In the eyes of the federal government, marriage is more about a tax arrangement than love and commitment. And unfortunately, for everyone else, it is an increasingly disadvantaged one.
The Institute for Family Studies recently reported on how “marriage penalties” cause a marriage to be a financial drag. The tax system seems to make single people benefit more than married couples.
There are a lot of factors one has to consider, but here’s a hypothetical example: Let’s say a couple’s joint earnings are around $200,000 annually. Their final tax liability would be around $25,000, with a marriage penalty of about $3,000. If the couple had filed their incomes separately, their tax bill would only be around $18,000 cumulatively — significantly less.
“A couple might face a higher tax rate after marriage than they did as singles, or their combined income might make them ineligible for welfare benefits they previously received,” IFS reports.
When lower-income couples gain access to one thing, such as Obamacare, they lose other benefits, such as food stamps. When married couples are placed on the spectrum of earning a higher income, they get hit from the other side and find their tax bills increasing.
Many couples are encouraged to file separately due to marriage penalties; those who earn less experience more of a financial impact. It seems as though these policies not only strike at the household’s income earning but discourage marriage altogether.
Since filing separately seems like the best option, with all the benefits that outweigh the taxes, the solution for many is just not to get married. IFS found that “it makes more financial sense for [couples] to cohabit rather than marry,” adding that “31% of Americans say they personally know someone who chose not to marry for fear of losing a means-tested benefit.”
Another report from the American Community Survey found, “A one-percentage point increase in the marriage tax rate decreases the probability of marrying for females with children by 3.69 percentage points. For males, a one-point tax increase translates to a 0.21-point decline in the probability of marrying if they have kids and a 1.54-point decline if not.”
Luckily, Sen. Mitt Romney (R-UT) has proposed the “Family Security Act 2.0” to combat this rising issue and help families.
“Despite being the bedrock of our country, there’s perhaps never been a more challenging time than today to raise a family,” Romney said. “It’s no coincidence that fewer and fewer people are getting married and having children.”
People will be less inclined to get married if it hurts them financially. And, for many people, the government is making it financially advantageous to act like a married couple but without the marriage bond. There is no easy fix, but there is a direct correlation between marriage penalties and the decline of marriage in America. And that, in turn, reveals just how far the country has veered from its values.
Esther Wickham is a summer 2022 Washington Examiner fellow.
