Revision of Spouse Exemption

If a person whose spouse does not have any job would be awarded hundreds of thousands of yen, who is going to work at the cost of leaving kids or housekeeping efforts? Japanese society has such a strange system called “spouse exemption” as tax deduction for jobless spouse. Recognizing serious contradiction of that system with the policy mobilizing as much people as possible to implement its economic policy called Abenomics, Shinzo Abe administration embarked on considering abolishment of spouse exemption.

Spouse exemption system is to deduct ¥380 thousand from the income that will be the basis for calculation of income tax, if the spouse annually earns ¥1.03 million or less. In the case that the spouse has ¥1.04 million of income, the deduction would not be applied. He or she would not rather work for ¥1.04 million and rather finish the work before ¥1.03 million. They call it “great wall of ¥1.03 million.”

Mainichi Shimbun reported that the Chairman of Taxation Research Council of Liberal Democratic Party, Yo-ichi Miyazawa, indicated introducing new system, which would be applied to all couples. In the new system, a married couple can receive certain amount of tax deduction regardless their income or way of working. The system will draw a line of limitation in annual income of the recipient to support the people with lower income.

It is fair to say that spouse deduction is obsolete as a system in the time when husband would be working in office and wife had to stay home. To maintain conservative value to keep traditional family, the government has been supported housewives without any specific job. However, the number of families with jobless housewife has declined from 11.1 millions in 1980 to 6.8 millions in 2015. Now double income families have overtaken jobless housewives.

One thing obvious is that Japanese economy cannot be improved without positive participation of women in every aspect of the society. Frustrated with slow progress of Abenomics, Abe introduced new agenda called “reform in the way of working.” He added new post of Minister in his Cabinet for the issue.

However, the key cannot be found in taxation system, but in a principle of justly rewarded labor. That is why Abe is introducing same-labor-same-wage policy. Labor market in Japan has small liquidity, allowing officially hired workers a great privilege for their stable status. Old workers with little motivation on their job always exclude young and vigorous ones from the offices.