Pink and Poverty Taxes on Marriage

October 02, 2022

Elias Ilin (Former) Assistant Policy Adviser and Economist

Laurence Kotlikoff Visiting Scholar, Research Department, Atlanta Fed; Professor of Economics, Boston University, and President of Economic Security Planning, Inc.

Melinda Pitts Research Center Director

Summary

A "pink tax" is the extra cost charged for goods and services designed for women. In this research, we expand the scope of this pink tax by examining gender and income differentials in marriage taxes. A marriage tax reflects the decline in spending power as a result of the difference in taxes and transfer benefits that arise from marriage. We use a lifetime measure of the marriage tax and show that low-income females with children are penalized the most, with a loss of 3.35 percent of their lifetime resources because of marriage. This marriage tax also makes a significant difference to their marriage decisions. The marriage rate for low-income females with children would be 13 percentage points higher without this marriage penalty.

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Policy Hub 2022-12

Key findings:

Certain features of the US fiscal system generate significant marriage penalties for low-income people.
The marriage tax rates are the highest for low-income females with children.
The marriage rate for low-income females with children would be 13 percentage pointshigher without this marriage penalty.

Center Affiliation: Center for Human Capital Studies

JEL classification: H24, H31, J12

Key words: marriage taxation, disincentives, marriage, social safety net, income tax

Digital Object Identifier: https://doi.org/10.29338/ph2022-12