Obamacare’s Marriage Penalty
Isn’t it bad enough that the current federal tax code is full of provisions that penalize married couples with a “marriage penalty?” Now, to add insult to injury, Obamacare (the recently enacted federal healthcare scheme) will also have its “marriage penalty:”
The latest unintended consequence of President Obama’s health care law could be a lower marriage rate, according to the staff of the House Oversight and Government Reform Committee. The committee recently released a study claiming a marriage penalty within Obama’s law could lead to fewer marriages once the law is implemented . . .
The marriage penalty is a result of how Obama’s law allocates tax credits for purchasing health insurance. According to the committee staff, based on estimates from the Joint Taxation Committee, “married couples will receive only 14 percent of the PPACA’s tax credits. At most, only two million married couples (out of nearly 60 million married couples) are projected to benefit from the health insurance tax credit in any year through 2021.”
“Obamacare introduces a substantial new marriage penalty into the tax code. Over time, PPACA’s marriage penalty will directly cause fewer individuals to marry,” the report found . . .
Another factor driving PPACA’s marriage penalty is the interpretation of the law denying premium subsidies to a worker’s family if the worker’s employer offers “affordable” insurance for self-only health insurance coverage. Under regulations recently proposed by HHS, as long as an employer offers self-only insurance coverage that is less than 9.5 percent of household income, the family does not qualify for tax credits, regardless of how much a family policy would cost.
According to the report, these aspects of PPACA strongly favor single individuals over those who are married.
I think this government study is being overly generous by calling this an “unintended consequence” of Obamacare. I think you have to really wonder if there are folks in the federal government who don’t like marriage . . .
Fixing Japan’s Demographic Disaster
photo credit: ChicagoGeek
Recently I’ve been trying to catch-up on the backlog of The Economist magazines that have been accumulating on my bedside table. As I perused the magazines, I came across this article titled “Land of Wasted Talent.” The article starts off simple enough:
Unlike an earthquake, a demographic disaster does not strike without warning. Japan’s population of 127m is predicted to fall to 90m by 2050. As recently as 1990, working-age Japanese outnumbered children and the elderly by seven to three. By 2050 the ratio will be one to one. As Japan grows old and feeble, where will its companies find dynamic, energetic workers?
But then things get weird. The obvious answer to me was — have more children . . . right? Well, no. The answer, according to The Economist, is to throw more women into the workforce. Huh, say what?
I’m sorry, but where is the connection between having more women working and fixing Japan’s demographic disaster? The lack of internal logic like this article is one reason why I have a backlog of Economist magazines.
Frankly, the magazine’s quality of writing seems to be going downhill in pursuit of ideological purity (of a general leftist slant, it is a British magazine afterall). As such, I feel less compelled to read it on a regular basis. And if I see more anti-family articles like this one, maybe I’ll save myself a few bucks and cancel it altogether.
Is America’s Debt Crisis Caused by Our Marital Crisis?
photo credit: Orin Zebest
Isn’t it strange that when you talk with a young, recently married couple that one economic reason for finally tying the knot is that it costs less for two people to share a home, furniture, etc. than it does for two separate people. So, why is it you never hear people talking about getting a divorce discuss how much more expensive it is going to be to bust up their home. Well, it turns out that the damage done to the economy extends far beyond simple living arrangements.
A new study by Henry Potrykus, Patrick Fagan, Robert Schwarzwalder titled “Our Fiscal Crisis: We Cannont Tax, Spend, and Borrow Enough to Substitute for Marriage” explores the economic costs of the breakdown of the family:
Three facts shape our on-going fiscal crisis: Government revenues come from the taxation of our economy. Our economic growth is and will continue to be a fraction of that of the pre-1960′s era because of the breakdown in marriage. All the while, more citizens are pushed into dependency on this government, again because of marriage breakdown.
This slowdown in economic growth coupled with the increased numbers of dependent citizens makes closing the deficit impossible for President Obama or anyone else who uses the present welfare state as the economic model to be sustained. It cannot be. This reality arises from two facts: 1) We have proportionately fewer children 2) Up to 20 percent of these children are unequipped to compete in the modern economy because of a lack of essential skills formed within the intact married family . . .
