March 12, 2007
Should Marriage be Subsidized?
Should Marriage be Subsidized? Becker
David Cameron, the leader of the Conservative Party, set off a considerable debate in Great Britain on marriage when he recently claimed "Families come in all shapes and sizes and they all need support [because]…married couples stay together longer. Therefore, there is a very strong case for supporting marriage [in the tax system]. Children do better if their mother and father are both there to bring them up". The Bush administration is also very pro-marriage, and in the past has considered using the tax code to encourage marriage.
Virtually all studies show that children brought up in intact families do better at school, and have fewer drug and delinquency problems, than do children whose parents divorced or never married. However, that evidence alone does not tell us whether or not children of divorced parents would have done poorly even if their parents had stayed together, perhaps because parental fighting creates an unpleasant atmosphere. Good evidence on the effects of divorced parents on children is much more elusive, but the limited material available confirms that divorce makes children worse off. This is partly because one-parent families have less money and time to spend on children, and because these families tend to live in worse neighborhoods. Moreover, the process of witnessing parents going through a divorce may also harm children.
A little evidence also indicates that being brought up only by mothers is harder on boys than girls, probably because boys benefit more when their fathers live with them. Since single mother families are so common among blacks, this finding has been used to help explain why young African-American males do a lot worse than young African-American females in school performance, delinquency, and on many other measures. Different outcomes between boys and girls of growing up in families without fathers suggest that this rather than which parents continue to live together is what harms children.
Even if having two parents in a household is beneficial to children, it is far from clear whether marriage per se benefits children compared to having parents who live together without being married. A further question is whether all two parent households, or only households with two biological heterosexual parents, benefit children? The statement by Cameron at the beginning of my discussion says that 'families come in all sizes and shapes and they all need support'. I am persuaded that children raised by two gays or lesbians do worse than children raised by heterosexual parents, although the evidence is far too limited to be certain about this.
The tax code of the United States require joint filing by married couples. This imposes higher taxes on couples when both work than if they were single partly because two low-income earners who marry might have too much income to qualify for the earned income tax credit, and would receive less if they do qualify. The progressive tax structure also penalizes two earner married couples, especially when their earnings are similar. Hundreds of other provisions also impose a marriage penalty, although they are mainly minor ones, while many provisions give small subsidies to married couples when only one of them works.
Any tax penalty imposed on two earner married couples has become more important during the past several decades because these couples are much more common. An obvious solution to a marriage penalty from joint filing would be to require, or at least allow, married couples to file separately and split their incomes. Separate filing is now the norm in virtually all other member countries of the OECD.
Subsidies to marriage could be easily implemented by allowing larger per person standard deductions to married couples than to single persons, but it is not obvious that the tax code should be manipulated to try to alter these family arrangements. Arguments based on the external effects of parental divorce and other separation decisions on children are often not applicable because the vast majority of parents do love their children. These parents take account of their children's interests in deciding whether to separate, and in their other decisions. Mainly for this reason, all countries leave the care of children to parents, except in extreme cases of neglect by parents.
Moreover, since justifications for marriage subsidies based on the positive effects of marriage on young children would not apply to couples without children, or with grown children, should subsidies be given to such families? Furthermore, suppose it were shown conclusively, the available evidence is mixed, that young children are worse off when both parents work. I doubt if there would then be much support for additional taxes on two-earner families, although the logic of doing this is the same as that for providing marriage tax subsidies.
Explicit marriage subsidies (or penalties),or taxes on two-worker families, will not have large effects on either marriage or the number of married couples where both work unless the subsidies (or penalties) were much bigger than would be politically feasible. But even if the tax system could be used effectively in these ways, it involves too much social engineering over choices by adult men and women. Except in extreme cases of child abuse and neglect where parental choices have sizable external effects on children, government interventions in family decisions tend to cause more harm than do good.
