area where data is scarce, the stat becomes much harder to explode.
Take the claim that ‘70% of those living in poverty are women.’ No one is quite sure where this statistic originated, but it’s usually traced to a 1995 UN Human Development Report, which included no citation for the claim.9 And it pops up everywhere, from newspaper articles, to charity and activist websites and press releases, to statements and reports from official bodies like the ILO and the OECD.10
There have been efforts to kill it off. Duncan Green, author of From Poverty to Power, brands the statistic ‘dodgy’.11 Jon Greenberg, a staff writer for fact-checking website Politifact, claims, citing World Bank data,12 that ‘the poor are equally divided by gender’, with, if anything, men being slightly worse off. Caren Grown, senior director of Gender Global Practice at the World Bank, bluntly declares the claim to be ‘false,’ explaining that we lack the sex-specific data (not to mention a universally understood definition of what we mean by ‘poverty’) to be able to say one way or the other.13
And this is the problem with all this debunking. The figure may be false. It may also be true. We currently have no way of knowing. The data Greenberg cites no doubt does indicate that poverty is a gender-blind condition, but the surveys he mentions, impressive though their sample size may be (‘a compilation of about 600 surveys across 73 countries’), are entirely inadequate to the task of determining the extent of feminised poverty. And having an accurate measure is important, because data determines how resources are allocated. Bad data leads to bad resource allocation. And the data we have at the moment is incredibly bad.
Gendered poverty is currently determined14 by assessing the relative poverty of households where a man controls the resources (male-headed household) versus households where a woman controls the resources (female-headed household).15 There are two assumptions being made here. First, that household resources are shared equally between household members, with all household members enjoying the same standard of living. And second, that there is no difference between the sexes when it comes to how they allocate resources within their households. Both assumptions are shaky to say the least.
Let’s start with the assumption that all members of a household enjoy an equal standard of living. Measuring poverty by household means that we lack individual level data, but in the late 1970s, the UK government inadvertently created a handy natural experiment that allowed researchers to test the assumption using a proxy measure.16 Until 1977, child benefit in Britain was mainly credited to the father in the form of a tax reduction on his salary. After 1977 this tax deduction was replaced by a cash payment to the mother, representing a substantial redistribution of income from men to women. If money were shared equally within households, this transfer of income ‘from wallet to purse’ should have had no impact on how the money was spent. But it did. Using the proxy measure of how much Britain was spending on clothes, the researchers found that following the policy change the country saw ‘a substantial increase in spending on women’s and children’s clothing, relative to men’s clothing’.
Of course, 1977 was a long time ago, and you’d be forgiven for hoping things might have changed since then. Unfortunately, however, this is the most recent sex-disaggregated data we have for the UK, so it’s impossible to say. But we do have more recent data from other countries (including Ireland, Brazil, the US, France, Bangladesh and the Philippines) and it is not encouraging. Money continues not to be shared equally between couples, and money controlled by women continues to be more likely to be spent on children (a gender-neutral word which itself hides a wealth of inequalities17) than money controlled by men.18 So unless the UK is a secret feminist paradise (I can confirm that it is not), it’s safe to say that very little has changed.
This being the case, the British government’s decision to introduce a new benefit called universal credit (UC) is unfortunate. UC merges several benefits and tax credits (including child tax credit) and, unlike the benefits it replaces, it is paid by default into the account of the main earner in each household.19 Given the gender pay gap, this is almost universally the man in heterosexual couples – and ‘almost universally’ is as exact as we’re going to get on this, because the UK’s Department for Work and Pensions isn’t collecting sex-disaggregated data on who the money is going to. So, in the UK at least, the data gap on gendered poverty is about to get even bigger.
Now we’ve established that men and women have different spending priorities, it should be clear that there is a big question mark over the second assumption, that living in a male-headed versus a female-headed household has no implications for your standard of living. And this is indeed what the data we have shows. In Rwanda and Malawi, children from female-headed households were healthier than children from male-headed households – even when the male-headed households had higher incomes.20
An analysis of the 2010 Karnataka Household Asset Survey in India was even more damning.21 When merely comparing female-headed to male-headed households, there was not much gender difference found in poverty levels. However, when poverty was assessed on an individual level, the difference was dramatic, with, wait for it, 71% of those living in poverty being women. And within those living in poverty it was women who experienced the greatest level of deprivation. Perhaps most damning for the validity of using household wealth to measure gendered poverty, the majority of poor women belonged to ‘non-poor’ households.
