16.11.14 News Zero Ichimen - Deduction for Spouse - Sakurai Sho [English translation]

Deduction for Spouse

The discussion about the way women work may change
finally starts in earnest.

Year 1961.
Women in part-time work.

In fact, there is increasing expectation to review a policy raised in this year (1961).
This policy is the "Deduction for Spouse".

"Deduction for Spouse" is that when the husband is mainly the bread-winner
while the wife is dependent housewife or work with very little income
there is a policy that "since the husband has someone to feed, his income tax will be deducted".

This policy also served a purpose to recognise the "effort of wife" of the female who supported and took care of the family.
The dividing line for qualifying for this policy is
"Annual income of JPY 1.03 million".

To enjoy the deduction, in order to make the annual income not exceed JPY 1.03 million
people change their way of working
this is called the "JPY 1.03 million ceiling".

This is a graph illustrating the monthly working schedule of part-time workers of a takeaway chain store.

The salary from December 2015 to November 2016 is
to be reflected in tax
there are many months which the working hours are around 100 hours.
But in September and October, the working hours are reduced largely to within 50 hours.

In addition, if the working hour of November is kept within 48 hours
the yearly working hour will be 1,030 hours, with hourly pay as JPY 1,000
the annual income will not exceed JPY 1.03 million.
People are making such accounts balance.

There is such calculation.

For instance, there are two groups of husbands and wives which the husbands work in the same company, and the wives work as the same part-time job.

The annual income of husband is altogether JPY 5 million.
The annual income of the wife of Mr. A is JPY 1.5 million.
The annual income of the wife of Mr. B is JPY 1.02 million.

The wife of Mr. A works a lot in this year
The annual family income of Mr. A is JPY 6.5 million.
That of Mr. B is JPY 6.02 million.

But after tax is drawn from this income
the final after-tax income is...
For Mr. A, JPY 5.11 million.
For Mr. B, JPY 5.10 million.
There is almost no difference between the after-tax incomes of these two families
The wife of Mr. A can be said to be "work to a loss".

Why does such situation happen.

First of all, the wife of Mr. A with more annual income
has to bear the "social insurance" herself.

On the other hand, Mr. B with less annual income
receives family allowance from the company of the husband.

Further, when the annual income of the wife is under JPY 1.03 million
with the "Deduction for Spouse" explained earlier
the income tax paid by the husband is reduced
these narrow the difference between the after-tax income of two families.

Now, what is considered to be reviewed is
this "Deduction for Spouse" policy of our country.

One of the clues leading to such review is that from 1997 onwards
the number of dependent housewives and families with both husbands and wives working reversed
The argument that "this policy no longer fits the era now" is getting popular.

The proposal to abolish the Deduction for Spouse first came around in Koizumi administration in 2005,
the then Democratic Party of Japan suggested the abolition in its manifesto,
the year before last Abe administration considered it.
While it is expected that the dependent housewives would oppose to abolition,
the policy is not abolished.

However Abe administration aims at building "a society where all of the 100 million citizens can play an active role"
[he] tries to create an environment where women can work more.
It is believed that such discussion will go on this year.

The report of the Tax Commission of the government
in regard to the abolition of Deduction for Spouse
commented pessimistically "It is applied to many taxpayers
it is undeniable that the influence will be great".

On the other hand,
there is also comment to raise the upper limit from the "JPY 1.03 million ceiling"
the report writes "it is necessary to proceed the review".

Within the ruling party
The figure "under JPY 1.5 million" also appears.

By raising the upper limit, more people can receive the deduction
which means there will be less tax income to the government.
Therefore, the mechanism that the income of husband exceeding a certain amount
leading to disqualification for Deduction should also be considered.

Murao Caster commented that
"Not only the tax policy, but also the social insurance policy and corporate allowance
depending on the income of spouse
whether people will or will not be qualified for these benefits or allowances.
If [the government] really wants to change the way people work
the review of these policies should also be proceeded".

From next week the Tax Committee of Liberal Democratic Party of Japan will start its discussion
the conclusion is planned to be summarised in the "tax outline" early December 2016.

Source: News Zeroイチメン (http://www.ntv.co.jp/zero/ichimen/2016/11/post-327.html)