For Richer or Poorer — or Maybe Not
by eugene steuerle

gene steuerle, former deputy assistant secretary of the U.S. Treasury, is a fellow at the Urban Institute. A version of this column first appeared in his Substack blog, The Government We Deserve.

Published July 5, 2023


Almost all of America’s elected officials proclaim their support for marriage, even as they create ever more ways to penalize it.

If creatures from Mars — well, slightly more likely, from one of Saturn’s moons — came down to assay our legal treatment of marriage, they would find the following. At younger ages — the times when incomes tend to be lower and households are raising children — Congress exacts massive penalties on marriage vows. (I’ll discuss below why I emphasize “vows.”) However, when individuals are older and far less likely to be raising children, Congress provides substantial marriage-vow bonuses.

In effect, Congress has decided to penalize marriage most at life stages when children benefit most from the commitment of more than one adult. How did this ever happen? 

The penalties came about as “means-tested” social welfare programs — programs in which benefits shrink as household income grows — affected ever-larger numbers of Americans. The means tests led to much higher effective tax rates on additional earnings for a married couple than for the same individuals if they remained single (or divorced).

Tangled Webs Woven

None of this was planned. Widely used benefits like SNAP (formerly known as food stamps), Temporary Assistance for Needy Families, rental housing subsidies, the earned income tax credit and Medicaid all phase out benefits as income rises, particularly above poverty levels. Earn an additional $10,000, and it’s not uncommon to be left with half of that amount or less, even before counting the costs of expenses that go with working — in particular, commuting and childcare.

Almost three decades ago, Linda Giannarelli and I began labeling the seeming paradox of high marginal tax rates on the poor as the “twice poverty trap.” The marriage penalties come along as a corollary, particularly when one low-earner marries another low-earner, forcing the newlyweds to face benefit phase-outs with a vengeance.

Then there is the old-age side of the ledger. Social Security benefits are designed so there are almost no marriage penalties, only marriage bonuses. Married couples often achieve lifetime bonuses of $100,000 or more relative to two unmarried individuals with similar lifetime incomes and Social Security taxes paid. The income tax rate structure also offers mainly marriage bonuses. (You don’t really want the details, do you?) But that doesn’t help the young and fecund, since a high percentage of lower-income households don’t pay income tax.

People might share a house, a college dormitory or a nursing home, and achieve the economies of scale in living that our various government programs effectively try to tax away only when you exchange vows.

Should we care? We do know people are less inclined to marry if there are financial penalties attached. But that’s not rigorous evidence. Even though it’s hard to determine the long-term effect of not-so-easily-understood rules determining government benefits, I suggest that the unfairness of the system in itself makes a strong case for reform even if the victims don’t know they are victims.

You see, the big losers are those who believe in the marriage vow. For almost all other situations in which adults live together, there is no financial penalty. Quite the contrary: people might share a house, a college dormitory or a nursing home, and achieve the economies of scale in living that our various government programs effectively try to tax away only when you exchange vows.

In theory, some programs award fewer benefits to larger households, married or single. But government has pretty much given up trying to sneak into homes to determine who’s living with whom. For someone who doesn’t care one way or the other whether they take formal vows, the system of marriage penalties and bonuses is essentially discretionary. Don’t marry when penalties are present; do marry if there are bonuses.

Changing Times

Clearly, much of what has happened to the family over recent decades has been driven by cultural forces far beyond the control of government. Isabel Sawhill, a senior fellow at Brookings, has suggested that it is virtually impossible to put the marriage genie back in the bottle. Yet, at the same time, she has been a leading force in the effort to reduce teenage pregnancy, which often reduces prospects for marriage. Richard Reeves’s Fathers’ Day Substack column, following up on his book on the struggles of modern men, Of Boys and Men, argues in somewhat the same vein that while fathers may not be married, it remains quite important for them to remain a strong presence in their children’s lives. Andrew Yarrow’s book, Man Out, about the growth in men on the sidelines in American life, similarly struggles with how much government can do. Yet he argues for restoring “faith in government.”

One way or the other, all these analysts find they cannot give up on promoting the sanctity and importance of commitment, vowed or not. After all, it’s a crucial ingredient in addressing the welfare of both children and those men and women who have become disconnected from society. I, myself, am quite uncomfortable with a government that tells struggling couples that they will make themselves significantly worse off in terms of income if they choose to marry (or stay married).

Republicans and Democrats have increasingly invested themselves in finding new ways to fight about aspects of culture over which they have very little control. Might not marriage penalties be one cultural realm where they do have some limited power and share a common view?

main topic: Tax Policy