John McCain and the Marriage Penalty

I’ve already expressed my wishes for the priorities of the Democrats concerning marriage laws, so here is my unique perspective about how the Republican Party's platform will affect marriages and families:

I seem to recall there was a bit of flap a couple months ago when both the Obamas disclosed their tax returns but John McCain disclosed only his.  Due to Senate financial forms we know that in 2006 McCain's wife Cindy made between two to seven million dollars per year as chair of the Hensley organization, but her total holdings and annual income from other sources are left to the public’s imagination. 

Perhaps McCain was afraid that disclosing his wife’s huge worth would taint his efforts to build rapport with working- and middle-class voters, or maybe he was embarrassed to admit that he wasn’t the biggest bacon-bringer-homer in his household. 

Or.....

....maybe he wanted to avoid calling attention to the tax inequity that bites many two-wage earner households in the U.S. (also known as the “marriage penalty.”) 

The “marriage penalty” was the result of a 1948 tax law change that encouraged women to step down from jobs they held during World War II so the mostly-male returning workforce could plug back into the economy.  Due to this change, it became advantageous to live in single wage-earner households since it allowed the sole wage-earner--usually the husband--to “split” his income between himself and his non-working wife and thereby pay a lower tax rate.  

However, to this day two wage-earner families often pay a higher tax rate; as this article from Smart Money shows, the marriage penalty is still significant enough to discourage two-income households, even in the new millennium.

The Bush administration has put money into “marriage initiatives”--many of which were merely billboard campaigns to persuade former welfare mothers and others in lower income brackets to marry.   We could be partisan and accuse the Bush government of trying to legislate the continuation of gendered household roles by encouraging marriage without repealing the marriage penalty, but we'll refrain.  Anyway, in the McCain household Cindy is the big breadwinner, so they have a personal stake in her continued economic contribution. Will Cindy McCain be the nation's First Homemakrrr, making more money than the President and Congress combined?  If so--rock on, Cindy (you wouldn't mind helping to balance the budget, would you?)

However, with the disparity in their incomes, the McCains would probably benefit tax-wise if they filed jointly, as opposed to many American dual-income households where spouses are forced to make a choice between paying tax penalties or having one of them withdraw from the workplace.

Will Cindy disclose her tax return?  Not likely.  Will John McCain withdraw from the workplace?  Not likely either.  Will the Republicans do something to help lower- and middle-class two-income households keep their hard-earned money for their own savings and investments?  We’ll see.   

For all you non-politicians out there, just remember: until the tax codes are revised, it’s a good idea to talk to an accountant or financial planner before you marry so you know what to expect when April 15th rolls around.  Otherwise, you may get an unanticipated wedding present from the IRS (and I can guarantee it won’t be a blender.)

Until next time, a sweet and long life to you all.  

 Elizabeth Oakes welcomes your feedback and tax returns at weddingexaminer@gmail.com.