Athens Review, Athens, Texas

Breaking News

Community News Network

April 15, 2014

Victimized by the 'marriage penalty'

In a few short months, I'll pass the milestone that every little girl dreams of: the day she swears - before family and God, in sickness and in health, all in the name of love - that she's willing to pay a much higher tax rate.

Yes, dear readers, this was my last tax day as a single filer. By this time next year, I'll be married, and the Internal Revenue Service will pool my earnings with those of my husband-to-be. The first dollar of my earnings will be taxed at the same marginal rate as the last dollar of his (or vice versa, depending on how you stack our incomes). Since marginal tax rates rise as earnings increase, that means we will have a higher tax liability as working spouses than we do as working single people. This higher tax burden is known as the "marriage penalty."

My accountant informs me that hubby and I will each be slapped with a four-figure federal income tax "marriage penalty." But don't cry for us. We'll grumble about it, sure, and one of us might even whine about it in a column. But husband-to-be and I will be able to absorb the higher tax burden and still pay our rent, as will most two-career, professional, childless couples who trade in a lower tax rate for the promise of wedded bliss.

The people who really suffer from the marriage penalty are lower-income families with young children - you know, those people constantly scolded by the Family Values Police for eschewing the bonds of holy matrimony or for being too lazy to work.

Consider a family in which the husband earns $25,000 and the wife stays home to care for their children. (Women are more often the more marginal earners, both because they earn lower wages and because they are more likely to be primary caregivers.) This family would face a series of painful "marriage penalties" if the mother decides to join the paid labor force.

If she takes on a $25,000 job, the family would lose the entirety of their earned-income tax credit - about $5,000 - and pay an additional $6,000 in payroll and federal income taxes, according to calculations from a recent report by the Hamilton Project, a nonpartisan think tank. This family would also lose access to about $2,600 worth of food stamp benefits, as well as other means-tested benefits, such as Medicaid. (The exact amount of lost benefits depends on which state they live in.)

To add insult to injury, the family's expenses would rise sharply, too. Once mom goes to work, the family must find someone else to care for the children and do other household chores previously performed by an unpaid, stay-at-home mom. And in most states, day care costs more than college tuition.

Add up the increased taxes, the lost means-tested benefits and additional child-care costs, and the family is likely to keep just 29 cents of every dollar that this opting-back-in wife might earn, according to the Hamilton Project. That's not much of an incentive for married moms to go back to work, especially if they have any non-finance-related misgivings about handing over child care and household tasks to hired help.

Conversely, if two unmarried sweethearts already work, the tax code discourages them from getting hitched. I know of a few couples who have decided to live in sin in perpetuity for precisely this reason. There are also famous cases of couples repeatedly getting divorced at year's end and remarrying in January, because your marital status on Dec. 31 is key to determining your annual tax liability. That loophole, however, was closed, after such divorce/remarriage schemes were deemed "sham transactions."

Despite all the morality rhetoric spewed by some policymakers and pundits, Congress has expressed peculiarly little interest in removing disincentives for married moms to work or for working parents to marry. Periodically there are murmurings of change; last month, for example, Sen. Patty Murray, D-Wash., introduced legislation that would allow low- and middle-income families with young children to deduct part of the secondary worker's earnings from their taxable income. But like other proposed reforms of the tax system, this has achieved little traction so far.

Right now, unpaid primary caregivers can calculate that the amount they would earn as paid workers is just not that much greater than the immediate costs of bringing in those earnings. I say "immediate costs" for a reason: By staying home now - to avoid the marriage penalty or otherwise - many parents will cost their families much more money later on, when the kids no longer need as much intensive child care, because extended career interruptions can result in persistently lower pay. In other words, by maintaining the "marriage penalty," Congress is not only costing U.S. families billions of dollars today; it is also holding back their earning power tomorrow.

