Rachel Cohen has a recent piece in Vox about a conservative welfare reform aimed at removing marriage penalties. This comes up a lot in conservative welfare circles, especially during and after presidential elections. It is doubtful that major policy changes will be made in this area, but it is a topic worth discussing, both in itself and also as a way of illustrating the superiority of a different way of doing tax and welfare policy.
The basic problem is that, whenever you create a welfare benefit that is restricted to families or households with income below a certain level, you make it so that eligibility turns, in part, on how many earners live in a given family or household. If family income needs to be below $20,000 per year to be eligible for a benefit, then a single-earner family earning $15,000 is eligible. But if two single-earners making $15,000 get married, their combined income would go to $30,000 and they would become ineligible for the benefit.
This is distributively unfair and has the effect of preventing some people from marrying. I actually know people in my family who, for many years, cohabitated but didn’t marry because doing so would result in the loss of Medicaid eligibility.
The proposal that is typically offered to solve this problem is to have one set of eligibility thresholds for singles and then a higher set of eligibility thresholds for married people. Generally, in these reforms, the married-couple eligibility thresholds are set at twice the level of the eligibility thresholds for singles.
But this doubling-of-thresholds reform can actually generate similar fairness problems in the other direction. We see this already with the federal income tax, which is set up this way. When a single person earning $200,000…
Auteur: Matt Bruenig
