By Dave Anderson:
I just finished my family's 2010 tax return. I'm doing the happy dance right now as we'll see a good size refund. However, I feel that a significant portion of the refund is not just in that my wife and I have a standard deduction that is twice that of a single person while we have signficantly less than twice the basic living costs of a single person.
Couplehood has many instances of shared costs that do not scale integrally proportionally from the components of the lives of two individuals who are living and acting on their own. I see this in housing as neither my fiancee nor I could afford to live in anyplace that passes a health inspection for only 50% of what we pay in rent today, but we have a nice place. Rapidly deteriotating consumables are much cheaper on a per-serving used basis due to the inability to buy single servings of an item, instead of multi-servings. Insurance also tends to be slightly cheaper....
the per capita fixed costs of living for a member of a couple is lower than the fixed costs of living for a single person. This all assumes that no one has children. If this is the case, then I do not see why there should be a tax subsidy for couples as they already have a significant increase in utility due to the cost sharings. Nonmarried cohabitating couples (straight and gay) already face the same tax situation as non-coupled individuals, so I have a hard time in the matter of fairness seeing why couplehood, which already has significant economic advantages in the realm of relatively fixed costs, needs additional economic boosts
Substitute the word marriage for couplehood, and I stand by this argument today. We have significantly lower basic subsistence costs than two single people who are not living and splitting expenses together. I believe that our tax code should be focused on taxing dollars above basic subsistence, and taxing the dollars with lower marginal utility at a higher rate than higher marginal utility dollars.
The "marriage penalty" fix negates this belief, although the federal government firmly believes that it is significantly cheaper to add a marginal individual to an exisiting household than to establish a new household. The poverty line for a household of one is $10,830 while for a household of two, the poverty line is $14,570, and the long run marginal household member addition is $3,740. There are numerous other examples of the federal government recognizing that coupled adult households have non-linear cost scaling and benefit from economies of household scale, and therefore reduce payments to account for this fact.
I benefit from this, but I don't think it is right.
Good point.
ReplyDeleteI think it's a holdover from the pre-WWII era when most households had one income, not two. Most analysts attribute the prosperity of the Fifties to a super-charged post-war economy while overlooking the new normal of two wage-earner families. Real estate and other essentials got more expensive in response to increased demand as the Father Knows Best/ one wage-earner paradigm disappeared along with black and white TV.
To some extent the "married, filing separately" category recognizes the disparity, but "married or single" remains a safety net for couplehood.
(Another part of the dynamic is the pernicious lie of the forty-hour work week. All the successful people I know, married or not, work a helluva lot more than forty hours.)
Any opinions about VAT?
At a time when peak people is one of the planets biggest challenges having a tax deduction for more than one or two children is what offends me the most. Of course the Bible thumpers would go nuts if any attempt was made to change that.
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