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It’s rational for them, but it discourages work. It’s basically a subsidy for housewives.

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Kaku Sechiyama, a specialist in gender studies at the University of Tokyo, estimating that as many as 80% of married working women in Japan are in part-time jobs that keep them just under the threshold. (New York Times)

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just under the threshold.

JT seems to have cut this quote short. Under the threshold of what? I can answer that. Under the earnings threshold. The government decided to tax people who make X amount of yen per year. I believe that is ¥1,000,000. If you make one yen more than that, the tax basically consumes what you made. Wise part-time workers attempt to earn ¥999,999 so as to avoid any tax.

This is obvious to almost anyone concerned with taxes, finance, and government. Except in 'unique' Japan. If the government opted to tax people who make more than ¥2,000,000 a year, guess what will happen? That's right. Part-time workers will attempt to earn ¥1,999,999.

And Sechiyama is wrong. It's not a subsidy for housewives. It's a tax break for part-time workers (who may want to earn more but the tax hinders that.)

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No, this is not a subsidy for part-time workers. There are a number of benefits for certain wives who earn under the two earning bags thresholds which do not extend to regular part-time workers, notably single parents.

One of the biggest subsidies is the pension subsidy. Housewives with husbands who work as regular employees who earn nothing or under the threshold have their pension fees waived. Now, if your husband is self-employed or also a part-time worker, or if you earn under the threshold but do not have a husband, you have to pay that pension. This means that many housewives who never pay into the system or pay for only a few years has a higher pension than those who have paid in for the full 40 years.

Also, husbands can write their wives who earn under the threshold off of their tax. This means that not only do we not collect income tax from these housewives, we also do not collect it from their husbands.

This has other effects. Let's look at two families: the A family and the B family. Both parents earn a total of ¥5million a year, and have 2 children of kindergarten age. A Family: husband earns ¥4 million, wife earns ¥1million at a part-time job. B Family: husband and wife both work fulltime and earn ¥2.5million a year.

The taxes paid by BFamily are much higher than that of A Family, because B Family can't write off unemployed adults.

Now, the municipality offers a subsidy for children attending kindergarten. A Family and B Family both have children attending the same kindergarten. However, this subsidy is means tested. You would think that means tested means total salary, right? But in Japan it means they check how much tax you pay in total. Since A Family's wife pays nothing and her husband's are greatly reduced since he can write her off, they are eligible for a much higher subsidy than B Family, despite the fact that they have the same total income.

There are many other was in which the housewife subsidy has adversely affected Japan. The major one is it has contributed to the rise of freeters.

Housewives are extremely attractive to employers because they will never ask for raises in case they go over the threshold and their pension and health are subsidized by the government so the employer does not have to pay their half. If you had a choice between hiring 2 housewives and 1 regular employee for the same unskilled job, who would you choose? The two that are subsidized or the one that is not? This is a major reason for underemployment and the rise in the working poor, as people have to cobble two or three jobs together to compete with subsidized housewives.

A system which actually taxed people fairly on he basis of income rather than family status would not only be better for the unfairly taxed families with fulltime working parents, but also the unmarried (especially widow/ers and other single parents), and especially for Japan's economy. Let's say conservatively that there are 10 million subsidized housewives in Japan. Just making them pay their own pension would bring in huge amounts for the debt-ridden government.

5 ( +5 / -0 )

@Okojo: Thanks for the detailed information! Yeah, I've always heard from girls in Japan that it's often more profitable to be a housewife rather than work fulltime and was always wondering what that meant..

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@Okojo: if I could like your post a thousand times, I would. It needs to be printed out and distributed!

-1 ( +0 / -1 )

Two working in my house taxed double including health insurance. WTH?

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20 years ago the US Social Security threshold for retirees was $12K/year, according to my coworker who stopped working every October.

As far as this being a subsidy, you can imagine any number of jobs paid for by the public that are totally unnecessary, 365 days a year including paid holidays, such as 'professor specializing in Elizebethan literature', 'climate researcher at the Hadley unit', or even "a specialist in gender studies at the University of Tokyo". If the housewife subsidy really is only 1Myen a year, you could get rid of one of those jobs and help 12 deserving housewives score their pin money, doing actual work not makework.

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JT seems to have cut this quote short. Under the threshold of what? I can answer that. Under the earnings threshold. The government decided to tax people who make X amount of yen per year. I believe that is ¥1,000,000. If you make one yen more than that, the tax basically consumes what you made. Wise part-time workers attempt to earn ¥999,999 so as to avoid any tax.

Yep. Here's the complete paragraph and quote along with the link to the full article:

The government is also debating whether to change tax rules that favor single-income families over those with two incomes. An exemption dating from the 1960s lowers taxes on men whose wives earn less than 1 million yen, or about $8,300. Kaku Sechiyama, a specialist in gender studies at the University of Tokyo, estimates that as many as 80 percent of married working women are in part-time jobs that keep them just under the threshold.

“It’s rational for them, but it discourages work,” Professor Sechiyama said. “It’s basically a subsidy for housewives.”

http://www.nytimes.com/2015/01/02/business/international/in-economic-revival-effort-japan-turns-to-its-women.html?_r=0

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