Working Women and Our Current Tax Code

A Slate article on the ways in which our current tax code hurts working women points out:

“The biggest roadblock to fixing the system is that most people don’t even know it’s broken—or at least in which particular ways it’s broken.”

You may think of filing taxes as something you must do as an individual but really, our system taxes families as a whole.

While someone might argue that our tax system is fair because it penalizes the second earner in a family (no matter who that person may be), because more often than not, that second earner is a woman, it really isn’t fair.

“…if a woman has a partner earning $50,000 a year, the very first dollar she earns is taxed as though it were her 50,001st dollar. As in all things tax code, how the penalty works for various kinds of couples is complicated…”

Many people are unaware that sometimes the way people behave in their socioeconomic peer group is affected by tax code. The article includes the observation that in general people with the least money don’t get married, those in the middle may marry and strive for more, while those at highest income levels have one partner not work.

We could do as other countries have done and tax individuals but that could make things difficult for families with one working adult. It would also be a tough sell politically since the country is invested in the idea of a traditional nuclear family. Slate concludes:

“ Introducing secondary-earner deductions or abolishing joint filing altogether would go a long way to fixing a system that, whether they realize it or not, makes no sense for the majority of American families today and adds one more obstacle to women gaining economic equality.”

You may not be able to alter tax code but you can work with a Fee-Only financial planner throughout the year to make sure that your financial planning helps you to file taxes in a such a way that you are not overburdened.

 

©Bring Clarity to Your Finances™. Working Women and Our Current Tax Code is a post from Bring Clarity to Your Finances™

About the author

Claire Emory, MBA, CFA, CFP®

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