Negative Social and Economic Effects of the Marriage Penalty Tax on Women and Society

Abstract

For decades the marriage penalty tax (MPT) has been debated, reduced, increased, and muddled in the US tax system. The issue is important to individual taxpayers, as well as to policy-makers, academic researchers, and society overall. Research shows that the MPT has a negative impact on marital stability, resulting in particularly deleterious effects on women and children, as single females, especially single-parent females, are more likely to be in poverty. Consequently, the MPT is a gender issue in that women are more negatively affected by it than men are, but to varying degrees all members of society are negatively affected, women, men, and children. The purpose of this study is to review how the MPT was affected by the new tax law, the Tax Cuts and Jobs Act of 2017, and briefly review the history of the MPT and its impact on individuals and society. While the MPT was greatly reduced by the 2017 Act, notably regarding tax rates, the MPT, as connected to the earned income tax credit, continues to have a major detrimental impact on low to moderate income couples, discouraging marriage and having a particularly negative effect on their children.

Keywords: marriage penalty tax, public policy, marriage, family welfare

JEL Classification: M4