Because larger families are a greater contribution to the economy than smaller families, U.S. family planning policies have undermined the U.S. economy. The sensible economic policy is to grow intact, stable married families instead of favoring sexual unions that are not child-centered.
- A sane government would work to reverse all laws, policies and programs that undermine fertile marriage such as no fault-divorce, abortion, education formation of high-school students in extra-marital sexual intercourse, and family planning services that have resulted in a massive increase in single-parent families, and the loss of well over 50 million workers.
- Tax policies should support rather than penalize marriage and family formation.
The long-range solution to our economic difficulties is to grow intact married families rather than growing government.
You know, there are very practical reasons why marriage is a 4,000 year-old institution. Marriage is not some ideology based on flimsy evidence. There will be a price paid for our flippant attitude toward marriage . . . though I think it will take more than a change in government policies to bring back marriage. People will have to take a long, deep look into their souls and make real changes. Going back to church would be a start.
The Power of the Family
photo credit: no lurvin here.
Harvard economists Alberto Alesina and Paola Giuliano have written a fascinating study on the power of the family as an economic unit (pdf). This study adds heft to what I’ve written about in the past about how strong families act as an bulwark against hard economic times. Here is what they have to say:
The structure of family relationships influences economic behavior and attitudes. We define our measure of family ties using individual responses from the World Value Survey regarding the role of the family and the love and respect that children need to have fro their parents for over 70 countries. We show that strong family ties imply more reliance on the family as an economic unit which proves goods and services and less on the market and on the government for social insurance. With strong family ties home production is higher, labor force participation of women and youngsters, and geographic mobility, lower. Families are larger (higher fertility and higher family size) with strong family ties, which is consistent with the idea of the family as an important economic unit. We present evidence on cross country regressions. To assess causality we look at the behavior of second generation immigrants in the US and we employ a variable based on the grammatical rule of pronoun drop as an instrument for family ties. Our results indicate a significant influence of the strength of family ties on economic outcomes . . . people belonging to strong family tie societies appear to be happier and satisfied with their life. [emphasis added]
It is a real tragedy that so many Americans use to understand this simple, but now forgotten, truth.
And Fathers Matter Too . . .
Hat tip to Dutch, Reformed. Here is the link mentioned in the video: FamilyFacts.org
The Decline of Marriage in American Society
As an economist, I like to use numbers to tell a story. Unfortunately, the story I have to tell today is a sad, and disturbing one–the decline of marriage in American society.
Using data from the Internal Revenue Service–hat tip to my husband for the pointer–we can look at how American’s file their tax returns and under what filing classifications: Married Filing Jointly (a traditional family), Head of Household (a single parent with children), single (never-married or divorced) and other (widowers and married filing separately).
As you can see in the chart below, Married Filing Jointly is the only filing classification to have fallen as a percentage of all tax filers between 1996 (first year of available data) and 2008 (most recent year of available data). In 1996, Married Filing Jointly made up 40.6 percent of all tax returns but by 2008 fell to 37.7 percent–a decline of 7.2 percent.
On the other hand, the fastest growing filing category was Head of Household up to 14.8 percent in 2008 from 13.8 percent in 1996–an increase of 7.7 percent. This is not surprising since Head of Households are pulling from both Married Filing Jointly (through divorce for example) and Singles (through teenage pregnancies for example). This filing group can also expand via another disturbing avenue–the sperm bank.
The next fastest growing (and largest overall) filing category is for Singles up to 45.6 percent in 2008 from 43.5 percent in 1996–an increase of 4.8 percent. This is likely the result of younger generations delaying marriage until later in life. This will have the result of increasing Single filers as a percentage of all tax filers.
This ongoing decline of marriage in American society is also a significant contributing factor in the falling number of children as well. A single mom simply can not raise the number of children as could an intact family. This is leading to a new phenomena being called Demographic Winter where there are too few children to support the current level of population. Demographic Winter in the U.S. in most pronounced in Northern New England.
Interestingly, the IRS has more good data that I can plumb . . . stay tuned.
Are We Educating Ourselves Out of Existence?
