Women Pay a Gender Tax and End Up Poorer

Every single working day of the year, American women pay a 22.6 percent gender tax on their income.  By gender tax, I mean a negative transfer imposed upon women’s wages which reduces the wealth they control and increases the amount of time they work. Feminists know the gender tax as the pay gap (in 2010, the median full-time, year-round woman earned $10,784 less than her male counterpart) as well as Equal Pay Day (to earn his income of $47,715, she had to work until April 17, 2011—an extra 15 weeks on the job). If we already have names for this, why must we insist on calling it a gender tax?

First, taxes resonate in our current political climate, pay gaps do not. Today’s popular and Congressional discourse is silent on pay discrimination but can’t say enough about anti-tax pledges, tax shelters in the Cayman islands, Tax Freedom Day, “tax the rich” campaigns, corporate tax debates, and the list goes on.

But second, and far more important, recognizing something as a tax highlights that money and/or labor is actually transferred from one person to another. Women’s missing incomes do not vanish into thin air.  Those dollars flow steadily and systematically into the hands of men. As we approach November’s elections and the debates heat up over taxes, let us expand our focus beyond income, wealth, and corporate tax rates and take the time to add up the gender taxes women pay the taxman and carefully examine the suboptimal ways men put those taxes to use.

To be fair, as we begin to measure these taxes we must note that the gender tax has decreased in recent decades. In 1970, wage-working women in America did not catch up to men’s earnings until September 11, 1971—requiring 36 extra weeks of work to reach parity. Yet, despite the real progress since then, women today still incur an enormous burden. In 2010, the more than 40 million full-time, year-round women on payroll paid more than $460 billion in gender taxes.

This transfer of income looks even more dismal when we consider that women pay gender taxes throughout the entirety of their careers. If we assume each year’s gender tax was saved and invested at a reasonable three percent real rate of return, a woman who earned women’s median annual income every year from 1965 to 2010 paid gender taxes worth an incredible $1,569,101 today—an enviable retirement nest egg worth seven houses, 26 degrees from a public four-year university, or the money needed to feed 134 families of four for one year.  Even if her gender tax was never invested, but immediately spent instead, the inflation-adjusted value of goods purchased would be worth $700 thousand today.

For a young woman beginning her career today, the threat to her economic security, and that of her family and community is similarly grave.  If the 2010 annual gender tax rate remains at 22.6 percent over the course of her career and the gender taxes are invested as above, these investments would be worth only 61.3 percent of her gross career earnings (post-gender tax) by 2055.