              

1
Text Only
Community News Network
  • Wal-Mart to cut prices more aggressively in back-to-school push

    Wal-Mart Stores plans to cut prices more aggressively during this year's back-to-school season and will add inventory to its online store as the chain battles retailers for student spending.

    July 21, 2014

  • Hospitals let patients schedule ER visits

    Three times within a week, 34-year-old Michael Granillo went to the emergency room at Northridge Hospital Medical Center in Los Angeles because of intense back pain. Each time, Granillo, who didn't have insurance, stayed for less than an hour before leaving without being seen by a doctor.

    July 21, 2014

  • Starved Pennsylvania 7-year-old weighed only 25 pounds

    A 7-year-old Pennsylvania boy authorities described as being so underweight he looked like a human skeleton has been released from the hospital.

    July 21, 2014

  • Malaysians wonder 'Why us?' after second loss of airline jet

    It was all too familiar. Grieving families rushing to airport. The flashing television graphics of a plane's last radar appearance. The uncomfortable officials before a heavy thicket of microphones.
    For many Malaysians, the disappearance of Flight 370 in March has been a long trauma from which the nation has not yet recovered.

    July 18, 2014

  • A quarter of the world's most educated people live in the 100 largest cities

    College graduates are increasingly sorting themselves into high-cost, high-amenity cities such as Washington, New York, Boston and San Francisco, a phenomenon that threatens to segregate us across the country by education.

    July 18, 2014

  • Your chocolate addiction is only going to get more expensive

    For nearly two years, cocoa prices have been on the rise. Finally, that's affecting the price you pay for a bar of chocolate - and there's reason to believe it's only the beginning.

    July 18, 2014

  • Facebook tests button to let people shop from its website

    Members on desktop computers or mobile devices can click a "buy" button to make purchases through advertisements or other posts on the world's largest social network, the Menlo Park, California-based company said Thursday in a blog post.

    July 17, 2014

  • The terrible history of passenger planes getting shot out of the sky

    What is more clear is that, if initial reports are true, this would be the deadliest incident of a civilian passenger plane being shot down in modern memory. In some instances, the causes of the disaster are still shrouded in mystery. Here are some of the worst events.

    July 17, 2014

  • 130408_NT_BEA_good kids We're raising a generation of timid kids

    A week ago, a woman was charged with leaving her child in the car while she went into a store. Her 11-year-old child. This week, a woman was arrested for allowing her 9-year-old daughter to go to the park alone. Which raises just one question: America, what the heck is wrong with you?

    July 17, 2014 1 Photo

  • web_starbucks-cof_big_ce.jpg Starbucks sees more Apple-like stores after Colombia debut

    This week Starbucks opened its first location in Colombia — a 2,700-square-foot store with a heated patio, concrete columns, mirrors on the ceiling and walls of colorful plants.

    July 17, 2014 1 Photo

Biz Marquee
AP Video
Raw: Israel Bombs Multiple Targets in Gaza Veteran Creates Job During High Unemployment Raw: Cargo Craft Undocks From Space Station Widow: Jury Sent Big Tobacco a $23B Message New Orleans Plans to Recycle Cigarette Butts UN Security Council Calls for MH 17 Crash Probe Obama Bestows Medal of Honor on NH Veteran Texas Sending National Guard Troops to Border Hopkins to Pay $190M After Pelvic Exams Taped Foxx Cites Washington 'Circus Mirror' NASA Ceremony Honors Moon Walker Neil Armstrong Obama Voices Concern About Casualties in Mideast Diplomacy Intensifies Amid Mounting Gaza Toll AP Exclusive: American Beaten in Israel Speaks Obama Protects Gay, Transgender Workers Raw: Gaza Rescuers Search Rubble for Survivors Raw: International Team Inspects MH17 Bodies Raw: 25 Family Members Killed in Gaza Airstrike US Teen Beaten in Mideast Talks About Ordeal 'Weird Al' Is Wowed by Album's Success