Tax Day Reminds Women How Far There Is Still To Go

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New Book Shows How Tax Law Written for Single Income Households, Not Modern Families

DALLAS ( April 12, 2006 ) – This week millions of Americans are frantically filling out their tax returns. And for thousands of women who work outside the home, this week represents a poignant reminder that no matter how far women have come, our nation's tax law has not kept pace.

"We no longer live in an Ozzie and Harriet world, yet you wouldn't know that by looking at our tax law," said John C. Goodman, president of the National Center for Policy Analysis and co-author of a forthcoming book Leaving Women Behind: Modern Families, Outdated Laws. "In fact, all of our economic institutions – including labor law, employee benefits and Social Security – are geared toward single-earner families with a stay-at-home spouse. By comparison, every other arrangement is penalized."

According to the book's authors, women who work for modest wages outside the home pay effective tax rates higher than Bill Gates. Consider the hypothetical case of Ozzie and Harriet, a middle-income couple.

  • When Harriet enters the labor market she is taxed at Ozzie's income tax rate, even if she earns only the minimum wage.
  • And even if Ozzie has maxed out on his Social Security payroll taxes, Harriet must pay Social Security taxes on every dollar she earns (up to the maximum), and she will get few, if any, extra benefits in return.
  • Further, when all taxes and all costs are considered (including the cost of child care and other services she was previously providing as the stay-at-home spouse), the second earner in a middle-income family can expect to keep only about 35 cents out of each dollar she earns.

According to the authors, a fairer tax system for two-earner couples, at a minimum, would allow both spouses to file completely separate tax returns, so that the first dollar the second spouse earns is also taxed at the lowest rate.

Leaving Women Behind: Modern Families, Outdated Laws is a forthcoming book by Kimberley Strassel, editorial writer for the Wall Street Journal; John C. Goodman, president of the National Center for Policy Analysis (NCPA); and Celeste Colgan, an NCPA senior fellow. It is published by Rowman & Littlefield in cooperation with the Manhattan Institute and will be available at booksellers, including Amazon.com, this May.