The GOP’s failure to unequivocally condemn U.S. Senate candidate Roy Moore of Alabama amid allegations of sexual misconduct has raised new questions about the party’s commitment to “family values.” Similar questions arose last year, when the party failed to distance itself from Donald Trump in the wake of the “Access Hollywood” tape.
Given these failures, it’s fair to ask: Is the GOP really the party of family values? The tax reform debate provides more evidence that it’s not. Instead, family values seem likely to be sacrificed on the altar of tax cuts.
Which shouldn’t surprise us. The modern GOP, which took shape in the 1970s and rose to power in the 1980s and 1990s, has long pursued tax cuts for corporations and the wealthy at the expense of most other public policy goals.
The same thing is happening today. Despite House Ways and Means Committee Chairman Kevin Brady’s (R-Tex.) insistence that his committee had written a “family-friendly tax code,” the GOP plan will raise taxes on many middle-income families. Even the provisions that defenders trumpet as “clearly pro-family,” such as the elimination of the tax code’s “divorce subsidy,” will actually make families worse off.
But although some have accused the right of using culture-war politics to distract from its economic agenda, the real story is how the GOP has successfully married its cultural and economic agendas by casting the federal government as the real threat to family values.
The history of the “marriage penalty” tax illustrates how this process worked. Congress created the marriage tax, as it is often called, in 1969 — not to punish marriage but to redress what many thought was an unfair tax on single people.
Both the marriage tax and the singles tax resulted from a system that uses the household, rather than the individual, as the basic unit of income taxation.
This doesn’t have to be the case — nor has it always been.
In the early years of the federal income tax, taxes were levied on individual incomes, irrespective of marital status. In theory, this meant that individuals paid taxes on their own incomes; in practice, it created a loophole that allowed married couples to shift income from one spouse to another to take advantage of lower marginal rates.
The Treasury Department deemed such practices tax evasion, and the Supreme Court agreed. In 1930, the high court ruled that federal law required the treasury to “tax salaries to those who earned them.” No longer, the court ruled, could one spouse transfer income to the other spouse to reduce their tax liability.
At least, not in common-law states. In the eight “community property” states, however, spouses were legally entitled to half of all property and to half of the couple’s collective earnings acquired after marriage. In these states, the Supreme Court found, married couples could file separate tax returns on half of the couple’s total earnings. For many couples, income splitting meant a huge tax cut.
Given that a couple in a community property state might owe 40 percent less in federal taxes than an identical couple in a common-law state, it’s not surprising that five states, plus the territory of Hawaii, adopted community property laws in the 1940s.
In 1948, Congress acted to stem this “stampede” by introducing the income-splitting joint return. The new law required married couples to total their joint income, divide it in two and then compute the tax based on that number. That figure was then doubled to produce the couple’s total tax bill.
For most married couples, this new system offered a “marriage bonus.” Because married women tended either not to work or earned far less than their husbands, this new system essentially allowed men to “marry into lower brackets” and reduce the couple’s total tax bill.
The flip side of the marriage bonus was a singles penalty. Two taxpayers with identical incomes could face vastly different tax bills. For most of the 1950s, this wasn’t a problem. Public policy and popular culture celebrated the marital unit and the nuclear family. Single men and women, who fell outside this domestic consensus, were often looked upon with suspicion and scorn.
This shifted during the 1960s. An increase in women’s labor force participation, a declining marriage rate and the sexual revolution together cast a spotlight on how the tax code discriminated against single men and women through “heavy bachelor and barren taxes.” In 1969, as part of a larger tax reform package, Congress eliminated the 50-50 income split and created the four separate progressive rate schedules in the code today: one for married couples filing jointly, one for married couples filing separately, one for heads of households, and one for single taxpayers.
Instead of making the tax code fairer, however, this law complicated it without eliminating the singles tax. What’s worse, it unintentionally introduced a new penalty for some married couples.
This “marriage tax” actually did not tax all marriages, only those in which the wife worked outside the home. The code continued to boost one-earner couples, who received a kind of subsidy for the wife staying home. At the same time, it imposed a tax on secondary wage earners, by taxing every penny they earned at the top rate faced by their partner. That means the tax code overtaxes not marriage, but married women who are also wage earners.
Ignoring this reality, the newly ascendant New Right — which embraced both “traditional” social politics and an anti-tax agenda — branded this part of the tax code a “marriage tax.”
That branding was one component of a new political project: using family values to secure tax cuts. By the time President Ronald Reagan took office, the marriage tax had been successfully transformed by the religious right and its tax-cutting allies in the GOP into a symbol of the federal government’s insensitivity to families.
For years, lawmakers have promised to reduce it. This is a promise they can’t keep, at least not if they want to both retain the progressive rate structure and a system that taxes household, rather than individual, income.
Shifting back to the individual unit, as many other developed countries have done, would automatically eliminate the marriage penalty. But it would also eliminate the marriage “bonus” that couples with a stay-at-home parent enjoy. This change is probably a political nonstarter for Republicans who often proclaim the virtues of traditional gender roles.
Efforts to reduce the marriage tax show how family values language has been used to achieve the GOP’s dream of cutting taxes for the wealthiest Americans.
More often than not, reducing the marriage tax has simply been a way for tax cutters to reduce tax rates. As tax rates go down, so does the “penalty” incurred when combining spousal income pushes married couples into higher tax brackets. Indeed, most of the “fixes” to the marriage tax penalty have benefited households with annual incomes above $100,000.
For almost 50 years, the campaign to eliminate the marriage tax has helped to further the GOP’s broader tax-cut agenda. It’s no surprise that the GOP is using the tax treatment of divorce in a similar fashion. Don’t be fooled. Just like the attack on the marriage penalty, this provision has more to do with protecting the GOP’s tax cut than with family values.