Item from the Smart Marriages Archive, reproduced in the Divorce Statistics Collection

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The Flaw in Bush's Tax Plan
By David Blankenhorn
New York Times, Op-ed, Monday, December 6, 1999

As part of his recently announced tax plan, George W. Bush is proposing to
reduce the marriage penalty, in which two people pay more in taxes after
they get married than they did as single adults.

Under his plan, families in which both spouses work could deduct 10
percent
of the income - up to $30,000 - of the lower-earning spouse. For a typical
middle-class couple, that's an annual benefit of $300.

It sounds good, but the plan is actually bad economics and a potential
setback to the very values Governor Bush says he is trying to shore up.

First, it is a regressive benefit. In 1996, the median income for
households
with children under the age of 18 in which both parents worked full time
was
$62,000. That's $23,000 higher than the annual income of households in
which
the father worked and the mother was at home. So the Bush proposal ignores
lower-income families while delivering a special benefit to more affluent
families.

Second, since the credit applies only to families in which both spouses
work, it does nothing for those in which one parent would like to leave
the
work force and care for the children. By shifting a greater share of the
tax
burden to one-earner couples with children and creating a $300 annual
incentive for the second parent to enter the labor force, the Bush
proposal
would end up reducing the time that some parents spend with their
children.

Finally, Governor Bush's plan does less than it could for parents because
it
is based on a philosophy of taxing individuals, not families. As is
currently the case with all other legally recognized economic
partnerships,
married couples should be permitted to share their income for purposes of
taxation. That is, if the father earns $50,000 and the mother stays at
home,
they earn, for tax purposes, $25,000 each.

This policy, which is called income splitting and was in fact the way
couples were taxed for several decades until 1969, would lower the tax
burden for all married couples, because it would maximize the amount of
family income taxed at lower rates.

Some people will say that Mr. Bush's proposal is too small to worry about.
After all, $300 is not much money to most couples. But a small bad idea is
still a bad idea.

Economists tell us that over time, even a modest financial incentive
affects
behavior, especially if it is reinforced by other, similar incentives, as
is
true in this instance. In most cases today, the parent at home is the
mother. Is creating a small new disincentive for stay-at-home motherhood
what Gov. Bush really wants to do?

David Blankenhorn is president of the Institute for American Values and
co-editor of "The Fatherhood Movement."

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