Tax relief for breadwinners or caregivers? The designs of earned and child tax credits in five Anglo-American countries

Abstract

Efforts to reconcile work-life balance goals are at the heart of the design of tax-benefit programs. Yet this relationship between work-life balance and tax-benefit programs is relatively unexplored. To help address this lacuna this paper compares approaches to reconciling work-life balance goals in the designs of earned and child tax credits in Australia, Canada, New Zealand, the United Kingdom, and the United States. These designs indicate different approaches to reconciling work-life balance. In their design of earned and child tax credits the United States places emphasis upon targeting tax relief by paid employment (to breadwinners), Australia and Canada by family structures (to caregivers), and New Zealand and the United Kingdom by both paid employment and family structures, although in New Zealand assistance is provided on a more residual basis. Of these designs the dual objective approach, particularly of the United Kingdom, appears to offer greater opportunity for both directly addressing relatively high rates of child poverty and increasing low wage caregivers' labor supply (as part of a broader poverty reduction strategy).