I recently received this disturbing press release from the U.S. Census Bureau–Census Bureau Reports “Delayer Boom” as More Educated Women Have Children Later. For me, this is the money-line:
Women 35 to 44 (corresponding with the 25 to 34 age group in 2000) with at least a bachelor’s degree had 1.7 births, while women who had less than a high school education had 2.5 births . . . “Our findings show that a ‘delayer boom’ is under way, where highly educated women initially delay childbearing but are more likely to have children into their 30s,” said Census Bureau demographer Kristy Krivickas. “But these women do not fully catch up to the childbearing levels of women with fewer years of schooling.”
So, with more and more women getting a bachelor’s degree does this mean that we are educating ourselves out of existence? We need a birthrate of 2.1 to maintain current population levels, a birthrate of 1.7 spells doom . . . just the fact of demography.
College Kid Calls Mom and Dad: “Ate French Fries Off the Sidewalk and Went to the ER”
photo credit: Lauren Manning
An alarming statistic I just heard on John Tesh radio show of all places is that one-third of all ER visits by teenagers are alcohol-related. The majority were males and of those males, the age breakdown was 53.4% of males ages 12 to 17 and 62.1% ages 18 to 20. (This data can be found in The DAWN Report (July 2010), published by the Office of Applied Studies, Substance Abuse and Mental Health Services Administration)). But it gets even worse…read on.
Not only are prospects dim and getting dimmer that our college grads will find jobs upon graduation (2010 grads are competing with 2009 grads; we have compounding unemployment among the young white-collared) Some are drinking away their brains as a recent study has shown that among the young, excessive drinking actually destroys neural stem cells in the brain impairing young people’s ability to learn and remember, a condition known as impaired neurogenesis.
So, you spend on average between $7k for public in-state tuition and fees and up to 26k for private college so your kids can further their mental capabilities and instead, in large numbers, they are actually destroying their ability to learn by drinking until they pass out. Perhaps Obamacare’s extension of of coverage to children on their parents’ policies until age 26 is an attempt to absorb those graduates who won’t be employed with health coverage upon graduation as well as those who won’t have the capability to graduate because their brains don’t function properly.
This is no laughing matter but I have an incident to share that at the time was very funny…at least my boys who are 8 and 6 were very amused. It was about 2am and we were waiting for my husband’s bus to arrive from Logan airport. I arrived a half-hour early and thought the kids would either be asleep or bored silly. Well, it turns out we had plenty of entertainment going on right outside our car windows.
We were parked close to the center of campus at Dartmouth College. Some of the entertaining co-eds walking by were the girl carrying her shoes who would occasionally drop her shoe, keep walking and then 3 minutes later turn around and retrieve her shoe. She did this about 5 times. My boys’ favorite was the guy walking with his buddy who dropped his styrofoam container filled with a burger and fries on the sidewalk, fell down onto his knees and started eating the french fries off the sidewalk while his buddy was laughing so hard he fell on the grass. The two of them carried on for about 5 minutes before they got the burger and remaining fries off the sidewalk and back into the box and were on their merry drunk way. Annual cost to go to this Ivy party: $46k.
Parents with kids in college are either drunk or irrational (or both) because the money they’re spending on higher ed would be better utilized at the bottom of a birdcage.
Higher Ed Bubble: $200k in Student Loan Debt and No Job
photo credit: followtheseinstructions
My brain just locked on to info in a recent tweet from Brandon Dutcher about Kelli Space who writes about trying to pay for the 200k in student loans used to earn her Sociology degree. The sad news is she’s only 22. And even sadder: she didn’t land a job even remotely related to her field of study. She is working for an internet company. She seems to be acutely aware that in this economy and at her payscale, her long-run financial forecast is abysmal.
It’s criminal that an 18 year-old could be encouraged by high school and college financial aid counselors to take on this kind of debt when the payoff from her degree amounts to about ten percent of the loan “if” she got a job in sociology. After doing some basic research about what her alternatives could have been, she concludes that any path out of high school would have been better than the one she bought into. She writes:
An idea that some students may want to consider is going into business rather than going to college. Peter Thiel, billionaire co-founder of PayPal, recently launched an initiative to encourage students under 20 years of age to focus on their entrepreneurial ideas as opposed to dutifully fulfilling the expectation for college. The Thiel Fellowship offers $100,000 each to twenty young people who are willing to put their education on hold in order to pursue these ideas.
