The Edmond Sun

Business

April 16, 2014

Victimized by the 'marriage penalty'

In a few short months, I'll pass the milestone that every little girl dreams of: the day she swears - before family and God, in sickness and in health, all in the name of love - that she's willing to pay a much higher tax rate.

Yes, dear readers, this was my last tax day as a single filer. By this time next year, I'll be married, and the Internal Revenue Service will pool my earnings with those of my husband-to-be. The first dollar of my earnings will be taxed at the same marginal rate as the last dollar of his (or vice versa, depending on how you stack our incomes). Since marginal tax rates rise as earnings increase, that means we will have a higher tax liability as working spouses than we do as working single people. This higher tax burden is known as the "marriage penalty."

My accountant informs me that hubby and I will each be slapped with a four-figure federal income tax "marriage penalty." But don't cry for us. We'll grumble about it, sure, and one of us might even whine about it in a column. But husband-to-be and I will be able to absorb the higher tax burden and still pay our rent, as will most two-career, professional, childless couples who trade in a lower tax rate for the promise of wedded bliss.

The people who really suffer from the marriage penalty are lower-income families with young children - you know, those people constantly scolded by the Family Values Police for eschewing the bonds of holy matrimony or for being too lazy to work.

Consider a family in which the husband earns $25,000 and the wife stays home to care for their children. (Women are more often the more marginal earners, both because they earn lower wages and because they are more likely to be primary caregivers.) This family would face a series of painful "marriage penalties" if the mother decides to join the paid labor force.

If she takes on a $25,000 job, the family would lose the entirety of their earned-income tax credit - about $5,000 - and pay an additional $6,000 in payroll and federal income taxes, according to calculations from a recent report by the Hamilton Project, a nonpartisan think tank. This family would also lose access to about $2,600 worth of food stamp benefits, as well as other means-tested benefits, such as Medicaid. (The exact amount of lost benefits depends on which state they live in.)

To add insult to injury, the family's expenses would rise sharply, too. Once mom goes to work, the family must find someone else to care for the children and do other household chores previously performed by an unpaid, stay-at-home mom. And in most states, day care costs more than college tuition.

Add up the increased taxes, the lost means-tested benefits and additional child-care costs, and the family is likely to keep just 29 cents of every dollar that this opting-back-in wife might earn, according to the Hamilton Project. That's not much of an incentive for married moms to go back to work, especially if they have any non-finance-related misgivings about handing over child care and household tasks to hired help.

Conversely, if two unmarried sweethearts already work, the tax code discourages them from getting hitched. I know of a few couples who have decided to live in sin in perpetuity for precisely this reason. There are also famous cases of couples repeatedly getting divorced at year's end and remarrying in January, because your marital status on Dec. 31 is key to determining your annual tax liability. That loophole, however, was closed, after such divorce/remarriage schemes were deemed "sham transactions."

Despite all the morality rhetoric spewed by some policymakers and pundits, Congress has expressed peculiarly little interest in removing disincentives for married moms to work or for working parents to marry. Periodically there are murmurings of change; last month, for example, Sen. Patty Murray, D-Wash., introduced legislation that would allow low- and middle-income families with young children to deduct part of the secondary worker's earnings from their taxable income. But like other proposed reforms of the tax system, this has achieved little traction so far.

Right now, unpaid primary caregivers can calculate that the amount they would earn as paid workers is just not that much greater than the immediate costs of bringing in those earnings. I say "immediate costs" for a reason: By staying home now - to avoid the marriage penalty or otherwise - many parents will cost their families much more money later on, when the kids no longer need as much intensive child care, because extended career interruptions can result in persistently lower pay. In other words, by maintaining the "marriage penalty," Congress is not only costing U.S. families billions of dollars today; it is also holding back their earning power tomorrow.

              

1
Text Only
Business
  • MS_prisons 1.JPG DOC action could save $36.8 million annually

    The Oklahoma Department of Corrections expects to avert more than 2,100 offenders by 2021 saving more than $36.8 million annually, an audit states.
    Tuesday, State Auditor and Inspector Gary Jones  released the results of a performance audit of the DOC that was requested by Gov. Mary Fallin. The audit for the period July 1, 2007 through June 30, 2013, distinctly focused on governance, financial management and capacity management.
    Audit recommendations included:

    July 30, 2014 2 Photos

  • food bank.jpg Regional Food Bank receives donation

    At a special celebration event Wednesday, Walmart and the Walmart Foundation announced that over the last fiscal year they gave more than $30 million in cash and in-kind contributions to charitable organizations throughout Oklahoma. Additionally, the retailer and its Foundation have partnered with local food banks to provide more than 15 million pounds of food to residents.

