NCPA - National Center for Policy Analysis


August 31, 2006

Married women who choose to work outside the home are likely to pay the highest marginal tax rates in the country according to a new book by the National Center for Policy Analysis, "Leaving Women Behind: Modern Families, Outdated Laws."  In fact, women earning only modest wages often find themselves paying taxes at a rate double that of multi-billionaires.

"The entry of women into the workforce has been the greatest economic and sociological change in our society in the past 60 years," says co-author Kim Strassel.  "Yet despite this momentous transformation, our public policy institutions have failed to adjust."

  • Two-earner families now constitute two-thirds of all married couples and women account for 59 percent of the American workforce.
  • Yet major economic institutions -- including tax law, labor law and employee benefits law, as well as Social Security and retirement policies, reward families with a full-time worker and a stay-at-home spouse and punish every other arrangement.

Strassel highlights several examples of the high taxes and tough choices working women face.  For example:

  • The first dollar a woman earns (assuming she earns less than her husband) is taxed at her husband's highest rate -- even if she only earns the minimum wage.
  • And even if her husband has maxed out on his Social Security payroll taxes, which are levied on the first dollar you earn up to a cap ($90,000 in 2005), she must pay Social Security taxes on every dollar she earns (up to the same maximum); and she will get few, if any, extra benefits in return.
  • When all taxes and other costs associated with working are considered (including child care and other services previously provided by the working woman as a homemaker), a woman in a middle-income family can only expect to keep 35 cents out of every dollar she earns.

Source: "Working Women Laboring for Less on Labor Day; New Book Demonstrates Working Women Ages 22 - 55 Pay Some of Highest Tax Rates in U.S." U.S. Newswire, August 30, 2006.


Browse more articles on Economic Issues