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The Tax Foundation is the nation’s
leading independent tax policy
research organization. Since 1937,
our research, analysis, and experts
have informed smarter tax policy
at the federal, state, and global
levels. We are a 501(c)(3) nonprofit
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When Marriage Doesn’t Pay:
Analysis and Options for Addressing
Marriage and Second-Earner Penalties
In nearly two of every three households in America with dependents, more
than one person works to make ends meet.
In many cases, when two workers file jointly, they are penalized for having a
second earner in the household. This is because the second-earner’s wages
are subject to a higher marginal tax rate.
In a recent NBER report by David Altig et. al., researchers found that by
earning an extra $1,000, one in four of the poorest households, regardless
of age, gives half to two-thirds of their paycheck to the government in taxes
due to marginal net tax rates above 70 percent on earned income.1 This has
significant implications for work incentives and tax credits eligibility if filers
combine their incomes and continue working.
• The tax treatment of dual-income earners in a family comes from social and
legal assumptions the tax code makes when evaluating the nature of taxable
• More discussion is needed to determine whether and how taxable income
should be treated when filers choose to marry while working in a progressive
income tax system.
The authors write: “One in four low-wage workers face lifetime marginal net tax rates above 70 percent, effectively locking
them into poverty. Over half face remaining lifetime marginal net tax rates above 45 percent.” See David Altig, et. al. “Marginal
Net Taxation of Americans’ Labor Supply,” National Bureau of Economics Research (NBER), NBER Working Paper No.