    July 30, 2014 1 Photo

  • City spends $1.7 million on ITS

    Public safety will benefit by the Intelligent Transportation System with its implementation by the City of Edmond, said Steve Commons, assistant city manager.
    More vehicles are added to traffic volume as Edmond’s population grows. ITS connects all of the city’s traffic signals in order to improve traffic flow in present time with greater efficiency, Commons said Wednesday.
    “Some of that can be done through computer automation that tracks how traffic is changing,” Commons said.

    July 30, 2014

  • Downtown Master Plan accepted by council

    The 2014 Downtown Master Plan Study was accepted by a 3-0 vote Tuesday evening by the Edmond City Council.
    Fort Worth-based consulting group Freese and Nichols presented their final update to the 1998 Downtown Master Plan. The city hired the group at a cost of $300,000 to make recommendations for future development of Broadway in the central business district.
    “There are clearly some short-term (parking) options that we feel should move forward,” said Cody Richardson, of Freese and Nichols consultants of Fort Worth. “Better signage at existing parking lots.”

    July 29, 2014

  • Lambrecht Construction to build office

    The commercial site plan of a physician’s office was approved recently by the Edmond Planning Commission by a vote of 4-0.
    Lambrecht Construction plans to build the office at 3917  E. Covell Road in the Fairfax Business Office, north of Covell and west of Sooner Road, said Bob Schiermeyer, city planner.

    July 29, 2014

  • jc_ITS map.jpg City to improve traffic flow

    The Edmond City Council this week approved a services agreement with Electronic Technology, Inc. For the  installation of Intelligent Transportation Systems’ video wall system at a cost of $314,620. The vote was 3-0.
    ITS is a fiber optic, wireless or hybrid communication system of monitoring road events and equipment in the field, data archiving and predicting traffic volume, said Kent Kacir, an engineer with Kimley-Horn and Associates Inc.

    July 29, 2014 1 Photo

  • sales tax holiday.jpg Oklahoma sales tax takes a holiday

    Beginning at 12:01 a.m. on Friday, Aug. 1 and ending at midnight Aug. 3, Oklahomans will be able to participate in a sales tax holiday giving shoppers the opportunity to purchase certain clothing and shoes free of sales tax.
    Yes, retailers may not charge tax, including state and local sales taxes on items that are tax-exempt during the sales tax holiday weekend. The sales of clothing and shoes priced at less than $100 are exempted from sales taxes.

    July 28, 2014 1 Photo

  • Karan & Rwanda.jpg Peace through Business empowering women entrepreneurs

    Peace Through Business is part of the Institute for Economic Empowerment of Women (IEEW) based in Oklahoma City. It is a program that connects small business entrepreneurs in Afghanistan and Rwanda with business owners in Oklahoma. One such entrepreneur found out about the program from a friend, applied, and was accepted to take part in this year’s session.
    Upon earning a master’s degree in Civil Engineering from the Universite de Sciences et Technique de Lille in Belgium, Lyliose Nduhungirehe began her career working for a construction company in Brussels, but she quickly switched paths to Information Technology.

    July 28, 2014 1 Photo

  • Anderson Properties continues to grow

    Berkshire Hathaway HomeServices Anderson Properties recently announced the acquisition of Tulsa-based Prudential Alliance Realty, an eight-office, 150-agent brokerage operating in Tulsa and Oklahoma City and Edmond.
    The transaction gives Anderson Properties, a full-service real estate agency a total of 38 offices and more than 600 agents.

    July 28, 2014

  • Logan County pays off jail tax early, seeks new one

    Logan County is paying off a sales tax ahead of schedule and needs a new one to be able to afford funding jail operation and maintenance, officials said.
    Citizens vote on the county sales tax which is split for redistribution by state law. The tax is collected by the Oklahoma Tax Commission and redistributed back to the county as specified by voters.
    In 2005, citizens passed a 10-year sales tax, scheduled to end next month, to fund the building, operation and maintenance of the county jail, which operates on a $1.3 million budget. Jail capacity is 188 without anyone in a holding cell or a temporary bunk. Thursday it was holding 130 inmates, said Logan County Chief Deputy Richard Stephens.

    July 26, 2014

Stocks