Wednesday, February 13, 2008

Tax and social policies: Singles v. married, families v. childless


Socially conservative literature has long been filled with implorations that marriage is to be preferred to singleness, that married men live longer, are better insurance risks, etc. They’ve long hinted that having kids and raising them is a moral requirement of civilization, although they won’t usually come out and say it. Actually, this kind of talk would appear sporadically throughout the 80s and 90s.

So, one of the big conservative gripes was the marriage penalty. That was instituted in 1969, supposedly to make the taxes paid by married and singles about equal. What happened is that when two married people with approximately equal incomes filed jointly, they tended to pay higher taxes in some income ranges. The penalty is supposed to have been eliminated through 2010, although the whole issue is still rather complicated.

Another criticism of the tax code, well founded, is the Alternative Minimum Tax. Because of conceptual problems with its structure and the lack of indexing for inflation, it is catching many “families with children” whose income and resources today would be considered middle class.

Of course, the next big issue now is which couples get to be treated as “married” for the purposes of tax treatment and federal benefits (like social security benefits for spouses on one account). We all know the gay marriage debate now, and have come to view the conservative arguments against it as “existential.” Another potential political issue is how much tax support to give for the raising of children, and whether to give income to those raising kids when they pay no taxes. The issue came up in the 2008 economic stimulus package. Some social conservatives have wanted to radically increase the per child benefit.

In my 1997 book, I suggested accepting gay marriage, but with two provisos: (1) a person gets to be “married” for benefits purposes only once in a lifetime (the “one per customer” idea to promote monogamy) and (2) the benefits kick in only when there is a bona fide dependent – like a child (biological or adopted), or a dependent elderly parent. That doesn’t ratify the ‘sanctity of marriage” enough for some people.

A modern civilization offers rewarding lives and cultural alternatives to some people who do not form and raise families and children. I fall into that category. To some people, this is a moral issue with religious or existential aspects. To others, it is a natural consequence of individualism, and simply demands that people answer for their own choices.

In practice, however, there is real tension between families with children, and the childless. Generally, people with families use employee benefits more, although they may pay much more for them in terms of copays and premiums. They may be more likely to use time-off benefits, and the childless are likely to work longer hours for the same pay (or their pay). This includes coverage of on-call support in salaried situations where the job requires carrying a pager, and it may require working less desirable shifts or doing more business travel. Business and HR magazines have covered this problem, but erratically and with some degree of embarrassment. In my case, I have paid dearly, in various ways, for not making the conventional commitment to get married and have kids, because, of course, of my sexual orientation. I talked about this before (with discussion of Elinor Burkett’s book) in January 23, 2008, the “Married with Kids Boon”, on my main blog, here.

Update: Feb. 14, Valentines Day

James Capretta has a commentary in The Washington Times, p A21, "The population gap: Low birth rates augur poorer futures," link here. He acknowledges that the US has a higher birth rate than much of Europe. Low birth rates sometimes produce short term gains from the entry of women into the workforce, but longer term loss as the population ages and there are fewer workers to support it.

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