Thiel understands that the massive amounts of debt that many students incur by the time they graduate is so burdening that while they spend their lives paying off the borrowed money, they have neither the drive nor the means to tend to other worthy pursuits. Only a few can get these grants, but his idea has much wider application. I suspect there are quite a few ambitious young Americans who would be much further ahead if they went into a business or trade and saved the money their families would have spent on college tuition.
Thiel’s fellowship coupled with my personal Mt. Everest (my hefty student loans) has opened up a world of regret for me as I look back and recognize all of the options I left unexplored at the age of eighteen. I often dream of how I could have worked full-time and gone to community college part-time while living at home, saving money, and paying my own way through school.
Maybe I could have worked while taking foreign language classes (another interest of mine) and, once fluent, applied to become a translator. Honestly, nearly any path after high school would have been better than amassing $200,000 in debt for an assumed rite of passage.
It’s obvious that we’re in the midst of a higher education bubble which is about to explode. Simple enough: not enough jobs for all the kids graduating from college. Perhaps parents should get off the college brainwashing train. One of my favorite books on the topic is Robert Kiyosaki’s If you Want to Be Rich and Happy, Don’t Go to School.
No responsible parent these days should let their child take on loans to go to college. But, what about giving some consideration to laying the groundwork for your children to start their own businesses ? What about taking money that you’d put in a 529 account and instead using the money to buy capital for their business ? By helping your children build entrepreneurial skills and investing in capital for their business, you’re investing in their futures as well as your own. Not to mention, you might be able to keep them local instead of having them chase jobs all over the country.
Life is Hard: Suck it Up and Strengthen Your Family Now
photo credit: dynamosquito
“When Marriage Disappears: The Retreat from Marriage in Middle America” was recently published by the National Marriage Project at the University of Virginia and the Center for Marriage and Families at the Institute for American Values. National Review interviewed the Director of the project Brad Wilcox. National Review’s interview can be found here.
In the National Review interview, Wilcox states:
“When Marriage Disappears” points out that a “soul mate” model of marriage has overtaken an “institutional” model of marriage in the minds of many Americans. What I mean by that is that more and more Americans think that marriage is about an intense and fulfilling couple-focused relationship that, by the way, is made possible by a comfortable and secure income.
More and more Americans have jettisoned the older, institutional view that marriage is also about raising a family together, offering mutual aid to one another in tough times, and becoming engaged in larger networks of kin and community.
I’ve been reading alot about the Mexican drug cartels lately so I’ll say it in Spanish and then translate, “la vida es dura” (English: life is hard). I can no longer remember what movie it was that dispensed this knowledge to me in my early twenties but it’s the truth. We all love the movie “Life is Beautiful” but we love it because of Roberto Benigni’s fight, spirit and resolve in the face of adversity. Marriage isn’t easy. Raising the kiddos isn’t easy. However, Gen Xers like myself and those generations that follow somehow think that all these things “should” be easy.
We women are trying to “find ourselves” in our careers and during our pedicures when we should be trying to get to know our spouse and our kids. Since mom went to work, families have gone into debt to try and afford the suburban home and second car that mom requires and/or demands if she works full-time. Let’s not be ridiculous and talk about college tuition for the kids. The environmentalists talk about sustainable growth; well, this dual-income plan isn’t sustainable over the long-run.
Like Mr. Wilcox stated above, the traditional view of marriage is: spouses aid one another during tough times and are involved in their extended families and community. Well, Grandma no longer lives down the street and there are usually no uncles, aunts or extended family to help pitch in when life is hard. Divorce scatters finances and family members while also weakening loyalty of parent-to-child as the divorced parents go on to start second marriages.
During tough economic times like we face now, it is imperative that we have strong family ties. We need many arms to hold us up (and I don’t mean the Government). During the last Great Depression, we had an intact social fabric. We no longer have this fabric so what does that mean for us as we face double-digit long-term unemployment and a bankrupt Social Security program ?
Life is hard young mothers and fathers, please stop surfing the 352 channels on your tv and start talking to your spouse and children about your plans for the next five years. Start focusing on what is going to make your family unit stable and durable over the long run. The long-run is important; just ask those who didn’t save enough for retirement and don’t have family nearby to help take care of them; their only prospect may be living their days out in a state-run nursing home.
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