The voices of Urban Institute's researchers and staff
July 10, 2012

Could the fight over marriage affect welfare and tax reform?

July 10, 2012

Could the debate over gay marriage force the federal government to correct the crazy ways our broken welfare and tax systems treat the institution? So far, the marriage discussion has focused on the rights of different couples to wed, but the issue stretches way beyond this rather limited focus. The government today spends hundreds of billions of dollars annually both fining and subsidizing marriage. Yet the funds are distributed unevenly and poorly, typically penalizing married couples during their childraising years and rewarding them when the children are grown. They also tend to penalize marriage more for those who are poorer.  Those who can gain the most from this system are those who, legality aside, consider a marriage vow optional.

As social pressure for adults to marry has declined, government marriage penalties have risen and reinforced that decline. Though many forces are at play in both developments, these trends have made a huge equity issue loom ever larger. Current law benefits most those who are willing to opt not to marry when there are penalties and opt into the system when there are bonuses. Couples who choose to marry—for love, family, religion—despite the penalties they’ll incur are the ones who lose.

A little explanation. Marriage penalties today arise in spending and tax subsidy programs largely as a byproduct of historic efforts to support children. Outside of public education, these supports for children are removed as income rises. And marriage tends to increase that income.

This trend affects low-income – often metro – areas in particular. In effect, not taking the marriage vow is the primary “tax shelter” available for low- and moderate-income individuals, and aggregate incomes in those communities would fall substantially should they start to marry in greater proportions.

In contrast, Social Security provides large subsidies for married couples.  Unlike private pensions, spousal and survivor benefits are paid for by all workers, including those who are ineligible because they were married for less than 10 years. And workers get these benefits for their spouses independently of raising children or paying a dime more than other workers. As a result, many workers, especially low-income women raising children, pay more taxes and raise more children than many Social Security spouses and survivors who do neither but still get higher benefits. Think of this marriage bonus as a penalty for singles, including abandoned parents.

These structures, unfairly and inefficiently designed in the first place, have become increasingly outdated relative to the conditions and needs of the modern society. Yet year after year, both political parties have indiscriminately created and added to these various marriage penalties and subsidies. Because so much money is at stake, they have been afraid so far to engage in any fundamental reform.

As wedding vows become more of an optional item for those who do not believe in the institution of marriage, one wonders how long this increasingly inequitable structure can stand.

A longer version of this column is available on Gene's new blog, Government We Deserve. Subscribe to more from Gene Steuerle.

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