How the Income Tax System Shortchanges Women

By Martha Burk, Ms. Magazine. Posted April 16, 2007.

A longer version of this piece appears in the Spring issue of Ms. Magazine.

What comes to mind when we think of income taxes? Probably dread. Do we ever think women's issue? Not likely -- but we should. Taxes are something women and men face with unequal pain, let alone gain.

For example, a married couple faces a "marriage penalty" if their two incomes are similar and they file a joint return, since the second income (usually the wife's) is taxed at a significantly higher marginal rate than if she filed as an individual. But if a couple forgoes the wife's second income (or if one person's income is appreciably lower), they may pay less as joint filers than they would have as singles (the marriage "bonus"). Both situations can reduce the incentive for a married woman to work outside the home.

While business interests and churches have long had armies of lobbyists to influence tax policy, feminist influence has been minimal. That needs to change, and here are some recommendations:

• Get marital status out of the tax code. The basic tax-paying unit in the U.S. system is the "household" -- defined as married heterosexual couples or single individuals. We should redefine the tax unit to follow the model used in almost all other industrialized nations: Each taxpayer is treated as an individual regardless of household type. This would eliminate both the marriage penalty and the marriage bonus, and at the same time would no longer exclude gay or cohabiting couples.
• Increase the Child Tax Credit and apply it to all families with a payroll tax liability. Working poor women get very little help from the Child Tax Credit because it is tied to the amount they pay in income tax, which is low because their incomes are low. Yet many still have significant payroll tax bills for such things as Social Security and Medicare, so applying the tax credit to payroll taxes as well as income taxes would benefit them.
• Institute paid family leave, funded by unemployment taxes, with incentives for men to take leaves as well. We should not only have a national system of paid leave, but go a step further and emulate Sweden's system. There, in order to get the full benefit, each parent must take a turn at caregiving; the benefit doubles if the father takes his turn. This wouldn't help single mothers, but for married couples it would go a long way toward getting men to do their fair share.
• Remove the caps on Social Security taxes and give a Social Security credit for caregiving. While income-tax policies encourage women to stay home and take care of kids, Social Security then punishes them by entering zero for each year spent at home outside the paid workforce. That means a more meager retirement.
• Revoke favorable tax treatments for institutions that discriminate against women. Churches that openly discriminate against women enjoy billions of dollars in tax savings through exemptions from income and property taxes, not to mention benefiting from the largesse of contributors who deduct their contributions. In turn, these funds are used to undermine women's rights. Case in point: Catholic and Protestant churches were among the biggest contributors to anti-abortion referenda in the 2006 election.

If some of the changes we need seem far-fetched or impossible, remember this: There was a time when the income tax was highly controversial, and now it is universally accepted. We're a long way from a feminist tax policy, but we have to take the first steps before we can get there.

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Martha Burk is the Money editor of Ms. magazine.

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