Should Marriage Be Subsidized?--Posner's Comment
I agree with Becker that marriage should not be subsidized. The primary concern motivating proposals for a marriage subsidy is that children do better if they are raised in a household in which there are two parents. (It is an open question whether it makes a big difference whether the two parents are of the same or different sexes. My guess is that only if having parents of the same sex leads the child to be ridiculed by other children are children raised in homosexual households highly likely to suffer, and the more common such households become, the less ridicule there will be.) I assume it is true that children benefit from being raised in a household with two parents, but this point argues not for subsidizing marriages, many of which are childless (or the children are grown), as Becker notes, but for penalizing divorce or (if the parents are unmarried) separation (including deliberate single-parenthood).
Penalizing divorce, presumably limited to cases in which the divorcing couple has minor children, could operate as either a tax on or a subsidy of marriage: a tax because it would increase the cost of exit, but a subsidy because by increasing the cost of exit it would provide more security to each spouse. It is unclear which effect would predominate, and therefore it is unclear whether the amount of cohabitation would rise or fall relative to marriage whether or not there was also a penalty for dissolving a cohabitation when there were minor children.
I do not think there should be either a marriage tax or a marriage penalty. We are speaking here of Pigouvian taxes—that is, taxes designed to alter behavior rather than to raise revenue for government. The principal effect of a tax on or subsidy of marriage is likely to be to induce substitution of cohabitation for marriage, in the case of the tax, or of marriage for cohabitation, in the case of the subsidy. When an activity has a close substitute, the principal effect of a tax on the activity is to induce substitution for the taxed activity, and in the case of a subsidy to induce substitution of the subsidized activity. It seems unlikely that the decision to have children as a couple or as a single parent, or to stay together with the other parent after children are born and until they become adults, is strongly affected by the precise legal form of the relationship. Given no-fault divorce and the declining stigma of nonmarital sex, the practical difference between marriage and purely contractual forms of family relationship has shrunk to a point at which tinkering with the marriage rate through taxes or subsidies seems unlikely to produce social gains. Of course, a heavy tax on cohabitation (perhaps in the form of a heavy separation tax) would drive couples to marry--but an effect of taxing both divorce and separation might be to reduce the birthrate. This is not certain, however, because each spouse would have greater assurance that the other spouse would remain part of the household, to help take care of the children either through personal services or financially; and this assurance would increase the willingness to have children.
Of course even if there were an exact contractual substitute for marriage, as in domestic partnership laws in force in some states and some foreign countries, many people would have strong religious, moral, or sentimental reasons to prefer marriage to the contractual substitute, and a few people would have strong moral or political reasons to prefer the contractual substitute. These preferences should be honored. But it is not clear why the legal, including tax and subsidy, consequences of the choice should differ.
A serious social problem is created by the practice of some poor women of having children with no expectation that the father will participate in the support or upbringing of the children, but instead with the expectation that the government will support them. The practice--in which the role of government becomes that of financial father of children born out of wedlock--nurtures criminality and perpetuates poverty. Subsidizing the production of children by persons who because they are poor single parents lack the resources to support their children properly is highly dubious social policy. Welfare reform has reduced the problem but not eliminated it. Whatever the solution, it is unlikely to be a marriage subsidy. A man who does not want to be married and support children will marry if marriage is subsidized but will divorce or abandon his wife after pocketing the subsidy. To prevent this gaming of the marriage subsidy would require costly and probably futile enforcement efforts by the government.
David Cameron, the Tory leader, whom Becker mentions, bases his pro-marriage policy on the following sentiment: "There's something special about marriage. It's not about religion. It's not about morality. It's about commitment. When you stand up there, in front of your friends and your family, in front of the world, whether it's in a church or anywhere else, what you're doing really means something. Pledging yourself to another means doing something brave and important. You are making a commitment. You are publicly saying: it's not just about me, me me anymore. It is about we--together, the two of us, through thick and thin. That really matters." But more than 40 percent of British marriages end in divorce, suggesting that the public commitment involved in a wedding ceremony doesn't have much sticking power. True, the number of cohabitations that end in separation is surely much higher, but many of them are entered into with no expectation of permanence. So far as I am aware, those cohabitations that are entered into with such an expectation are no more (or perhaps not much more) likely to end in separation than marriages are to end in divorce.