Jewish World Review Oct. 21, 1998 /2 Mar-Cheshvan, 5759
Government punishes marriage, pushes cohabitation
By Dr. Wade F. Horn
OUR NATION'S CAPITAL IS BRIMMING with bad news for anyone who believes
in starting and raising a family in the context of a loving marriage.
First of all, the IRS penalizes middle and upper-come couples who get married. Even worse, the government is actually paying low-income women not to get married. And worst of all, our political
leaders can't figure out how to fix it.
On October 6th, an $80 billion Republican tax-cut bill -- including
provisions that would have reduced or eliminated the so-called marriage penalty -- died when
Senate GOP Leader Trent Lott, in the face of a near certain Clinton veto, decided to
pull the bill from further consideration. Most conservatives viewed this as a great defeat for
pro-family policy-making.
If part of the agenda of this tax cut bill was to strengthen marriage,
it would have done so only marginally. Even worse, it would have left the most
anti-marriage policy in America untouched: the Earned Income Tax Credit (EITC).
The marriage penalty in the tax code reflects the fact that married
couples who both work for wages frequently pay more in taxes then if they earned the same
amount of income but weren't married. And the more equal the incomes of the couple, the
steeper the marriage tax penalty.
Take, for example, two people earning $30,000 each. If they were
single, and claiming the standard deduction, each would pay $5,189 in taxes or $10,378
in total. If they got married, they would have to combine their income for purposes of
taxation for a total of $60,000 in which case they would pay $11,437 in taxes. The difference
between $11,437 and $10,378 ($1,059) is their marriage penalty, courtesy of the federal
government.
This sounds unfair which, of course, it is. What the Republican bill would have done
is allow married couples the option of filing as individuals. This would have eliminated the
marriage penalty.
So why shouldnþt we consider the derailment of a bill that would end
the marriage penalty a defeat for pro-marriage forces in Washington? Because as onerous
as the tax penalty is for married couples, the marriage penalty is even worse for
lower-income couples who are eligible for the EITC.
The EITC is a Reagan-inspired incentive for work. Essentially, the
EITC is a wage supplement for low-income workers. If you work at low wages, rather than
relying on welfare, you are eligible to receive some additional cash from the federal
government through the EITC. The maximum benefit is $3,756 for a worker with two
children and an income of roughly $10,000.
So far so good.
The problem is that the EITC is pegged to wages, not to family
structure. If you get married, the couple must combine their wages for the purposes of the EITC.
This is what leads to the EITC marriage penalty þ in essence, paying low-income couples
not to marry.
According to calculations by Eugene Stuerle of the Urban Institute, if
a single mother with two children working half-time at minimum wage marries a man working
full-time at minimum wage, the couple would lose $2,149 in EITC benefits. Even worse, if
that same single mother working full-time at minimum wage marries a man working
full-time at $8 an hour, the couple would lose $3,026 in EITC benefits. In both examples, the
family loses thousands of dollars in cold, hard cash if they get married. If instead
they cohabit, they lose nothing.
In fact, the typical EITC marriage penalties are actually greater than
the typical marriage penalty that higher income workers experience through the tax code.
Little wonder marriage is dying in low-income communities. The federal government,
through the EITC, says, "If you get married, it'll cost you. And it'll cost you big time."
This is a travesty. At the same time that we are all wringing our
hands lamenting the fact that one out of every three babies is now born out-of-wedlock, official
government policy says if you do get married, it'll cost you thousands of dollars. But
if you merely cohabit, well then, that won't cost you anything.
The problem is cohabitation is a lousy way to raise children.
Cohabitors are far more likely to break-up and engage in more violence toward each other than
married couples.
And when it comes to children, there is scant evidence that cohabitation
yields the same benefits as does marriage. In fact, the opposite is true. Cohabitation
places children at increased risk for child abuse, abandonment, and emotional and behavioral
problems compared to marriage.
Fortunately, there is a solution to the EITC problem. Simply increase
the amount of income a couple can earn before the EITC begins phasing out. And fixing the
EITC marriage penalty is far less expensive than solving the marriage penalty for higher income
couples --- $3 billion a year as opposed to $20 billion to completely rid the tax code of
marriage penalties for higher income couples.
Why not fix both the marriage tax penalty and the EITC marriage
penalty? In a perfect world you would do both. No couple -- whether of high or low income
-- should be faced with an economic penalty simply because they choose to get married.
But we don't operate in a perfect world. Sometimes we have to make choices.
This is an easy choice. Where is marriage disappearing the fastest?
In low-income communities, that's where. The biggest problem with higher income couples
is not getting married, but staying married. But among low-income earners, the problem is
never getting married in the first place. It's a crime that the federal government
imposes financial penalties on those that choose to do so.
That's why we shouldnþt shed too many tears for the loss of the $80
billion tax cut proposal, for it gives us an opportunity to reconsider who needs the most
protection from federally- imposed marriage penalties: low-income or higher-income couples.
Seems like a pretty easy decision to me. Itþs a shame our political leaders canþt figure
it
Well, not really.
Lott
JWR contributor Dr. Wade F. Horn is President of the
National Fatherhood Initiative and
co-author of The
Better Homes and Gardens New Father Book. Send your question about dads,
children or
fatherhood to him C/O JWR
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