The Financial Impacts of Marriage

This is fun: Obsolete Marriage. Apparently the US is turning more European in this respect too, not just on the heath care front.

The article neglects to mention one reason why people may be reluctant to marry: the marriage penalty is alive and well. For couples with six figure incomes each it can easily be several thousand dollars per year, and such couples are becoming more and more common since the stay-at-home mom (or dad) goes the way of the dinosaurs. For people with lower incomes there is generally a tax benefit in getting married.

This should provide incentives for lower income people to get married and for higher income people to stay single. The reality is the exact opposite. People with less education, and presumably lower incomes, have been staying single, while college grads have been getting married. Maybe they haven’t been putting their degrees to good use calculating their taxes or cost doesn’t factor in the decision to tie the knot.

Either way, this is a clear example where (possibly unintentional) social engineering via tax incentives fails to work. I wonder if this is the exception or the rule.

Posted by Martin Gremm (Pivot Point Advisors)

About the author

Marc Schindler, CFP®

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