Sunday evening Twitter can be a very silly place. Ill-considered tweets about taxes from Grover Norquist, the anti-tax crusader, make it sillier still. Apparently inspired by an incident with his daughter, the president of Americans for Tax Reform, which opposes all tax increases, sent this take into the Twittersphere:
The tweet quickly went viral, but much of the feedback was far from flattering. Users berated him, first, for failing to tell his daughter about sales tax before she went to buy the guitar and, second, for not explaining the basic function of taxes — including the many services she benefits from daily.
… and so it continued. A few tweeters voiced frustration with the sales tax system, suggesting that sales tax should be included in the listed sale price of goods, a common practice in many other countries. Mostly users reveled in the piling-on.
But there is another, more productive conversation that the tax reformer might have had with his daughter about taxes.
The current structure of the U.S. tax system carries a gender bias, which Norquist’s daughter stands a good chance of facing should she someday get married.
Married couples who file taxes jointly enjoy extensive benefits. But they also get taxed based on the couples’ joint income. This means the spouse that earns less income, or “secondary earner,” gets penalized with a very high marginal tax rate. Not surprisingly, this secondary earner is almost always the woman — in part because of the wage cut women suffer when they take time out to care for children.
Take a couple in which the man earns $200,000 and the wife earns $25,000. If they file separately, the former would fall into the 33 percent bracket and the latter into the 15 percent bracket. But if they file jointly, both would fall into the 28 percent bracket. Though the couple lowers its total tax burden by filing jointly, it substantially raises the marginal tax burden on the secondary earner.
Around 60 percent of married couples between ages 25 and 64 include two earners, according to the 2017 budget released last year by the Obama administration. By lowering women’s return to work, the system discourages them from participating in the workforce. When child-care costs are added to the equation, their return is ever lower.
Janet Stotsky, an economist at the International Monetary Fund, explains that gender bias in tax systems reflects prevailing social attitudes about the roles of men and women. The U.S. tax code was written at a time when the norm was for women to stay at home. Many countries have reformed their tax codes to reflect the reality of modern households, in which both spouses work. After a 1984 study by the European Community concluded that joint-filing tax systems were not gender neutral, several European countries moved to systems of independent taxation to eliminate gender discrimination.
“This is a distinctly American problem now,” says Melissa Kearney, an economics professor at the University of Maryland. In 2013, Kearney and her co-author, Lesley Turner, published a proposal for reform, “Giving Secondary Earners a Tax Break.” She expected it to appeal to conservatives and liberals alike: getting rid of the disincentive for women to work is pro-work, she emphasizes. “It helps working-class families. Both on efficiency and equity grounds, people should get behind it.”
To her surprise, it received pushback. Social conservatives criticized it for changing the incentive for women to stay home. But as Kearney points out, reform wouldn’t punish stay-at-home moms; it would just make the relative returns greater for women who work outside the home.
Leaving them with more money to, should they choose, buy a guitar.