Full Citation
Title: Breadwinners, Single Parents, Dual Earners: Who's Overtaxed?
Citation Type: Miscellaneous
Publication Year: 2024
ISBN:
ISSN:
DOI:
NSFID:
PMCID:
PMID:
Abstract: Among wonkish tax topics, perhaps the most controversial is the treatment of parents—depending on whether they’re single or married and whether one or both work. For decades, we have had a version of the “mommy wars” played out through the tax code, as society struggles over how policy should treat single parents, dual-earning couples, and breadwinners.For years, I’ve written about the various features of our tax code that pull American parents in different directions.1 For instance, the system is quite friendly to the old one-earner model: the tax burden on a worker falls enormously if he marries a nonworker, and the nonworking spouse gets a Social Security benefit equal to half the worker’s, despite not paying into the system. On the other hand, if two parents both work—leaving no one home to watch their kids—the government will absorb some of the costs associated with that decision through a credit for child care. Unmarried parents also receive unique treatment, under the “head of household” status, and they benefit disproportionately from the Earned Income Tax Credit (EITC).2It’s a system with something for everyone. But not every “something” has the same value, and family-policy analysts strongly disagree as to how exactly the current system is skewed.3So I looked at all these features simultaneously, and attempted to quantify, albeit loosely, their relative impact over the course of a taxpayer’s entire life.I wrote a computer program that, using the tax system as it existed in 2022, estimates the tax burdens of various family and income configurations. It focuses on adults in the 25th–75th percentile of full-time wage and salary income for each age: the broad middle class, as distinct from the poor, for whom the safety net can be more of a factor than the tax system; and the wealthy, whose tax situations vary widely and who are, frankly, less of a concern. The upshot: the federal tax system does a good job of reducing taxes for those with lower incomes and those with children in general. (Indeed, low-income parents may receive even more favorable treatment soon, under a Child Tax Credit agreement that Congress is working on.) Single parents and one-worker married couples also receive substantial relief. But one type of family configuration is left behind: working married couples with kids, particularly when both partners earn similar amounts. This is a crucial category: over the past half-century, working-couple households have decidedly become the norm, working mothers have increasingly worked full- instead of part-time,4 and men’s and women’s wages have converged as well. Whatever the wisdom of the child-care tax credit—see Appendix 2 for a digression on that topic —it simply isn’t big enough to match the benefits targeted to other parents. Dual-earning couples often pay higher taxes married than they would separately, and they’re overtaxed relative to couples where one parent stays at home, too.Both sides of the political aisle should support tax relief for the demographic of dual-earner couples with kids. Two-thirds of married mothers and nine-tenths of married fathers work,5 so to disadvantage working couples is to disadvantage marriage itself, which should be anathema to the right. And addressing this inequity could make it easier for mothers to work, a goal of the left. More radically, the time may have come to reconsider the especially favorable treatment given to couples in which only one parent works, as well.I do not say this as a partisan for the dual-earner model. My mother stayed home while I was growing up, and I worked part-time so that I could watch my kids for a period around when my third child was born. I believe that day care can be bad for kids in some circumstances,6and, contrary to some on the left who might like much of what I propose here, I do not think that prodding mothers into the workforce in the name of “gender equity” is a legitimate aim of government policy. I have reached this conclusion merely as someone who wants the tax system to allow parents to make the right decisions for their own families and to treat all types of families as fairly and neutrally as possible. The status quo fails working-couple families in that regard.
User Submitted?: No
Authors: Verbruggen, Robert
Publisher:
Data Collections: IPUMS USA
Topics: Family and Marriage, Poverty and Welfare, Work, Family, and Time
Countries: