NCPA - National Center for Policy Analysis

Taxes Discriminate Against Married-Women Workers

March 20, 2001

If married women who work fully understood what the marriage penalty eats out of their earnings, many would probably quit their jobs and stay home, says University of Chicago law professor Edward McCaffery.

In an interview with the University of Chicago Press online, McCaffery uses the example of a husband who makes $60,000 a year and a wife who earns $30,000 -- and shows that the husband needs a mere $2,000-a-year raise to equal the net income the wife contributes to the four-person family.

Here's how it works:

  • The wife's $30,000 salary is taxed at 50 percent -- including federal, payroll, state and local taxes.
  • Child care costs $10,000 a year before the meager $1,000 tax credit for two children.
  • For other expenses incurred by working -- commuting, dry cleaning, meals outside the home and housekeeping services -- subtract another $5,000 per year.
  • The upshot is that the family walks away with only the equivalent of that $1,000 tax credit for children.

The fundamentals of the tax laws written in the 1930s and 1940s were based on the norm then of the single-earner family -- and with regard to marriage, they haven't been updated in a significant way.

Source: Editorial, "Tax Relief: It's a Women's Issue," Investor's Business Daily, March 19, 2001.

For UC Press text


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