It’s time for us to kill off the zombie assumptions that poverty can be determined at a household level, or that ‘female-headed’ has the same implications for male poverty that ‘male-headed’ has for female poverty. They are based on faulty data and non-gender-sensitive analysis. More than this, they add to and perpetuate the gender data gap. And they have led to some policy decisions that are disastrous for women.
In the US, nearly all married couples file a joint tax return. They don’t have to: they have the choice of filing either individually or as a couple. But the system incentivises them so strongly – through lower taxes and access to certain tax credits – to file jointly that 96% of married couples do.22 And the result, in practice, is that most married women in the US get over-taxed on their income.
The US tax system is progressive, which means there are several tax bands. The first $10,000 or so that you earn gets taxed at a lower rate than the next $10,000 you earn, and so on. So, let’s say you earn $20,000 and your friend earns $60,000. For the first $20,000 of her income, you and your friend will pay the same amount of tax. But she will pay a higher rate of tax on the income she earns above that. That is, unless you happen to be married to that person and you file a joint tax return with her. In that case, you and your partner are treated as a single economic unit, with an income of $80,000, and how your tax is calculated changes.
In a married couple’s joint tax return, the couple must ‘stack’ their wages. The higher earner (given the gender pay gap this is usually the man) is designated the ‘primary earner’, and their income occupies the lower tax bracket. The lower earner (usually the woman) becomes the ‘secondary earner’, and their income occupies the higher tax bracket. To return to our couple earning $60,000 and $20,000, the person earning $20,000 will be taxed on that income as if it is the final $20,000 of an $80,000 salary, rather than all she earns. That is, she will pay a much higher rate of tax on that income than if she filed independently of her higher-earning husband.
Defenders of the married-couple tax return will point out that overall the couple is paying less tax by filing together. And this is true. But because, as we’ve seen, the assumption that household resources are shared equally is flawed to say the least, a couple paying less tax doesn’t necessarily translate into more money in the secondary earner’s pocket than if she’d filed individually. And this is before we even address any issues of how financial abuse may be making the joint filing system even worse for women. In short, the current US tax system for married couples in effect penalises women in paid employment, and in fact several studies have shown that joint filing disincentivises married women from paid work altogether (which, as we have also seen, is bad for GDP).23
The US is not alone in having a tax system that, by failing to account for gender, ends up discriminating against women. A recent paper expressed bafflement at how ‘many OECD countries’ were passing legislation in an attempt to reduce the gender pay gap while at the same time effectively increasing it through their family tax and transfer systems.24 Two such countries are the UK and Australia where, although married couples file separate income tax returns, most benefits and tax credits still breach the principle of independent taxation.
The UK’s Marriage Allowance gives the main wage earner (usually the man) a tax break in couples where the lower earner is on £11,500 or less.25 This bolsters the gender pay gap on two fronts: supplementing male income, while also creating a perverse incentive for women to work fewer paid hours. Japan has a similarly male-biased married-couples tax break. Since 1961, the ‘head of household’ (normally a man) has been able to ‘claim a tax deduction of ¥380,000 ($3,700) as long as his spouse’s income does not exceed ¥1.03m (around $10,000)’. A 2011 survey by Japan’s labour ministry found that ‘more than a third of married women who worked part time and deliberately curtailed their hours did so to keep the tax deduction’.26
In a slightly different example of a hidden gendered bias, Argentina’s tax system provides a rebate almost four times higher for employees than for the self-employed. Gender comes into it because men are more likely to be employed in the formal economy, while women are more likely to be self-employed in the informal economy.27 So the tax system is essentially covertly giving a higher rebate to men than to women.
