Who really gets child benefit?
Cath Elliot says that Osborne’s withdrawal of child benefit from top-rate tax-payers is “an attack on women.” I agree, but not, I fear, for reasons that Cath would like.I refer to this paper by Laura Blow and colleagues:Child benefit is spent, at the margin, on adult-assignable goods…it is parents who benefit from unanticipated variation in child benefit.They estimate that for a couple not on other benefits with one child, a £1 rise in child benefit is associated with a 49p rise in spending on alchohol, a 40p rise in spending on adult’s clothing, but only a 1.4p rise in spending on children’s clothes.For lone parents, 70p of a £1 rise in child benefit is spent on women’s clothing and 21p on alcohol.Osborne’s move is, then, another blow for the drinks industry.This is not because parents are selfish and glug chardonnay whilst their kids play with the traffic. Quite the opposite. Their spending on their children would be heavy anyway, so variations in child benefit lead to variations in spending on themselves. This is a particular instance of a general principle - that the incidence of benefits and taxes does not always fall upon those for whom the tax or benefit is intended.This is not to deny Cath’s point that child benefit is a “life-line for some women”. Quite the opposite. It is exactly that - a life-line for some women, not their children.