Over the last two decades, the tax burden has shifted from taxpayers without to taxpayers with dependent children. While social security expenditure on welfare dependency has risen, spending on family income protection has fallen.
Sullivan argues for a return to the protection of family incomes via tax rebates available to all families. ‘The current targeted family welfare approach, which replaced tax rebates in the 1980s, means that working families are living on incomes little different from equivalent families who are entirely dependent on welfare’.
‘It encourages family welfare dependency, and gives power and jobs to the welfare bureaucracy, whereas the taxation approach is minimalist in bureaucratic terms and promotes family autonomy’, says Sullivan.
Primary effects of the withdrawal of family income protection are:
- Family standards of living are well below those of tax payers without dependents.
- Falling birth rate
- Mothers working beyond their preference
Secondary effects are:
- Reduced quantity and quality of parenting
- A growing number of families entirely dependent on welfare
Sullivan advocates child tax rebates that are available at the same level to all families. These could replace – at a modest additional cost to revenue, and with no lowering of welfare incomes – the current complexity of family payments directed at lower income levels and also the generous childcare payments and subsidies available only to mothers who work.
This has a real chance, she predicts, of reversing the drift of families into welfare dependency and is able ultimately to produce savings’