inequality, some food for thought

[Azazello1313]

Two Classes, Divided by ‘I Do’

 

to me, it is important to read that in light of the facts in this economic paper, in particular this bit:

 

 

Means testing and joint filing has resulted in hundreds of billions of marriage penalties for low and middle income households.

 

 

 

 

 

Essentially, when moderate-income couples marry, their marginal tax rate moves up from, say, 25 percent, to the 50 and 80 percent ranges shown above. For instance, a moderate income male marrying a working mother with children can easily cause her to lose EITC, SNAP, Medicaid, and other benefits as well.

 

 

 

Marriage penalties arise because of the combination of variable U.S. tax rates and joint, rather than individual, filing by married couples for benefits and taxes. If graduated taxes were accompanied by individual filing or if all income and transfers were taxed at a flat rate, there would be no marriage penalties.

 

...

 

One thing we have learned in public finance is that taxes have significant effects on portfolio behavior even if there is less certain effect on work and saving. Not getting married is the major tax shelter for low- and moderate-income households with children. In many low-income communities around the nation, marriage is now the exception rather than the rule.

 

 

 

Marriage penalties or subsidies are assessed primarily for taking wedding vows, not for living together with another adult. Those who do not feel morally compelled to swear fidelity in religious or public ceremonies for the most part do not suffer the penalties. Our tax and welfare system thus favors those who consider marriage an option—to be avoided when there are penalties and engaged when there are bonuses. The losers tend to be those who consider marriage vows to be sacred.

 

 

 

These effects of marginal tax rates extend well beyond the marriage patterns of low-income families. Divorced couples allocate child support so as to maximize future college aid. Some couples avoid remarriage to avoid losing Social Security or pension benefits. As noted, the disabled sometimes avoid work so as to keep Medicaid, while some of the unemployed delay going back to work.

 

[SEC=UGA]

Very interesting...

 

A friend of my wife's, who is unemployed and has 4 children, got married to the father of her two youngest (twins) shortly after they were born (because with his income and identifying him as the father, they would have had to pay for the child birth.) ABout a year in, after she had to come off of the state's programs, due to his income, they got a divorce so that she could go back on the state's welfare system. They still live together, in a newer house he recently purchased, and for all intents and purposes are married.

 

In rural areas (and I'm sure in urban areas) there are a vast number of people who game the system in such a manner as they know the ins and outs of the system. Hell, many of these people make a full time job out of keeping tabs on what they need to do to ensure they get the most out of the public assistance programs.

[stevegrab]

Yep that's true I know of a few who don't marry because it will reduce their benefits (SS disability, medicare/aid, etc.) Its become (for some) more about what marriage means to them financially than any other criteria.

[detlef]

But marriage is a sacred and holy union that must be protected. How can such a gift from god be so conveniently disregarded for financial reasons?

[Azazello1313]

But marriage is a sacred and holy union that must be protected. How can such a gift from god be so conveniently disregarded for financial reasons?

 

obviously the people who feel that way are suckers leaving money on the table, so the joke's on them.