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Title: Giving Secondary Earners a Tax Break: A Proposal to Help Low- and Middle-Income Families

Citation Type: Working Paper

Publication Year: 2013

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Abstract: The current structure of the tax and transfer system in the United States makes it particularly challenging for low-income married couples with children to work their way into the middle class. Specifically, the tax and transfer system has an inherent secondary-earner penalty that discourages work efforts and reduces the return to work for a second earner within a married couple. When children are present, a spouses work efforts often brings associated child-care costs, making the return to work even lower. Our estimates suggest that under the current federal tax and transfer system, and assuming standard child-care costs, a family headed by a primary earner making $25,000 a year will take home less than 30 percent of a spouses earnings. We propose a secondary-earner deduction for low- to moderate-income families. This incremental modification to the tax code would increase disposable income for affected families.

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Authors: Kearney, Melissa S.; Turner, Lesley J.

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Publication Number: 2013-07

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Data Collections: IPUMS CPS

Topics: Family and Marriage, Poverty and Welfare

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