“Marriage penalties,” in which the tax-and-transfer system punishes people for getting married, have long been a troubling aspect of American social policy. 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.
A new working paper from Elias Ilin, Laurence J. Kotlikoff, and Melinda Pitts investigates this problem in an interesting and novel way. It starts with real data on Americans’ finances, and then runs elaborate simulations estimating how individuals’ spending will fare over their entire lives if they marry or stay single. The upshot is that while the tax system does not pose too much of a problem except for the highest earners, the benefit system punishes lower earners for tying the knot. Further, the marriage penalties faced by single Americans correlate with their marriage behavior, suggesting that these policies, beyond being unfair, could significantly discourage marriage.
Continue reading the entire piece here at the Institute for Family Studies
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Robert VerBruggen is a fellow at the Manhattan Institute. Follow him on Twitter here.
This piece originally appeared in Institute for Family Studies