April 16th, 2024 2 Minute Read Press Release

New Report: The Tax System Hurts Dual-Income Families

Taxing spouses individually can would help support today’s most common family arrangement

New York, NY – Yesterday was Tax Day, the final day for Americans of all backgrounds to file the often-complicated paperwork needed to determine how much they pay, and—depending on a variety of factors—how much they save. In a new report, Manhattan Institute fellow Robert VerBruggen examines how the tax system treats different family arrangements, finding that it disproportionately disadvantages dual-income families, and proposes a way to remedy this inequity.

The tax treatment of families is a controversial subject, with several iterations of the “mommy wars” indicating Americans’ sensitivity to how tax policy treats single parents, dual-earning couples, and traditional “breadwinner and homemaker” couples. VerBruggen’s report utilizes an original data tool to estimate the tax burdens corresponding to various family and income configurations, finding that while the tax system does a good job of reducing taxes for those with lower income, those with children, single parents, and traditional one-worker married couples, two-income married couples have been left behind. He finds that dual-earning couples often pay higher taxes married than they would separately, and that they’re overtaxed relative to couples where one parent stays home.

Given that working-couple households have become the norm over recent decades, this disadvantage is a disincentive against marriage, which cultural conservatives should oppose. Cultural progressives should also find this disadvantage problematic, as it makes it more difficult for mothers to work. Therefore, VerBruggen sees bipartisan potential for his proposed solution to this problem: dual-income spouses should be taxed individually, with adjustments for family realities.

The report acknowledges that there is no perfect solution, but points to individual taxation as a good step towards addressing the inequity faced by America’s millions of dual-income families.

Read the full report here.


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