Marital Decisions
Amy Kasman writes:
The topic I am investigating – broadly speaking – is the effect economic considerations have on the marital decisions of citizens. The most salient causal mechanism for this is tax law. Specifically, because of the joint-filing system of the United States tax code, the more equal the incomes of two partners are, the less tax benefit (and in some cases the more penalty) they will receive by marrying and filing as a married couple. This type of tax code is not universal, and in some countries marriage does not affect the income tax of the partners involved; I will be examining how the marriage rates differ among countries with the two different tax codes. However, recent events concerning marriage domestically bring to light several issues with my research on even the most basic causal level.
The proceedings currently going on at the Supreme Court regarding DOMA originate in the complaint of a woman named Edith Windsor, who was required to pay a $300,000 estate tax upon her female partner’s death. She would not have had to pay the tax were she and her partner able to get married. The main takeaway from Windsor’s side of the argument before the Court is, of course, that this is unequal and unfair treatment based on discrimination against an entire class of people; but there are other insights available to someone looking at the case. The emotional importance that the dispute had for Windsor – she said of the government that it was “treating us like strangers,” – and the amount of money involved, which is not an insignificant sum for most people, indicate the intensity of the effect that this particular tax – one of many that are affected by marital status – has on the legal and societal role of the institution of marriage itself, and highlights the importance and complexity of even just the economic aspect of marriage.
Income tax, which is the driving force behind the way my research assumes different tax codes affect different country’s marriage rates, is not the only economic benefit of marriage. The institution, especially when recognized by the federal and not just a state government, grants many economic benefits which are not so easily measured.
Any attempts at breaking down the complexity of a societal, legal, cultural and personal institution will miss important factors. In the social sciences, even the measurement of certain variables poses problems; even ascertaining which countries allow married couples to file jointly – or ‘income split’ – is frustratingly difficult. The only online information available is for OECD countries, and even then there are so many notes appended to various countries that the measure is no longer an obvious binary – in Iceland, for example, the income tax is based on the individual except when it comes to the investment income of married couples – and even that information is only as of 2006.
The difficulty of proving or disproving hypotheses in the social sciences is, of course, obvious to anyone who attempts such a thing. It is just as obvious that researchers ought to try anyway. But a thorough sense of humility is necessary in order to achieve any real sense of perspective about one’s results.
What I find particularly interesting about your topic is what might be the effect of the “marriage penalty” i.e. the higher taxes married couples need to pay when their joint income crosses into a higher tax bracket than if they were to pay separately. While on one hand marriage yields certain economic benefits such as tax breaks on health insurance, exemption from the estate tax along with greater access to federal family and medical leave, on the other hand there is the marriage penalty. At what point do the costs overwhelm the benefit? The marriage penalty has not been shown to affect the choice of the majority of heterosexual couples to get married. Will it effect that of homosexual couples? Depending on the priorities of people, the correlation trend could go either way and it makes for a fascinating application of behavioral economics to understand which way the trend would go
Source: Dixon, Kim and Temple-West, Patrick. “Analysis: Gay marriage rights may carry bigger U.S. tax burden for some”. Reuters. 28 March 2013
I find it very interesting how you mentioned that in some income brackets, marriage can have a negative economic effect. You mentioned that you chose to study countries with varying income tax legislation, and I am curious about how you think social ideals may play into this? Although it’s true that there are many economic factors in the decision to marry, how can one control for differing social views on marriage across various religions, cultures and even varying income distributions? This is a very interesting study and I look forward to learning the results of your analysis. Good luck on your paper!