NCPA - National Center for Policy Analysis


April 15, 2009

Taxes are on everyone's mind this time of year.  The general belief is that married couples can benefit from an increase in allowable deductions, however, in practice, this is not the case, says the D.C. Examiner.

According to a study by Edward McCaffery, a professor of law, economics and political science at the University of Southern California, and published by the National Center for Policy Analysis, there is a high disconnect between the way women participate in the economy and how they are taxed.  The major elements of the tax system were put in place in the 1930s, 1940s and 1950s, when most women, certainly most mothers, were not in the workforce.  Today 70 percent of all married women work for wages while 60 percent of mothers with children under the age of 6 work for wages.  Yet, the tax laws are biased toward single-earner households in which only one spouse works and biased against two-earner households.

According to McCaffery:

  • The "marriage penalty" in the tax code is a tax on two earner households -- when a wife enters the labor market, even if she earns only the minimum wage, she is automatically in her husband's tax bracket.
  • Moreover, even if her husband has paid the maximum Social Security tax, the wife who works must begin paying from the first dollar she earns.
  • Combine a 28 percent federal income tax with an 8.5 percent state and local income tax, then add a 7.65 percent Social Security (FICA) payroll tax, and the marginal tax rate of the second earner in the average household is more than 44 percent.
  • Some married working women actually lose money by entering the labor market.

These marriage penalties hit at the top and the bottom of the income ladder.  It hits those at the top particularly hard because high-income earners are in the top tax brackets, says McCaffery.  Furthermore:

  • If you are middle- to upper-income and married, the incentive is not to work.
  • If you are low-income and working, the incentive is not to marry.

To bring our tax system into the 21st century, McCaffery recommends:

  • Changing the income tax law to permit each married partner to file separately and avoid unfair penalties for working wives.
  • Allowing a second-earner exemption which would let couples deduct work-related expenses associated with two earner households when calculating income taxes.

Source: Zeina Zeitouni, "Women and Taxes: getting out of the 1950s and call for reform," D.C. Examiner, April 15, 2009.

For text:

For NCPA study: 


Browse more articles on Tax and Spending Issues