<p>The question is not whether the reduction in FA is a tax, but whether it makes economic sense for the OP to get a job given the incidental loss in FA on top of conventional taxes. The incentives are pervese; there is no direct impact on FA for the salary paid to (usually) wives when children are at home, but there is a substantial loss if she earns a salary after the children leave home.</p>
<p>But the rules are the rules, and she is perfectly entitled to take those rules into account when making economic decisions.</p>