What ABBA's outfits can tell us about gender bias in the tax code

Mamma Mia it's not fair!

ABBA’s costumes were all about the ruffles, the sequined jumpsuits, the sparkly dungarees, the tassels, the shiny fabrics, the platform shoes and the animal prints.

But there’s actually an economic story behind it.

That’s right. The look CAN NOT be blamed solely on the general fashion sentiment of the 1970s – it was actually (partly) a consequence of the Swedish tax code.

It stated that stage outfits could only be deducted against tax if  they were so outrageous they could not possibly be worn on the street. If ABBA had worn things that were more toned down they would have had to pay for them with taxed income.

This is still how it works generally in many economies. For clothing to be deductible against tax it must not be “suitable for regular wear”: think firefighters, professional athletes, health care workers and most of the things Lady Gaga wears on stage.

Other items do not qualify.

Over the years some women who work in TV have taken issue with these types of rules. The pressure on women in the public eye to look a certain way is intense. They know they can’t show up on air without their roots done or even wearing the same outfit as last month. Still if they run their own business (and do not fancy showing up in a full sequined ABBA-outfit) they generally can’t claim their clothes as “business expense”.

This brings us to the issue of gender bias in the tax code, because this is actually not just about ABBA- members wearing glitter for tax purposes or female newsreaders having to pay for their highlights with taxed money.

Tax codes for businesses tend to be written with male business owners in mind.

Take childcare: it generally doesn’t qualify as a business expense. You can buy fancy home office furniture but not pay for a nursery place through your business.

And as you might have guessed most female small business owners need childcare more than they need a fancy desk. (The fact that taking clients to a strip club tends to be tax deductible - no questions asked - doesn’t exactly make the system seem fairer to most women…)

Here in the UK there are ways to set up a business to partly get around this but the general principle is there: childcare is not a legitimate business expense.

Tax policy also often prioritises male-dominated, capital-intensive businesses, that buy big machines. The service-oriented businesses, that most women run, tend to get fewer advantages. An American study from 2017 found that three out of four small business tax expenditures studied were designed in a way that excluded most women-owned firms.

I’m personally Swedish enough to think that paying tax is a very civilised thing to do: it’s the way we have to invest in public goods like health and universal childcare. The problem with gender bias in the tax code is that it’s just ANOTHER ONE OF THESE THINGS that leads to women-owned businesses having less capital.

And as most of you know access to capital is one of the big economic problems for women all over the world. Mamma Mia.

(And happy Thursday.) 

Katrine

PS. Did you know that on the Island of Jersey married women STILL need their husbands’ permission to talk to tax authorities and to file taxes under their own name? LUCKILY a new law is coming into force this year… #progress

NOTES:

In 1984 Birgit Cullberg choreographed a Swedish TV ballet set to ABBA music. Me and my sister watched it on VHS until our tape broke…

OECD paper on gender and tax bias in the Global South

THE best ABBA song.

PS. My book Mother of Invention: How Good Ideas Get Ignored In An Economy Built For Men is now available for pre-order: