Marriage Penalties
CARLSON, ALLAN & BLANKENHORN, DAVID
Marriage Penalties What's good and what's bad in Bush's tax plan. BY ALLAN CARLSON AND DAVID BLANKENHORN WHEN MARRIAGE BUFFS (like us) consider President Bush's proposed tax cuts, we don't obsess...
...In purely economic terms, this is a fairly small move...
...This provision was eliminated in the tax changes of 1986...
...So here is the conservative economist Alan Reynolds of the Hudson Institute in 1999, writing in National Review, worrying that the U.S...
...debate in part by way of Swedish social radicalism: Ignore marriage altogether...
...Both strongly favor the market economy over the household economy, and paid work over unpaid work...
...In 1997, the Congressional Budget Office weighed in, releasing a study not only quantifying the marriage penalty, but also showing that many (primarily one-earner) couples enjoy what the CBO called a marriage "bonus"—that is, they pay less as a married couple than they would have paid as single individuals...
...Largely on the basis of this CBO report, virtually everyone in the public debate—except a few eccentric marriage buffs—came firmly to believe that individual filing represents the basic standard of tax fairness...
...close to passing, legislation permitting married couples to file their returns singly, as if they were unrelated individuals, or jointly—whichever would result in the lower tax burden...
...the poorest taxpaying family benefits from it just as much as (and proportionately more than) the richest...
...Supply-siders' mission is to cut marginal tax rates to induce more and more Americans to get jobs and work longer hours, thus boosting the gross national product...
...And for the anti-marriage Left, what a sweet irony...
...This increase would reflect the principle that raising children is not only a private lifestyle choice, like raising geraniums, but also a socially necessary vocation that deserves and requires support from society...
...We lose sleep over whether they will be good for the institutions of marriage and the family...
...Unlike reducing marginal rates, which disproportionately benefits the affluent, the child tax credit is non-regressive...
...The details vary, but the essential idea is to treat married couples as joint economic partnerships, just like other legally recognized economic partnerships, permitting them fully to share their income for purposes of taxation...
...Allan Carlson is president of the Howard Center for Family, Religion, & Society in Rockford, Illinois...
...They raise children and run communities as volunteers, indifferent to the fact that The Economy needs them...
...Those who are at home contribute nothing to the state...
...This is very bad...
...By encouraging spouses to join the paid labor force, and by shifting a greater share of the total tax burden onto one-earner couples, such a law would create greater disincentives for at-home motherhood and for all other forms of unpaid work in families and communities...
...And here is where the Bush tax plan takes a wrong turn...
...In particular, both groups look at able-bodied mothers at home with children and see a social problem...
...More broadly, by moving us closer to an individual, as opposed to family, basis for taxation, such a policy would discourage the economic and personal interdependence that is at the heart of marriage...
...BY ALLAN CARLSON AND DAVID BLANKENHORN WHEN MARRIAGE BUFFS (like us) consider President Bush's proposed tax cuts, we don't obsess over whether they will be good for the economy, or for certain government programs, or for the Republican party...
...At the same time, while the child tax credit helps many married parents, its connection to marriage itself is indirect...
...Who could have imagined it...
...This was a huge idea, and it had consequences...
...For the Left as a whole, this posed no problem...
...But it would be better to do nothing about this problem than to do what President Bush is now proposing...
...Why are we running short...
...The good idea is doubling the child tax credit, from $500 to $1,000...
...In 1981, purportedly to reduce the marriage penalty, the Reagan administration sought and achieved a change in the tax code that was an important step in the direction of individual taxation...
...Yet this odd intellectual scaffolding has defined the "marriage penalty" debate in the United States for more than two decades...
...Congress actually adopted something very close to this in 2000, only to have the legislation vetoed (mostly for extraneous reasons) by President Clinton...
...Indeed, as part of this year's tax package, we hope that the president and Congress will finally correct the inequity at the heart of the dependent care tax credit, either by replacing it with an even larger child tax credit—say, $1,500 per child—or by making it available on a non-discriminatory basis to all families with young children...
...Conversely, those who dislike marriage, as well as those who haven't thought it through, or who simply have other tax-policy fish to fry, almost always favor the tax-them-as-individuals approach...
...Indeed, the president's proposal to reduce the marriage penalty would weaken marriage, not strengthen it...
...Moreover, unlike the notoriously unfair dependent care tax credit, which provides tax relief to parents using commercial child care, the child tax credit helps all taxpay-ing families with children...
...And for those who share our little fixation, here's the skinny: President Bush's tax plan contains one very good idea and one very bad one...
...But it is rooted in the same bad thinking that has haunted this issue for decades...
...Primarily because high marginal tax rates are "driving skilled married women out of the labor force...
...Both see the world primarily in terms of autonomous individuals...
...They could advance their agenda under the rhetorical guise of helping some married couples...
...For marriage buffs, the tax question on which all else rides is whether we tax married persons as individuals, essentially as if they were single, or treat the married-couple household as a single unit of taxation...
...Milton Friedman strategically cuddling up with Gloria Steinem...
...Such a shift in the tax code would be economically regressive, primarily benefiting comparatively affluent, two-earner couples...
...Because marriage buffs want public policy to recognize that marriage exists, we cling to the latter formula...
...David Blankenhorn is president of the Institute for American Values in New York...
...Which brings us finally to President Bush...
...His proposal for reducing the marriage penalty in 2001 is to go back to 1981 and permit the second earner in two-earner couples to deduct 10 percent of income, up to $30,000...
...The proposed solution sprang from the ideological Left, and entered the U.S...
...Such a shift in public policy would eliminate the marriage penalty, but it would also sharply scale back recognition of marriage in public policy and, in the process, create substantial economic disincentives for all forms of marital interdependence, including the decision of mothers to be at home with children...
...To get this issue straight, we need to rewind the tape a bit...
...Tax everyone individually...
...Only last-minute lobbying by the Family Research Council and a few individuals, including several marriage buffs on key congressional staffs, prevented this idea from becoming law...
...Because the credit is marriage-neutral, it fails to reflect any societal or policy understanding of what marriage is...
...economy is "running short of willing and able workers...
...Both groups see the world primarily in terms of autonomous individuals, not family units or people who depend on others...
...There are several ways to eliminate the marriage penalty properly, without undermining marriage as an institution...
...In the early 1980s, the story got even stranger, as eliminating the Left-defined "marriage penalty" suddenly became a pet cause of supply-side economists in the Reagan administration...
...It was a classic supply-side measure—essentially a $600 per year incentive for the second spouse to enter the paid labor force...
...Under this law, couples in which both spouses work were allowed to deduct 10 percent of up to $30,000 of the income of the lower-earning spouse...
...And here is the Social Democratic finance minister of Sweden, Bosse Ringholm, explaining in February 2000 that he opposes the extension of certain tax benefits to at-home parents because "society gets nothing back from a parent who is at home...
...In 1997, and again in 1999, congressional Republicans seriously entertained, and in fact came The supply-siders and the anti-marriage Left are soul mates...
...Such women become economic non-contributors...
...So a genuinely pro-marriage solution is readily available for anyone who wants it...
...To get at this deeper issue—the one that truly sets the heart of the marriage buff aflutter— we must look at what is surely the most misbegotten tax issue of the past two decades: the so-called marriage penalty...
...In important respects, however, they are soul mates of the anti-marriage Left...
...Criticism of something called the "marriage penalty"—defined as a married couple's paying more in taxes filing jointly than they would if they had remained single and filed separately—first emerged in the United States in the 1970s...
...In the early 1990s, Newt Gingrich loudly revived the notion of ending the marriage penalty, including the promise in the Republicans' 1994 Contract With America...
Vol. 6 • February 2001 • No. 23
