The Marriage Penalty

How the Government Incentivizes Harmful Choices

Last summer when my nephew was studying for his CPA exams, he informed his parents that he’d found a way to save them a lot of money on their taxes. They were thrilled until he explained: all they had to do was get divorced.

It’s true: People who are married pay more in federal taxes and receive less in governmental benefits and subsidies than do their unmarried counterparts.

This has consequences. As a new study indicates, “the marriage penalties faced by single Americans correlate with their marriage behavior, suggesting that these policies, beyond being unfair, could significantly discourage marriage.” The study shows, for instance, that “for 25-year-old, low-income females with children, the marriage tax reduces their chances of being married ten years later by 7.52 percent.”

Way back in 1981, George Gilder warned that the U.S. welfare system was disincentivizing marriage. Matters have only gotten worse since then. Now nearly ninety governmental programs work together to disincentivize marriage in two ways: by increasing the economic viability of single parenthood, and by economically penalizing those who marry. As Robert VerBruggen of the Manhattan Institute and the Institute for Family Studies says, “Put simply, the system discourages marriage.” The Biden Administration’s “Build Back Better Act,” currently stalled in the Senate, would further exacerbate the problem.

It really is a problem, and not only in moral terms. Marriage is the very thing that best raises people out of poverty. Married couples are more stable financially. Children raised by married parents are far less likely to be poor than children in single-parent or cohabiting households. Why?

First, children raised by their married parents are much more likely to enjoy access to the economic support of their father over the course of their childhood, compared to children raised by single or cohabiting parents. Second, married parents are more likely to enjoy economies of scale, compared to single parents, and to pool their income, compared to other types of families. Third, stably married parents who do not have children with other partners do not incur child support obligations or legal expenses related to family dissolution that reduce their household income (Institute for Family Studies).

It’s not just a matter of pooling resources; marriage encourages economically beneficial behavioral changes as well. Married people are more likely to work hard and save money than are single people.

And apart from economics, marriage brings many other well-documented benefits, both for the spouses and for their children. Married people tend to be healthier. They tend to be happier. Children with married parents fare better in a host of ways, including doing better in school and being less likely to commit crimes. It appears that:

By a broad range of indices, marriage is actually better for you than being single or divorced– physically, materially, and spiritually.... Married people live longer, have better health, earn more money, accumulate more wealth, feel more fulfillment in their lives, enjoy more satisfying sexual relationships, and have happier and more successful children than those who remain single, cohabit, or get divorced (The Case for Marriage).

Less crime, better-educated people who are more ready for the job market, lower health-care costs, happier people—all of these good things benefit not only the individuals involved, but also society as a whole.

So what do we do about governmental policies that economically discourage people from getting married?

Obviously when people are struggling financially we want to help them, and governmental aid programs are one way to do that. But surely we can formulate policies that don’t worsen the very problems they’re trying to solve.

We need to urge our elected representatives to enact policies that encourage—or at least don’t discourage—what researchers call “the success sequence”: school, job, marriage, kids (in that order). We can’t leave marriage out of that sequence. It isn’t the only factor in alleviating poverty, but it’s a crucial factor.

It sounds old-fashioned, and many consider it unfashionable because it’s in line with traditional Judeo-Christian values. Nevertheless, marriage is what works best for creating financial stability.