A Marriage Penalty I Didn’t Know About

Conservatives are often big proponents of ending the “marriage penalty” on federal income taxes. Basically, the “penalty” refers to the higher tax rates that married couples face than if they have filed their taxes individually as “heads of household.”

Yesterday, the Innovation Lab team met with our free tax preparation team, who are planning their 2010 tax season. The program’s goal is to make sure every eligible family receives the Earned Income Tax Credit, which is the largest federal anti-poverty program in the U.S. and provides up to $5,600 to working families with children. We’re working together to find ways to reach more of our Head Start and other early childhood program families through the tax program and to make sure they receive the EITC.

In that meeting, I came to learn something I didn’t know. Families with a tax filer who has an Individual Taxpayer Identification Number (ITIN) are not eligible for the Earned Income Tax Credit. ITIN’s are provided by the IRS to any tax-payer that does not have a social security number – mainly certain categories of immigrants (and not necessarily undocumented). These tax-paying workers are denied access to a critical family-supporting credit, even if the other parent does have a social security number. That leaves out a potentially huge swathe of working families from the government’s most important family-supporting, work-promoting, anti-poverty program. And it penalizes the children of married parents, and marriage itself, when one parent has an ITIN.

I’d like to see someone get behind ending this marriage penalty.

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Into and Out of Poverty

I posted yesterday about the links between single parenthood and poverty and referred at the end to the relatively small portion of people that fall into poverty by becoming single parents. Well the Urban Institute just dropped a great research brief into my inbox summarizing the research on poverty “spells.” Just in the interest of being straight with my readers, I should point this nugget out: “Single-mother households become poor at a rate of 15.7 percent a year, compared with just 2.8 percent for married-parent households (Ribar and Hamrick 2003).”

So, yes, households headed by a single mother are more at risk for poverty. But even so, the overwhelming majority of these households are not in poverty. Poverty and single parenthood should not be conflated.  And, to again reinforce, a solid plurality of poverty spells are caused by job loss not by parenting status: “between 40 and 50 percent of those who become poor live in a household where the head of the household, spouse, or other family member lost his or her job.” The majority of people (the brief says between 50 and 70 percent) who leave poverty do so because they or a household member got a job, not because a single parent found a spouse.

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“Broken Families Cost Taxpayers”

The Tulsa World reports on a state legislative panel’s hearing yesterday on reducing divorce and births to unwed parents. I know the author isn’t responsible for writing the headline, but the headline editor definitely captured the spirit of the article with the headline “Broken Families Cost Taxpayers.”

So that I don’t bury the lede here, let me just state my complaint up front: in Oklahoma (and in most places), among the most effective ways to draw the public’s scorn is to say something “costs taxpayers.” I remember the report on that Defense Department toilet (which turned out to be an astronaut toilet) costing millions of dollars to procure. “Toilets Cost Taxpayers Millions”, or some variation on that theme, the evening newscasters screamed. And sure enough, the public was appropriately scornful of toilets and the Defense Department. So what happens when you label your story “Broken Families Cost Taxpayers”? You draw scorn upon “broken” families.

Moreover, the headline implies that our concern over “broken” families should be rooted in its cost to taxpayers rather than in compassion for the family members themselves. It’s commonplace now to see economic arguments replace what used to be ethical issues (by which I mean a competing conception of the good), ranging from the President’s urge to “bend the cost curve” on healthcare to organizations like the Partnership for America’s Economic Success (which argues for greater early childhood investments), to the House hearing reported on today.

Finally, the reporter writes, “slightly more than 60 percent of all Oklahoma births that year [2008] were funded by Medicaid.” Now that may be technically true, but the wording implies that births are a sort of government program. We could reduce our appropriations to them and then there’d be fewer births. It’s as if there’s something wrong with a government that supports its children at their most vulnerable.

Now, it can’t be denied that single-parent households are at much greater risk for economic insecurity and, thus, more likely to be eligible for government safety net programs.

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