There’s a fairly simple reason why so many tax systems discriminate against women, and that is that we don’t systematically collect data on how tax systems affect them. In other words, it’s because of the gender data gap. The impact of taxation on women is ‘an underdeveloped area of research’ according to a 2017 report from the European Parliament, which called for more sex-disaggregated data on the issue.28 Even countries such as Spain, Finland and Ireland that have taken steps to analyse their budgeting from the perspective of gender, usually focus only on spending, not tax. In the EU, Austria ‘is one of the few countries where the government has defined specific goals for the tax system, such as promoting a more equal division of paid and unpaid work between women and men, enhancing the labour participation of women and reducing the gender pay gap’. Meanwhile, a 2016 survey of EU member states found that only Finland and Sweden have strictly individualised income tax systems.29
The tax system’s woman problem extends beyond the zombie assumption that household resources are allocated equally between the sexes: it encompasses the theory of taxation itself – at least in its current form. Since the 1980s, governments around the world have been less interested in taxes as a means to redistribute resources, seeing tax more as a potential retardant to growth that must be contained. The result has been lower taxes on capital, corporations and high-income earners, and an increase in loopholes and incentives so that multinational corporations and the super-rich can avoid and evade tax. The idea is not to ‘distort otherwise efficient market processes’.30
When gender has come into this framework at all, it has been solely in the context of how tax might harm growth by disincentivising women to enter paid employment. What isn’t considered is how a tax system focused so narrowly on enabling ‘growth’ benefits men at the expense of women. Cuts in the top rates of income tax disproportionately benefit men because of the gender pay gap. For the same reason, the majority of women in the world are not in a position to make use of the various tax loopholes an expensive accountant can afford you. Decreases in (or non-enforcement of) wealth and asset taxes also disproportionately benefit men, because men are far more likely to control such resources.31
But it’s not just about benefiting men over women. These male-biased benefits actually come at women’s expense, because as we’ve seen, women have to fill the resulting service gaps with their unpaid care work. In 2017, the Women’s Budget Group pointed out that at the same time that austerity measures were having a particularly severe impact on women in the UK, ‘tax giveaways disproportionately benefitting men will cost the Treasury £44bn per annum by 2020’.32 These include a £9 billion cut in fuel and alcohol duties, a £13 billion cut in corporation tax, and a loss of £22 billion from raising income tax and National Insurance thresholds. Together, these tax giveaways accounted for more than the total annual cuts in social security spending – which makes it clear that this isn’t a matter of resources, so much as (gendered) spending priorities.
The problem of low tax revenues in low-income countries is exacerbated by cross-border tax-avoidance techniques: multinational companies often ‘negotiate tax holidays or incentives as a condition for bringing their business to developing countries’, costing developing countries an estimated $138 billion in revenue annually. Well, the argument goes, if massive corporations paying zero taxes while they exploit cheap labour is the only way to get them there . . . Only it isn’t. The OECD has found that ‘such incentives are rarely a primary reason for investment in developing countries’.33 Women’s cheap labour, on the other hand, is certainly quite the draw. Nevertheless, such tax systems are sometimes ‘imposed as conditions on developing countries by international financial institutions’.34
In a parallel to UK tax giveaways that outpace its spending cuts, the IMF estimates that developing countries lose $212 billion per year from tax-avoidance schemes, which far outstrips the amount they receive in aid.35 Over a third of the world’s total unrecorded offshore financial wealth is thought to be secretly held in Switzerland, which recently faced questions from the UN ‘over the toll that its tax and financial secrecy policies take on women’s rights across the globe’.36 A 2016 analysis by the Center for Economic and Social Rights (CESR) found that the amount of money lost to tax dodging by multinational copper firms such as the Swiss-headquartered Glencore in Zambia, could finance 60% of the country’s health budget. CESR also estimated that the Indian government lost out on up to ‘$1.2 billion in direct tax revenue from the funds held in just one bank branch in Switzerland – comparable to as much as 44% of [India’s] expenditure on women’s rights, and 6% of total social spending in the country in 2016’.37
Governments need money, so they have to make up these losses somehow. Many of them turn to consumption taxes because they are easy to collect and difficult to evade. Low-income countries raise ‘about two-thirds of their tax revenue through indirect taxes such as VAT, and just over a quarter through income taxes’.38 A recent International Labour Organization analysis found that 138 governments (ninety-three developing and forty-five developed countries) are planning to either increase and/or extend consumption taxes, primarily through VAT.39
This increase disproportionately affects women too. Not just because they are over-represented among the poor (the poorer you are the higher a proportion of your income goes on consumption), but also because they tend to bear the responsibility of buying food and household goods. And because women’s paid labour supply is more elastic (in no small part because of the gender pay gap), increasing VAT can have the effect of pushing women to spend more time in unpaid work in order to produce in the household what they might otherwise buy on the market.
This problem is exacerbated by an often gender-insensitive allocation of what products do and don’t have VAT added, driven by an overall lack of research based on sex-disaggregated data on the impact specific consumption tax rates and exemptions have.40 VAT is not generally added to products that are seen as ‘essential’, so in the UK, food is exempt because it’s considered essential, while iPhones are not because they are not. But one man’s frivolity is another woman’s essential, and around the world women have been campaigning to get male-dominated legislators to recognise that sanitary products are not luxury items. In some countries they’ve even succeeded.
It’s clear that tax systems around the world, presented as the objective trickle-down of market-driven forces have intensely gendered impacts. They have been created based on non-sex-disaggregated data, and male-default thinking. Together with our woman-blind approach to GDP and public spending, global tax systems are not simply failing to alleviate gendered poverty: they are driving it. And if the world cares about ending inequality, we need to adopt an evidence-based economic analysis as a matter of urgency.