The War On Women Is an Economic Outrage

When the press writes about the "war on women," they generally mean the unavailability of free contraceptive services and denial of access to abortions. Or, they discuss pay equity, or discrimination in hiring and promotion.

What many writers miss is that another institutional barrier to women lurks in the federal tax code: the "marriage penalty" that results from the joint filing requirements for married couples.

Arguably, Senator Patty Murray (D-WA), a member of the Senate Democratic leadership (she chairs the party's senatorial campaign committee), voiced an additional threat to women in the ultimatum she laid down earlier this week at the Brookings Institution.

Ms. Murray declared that if President Obama and congressional Democrats cannot get from the Republican House a bill that only raises taxes for people making $250,000 and more a year in 2013, they will let the present tax rates expire, as scheduled in law, at the end of the year. This will cause rates to rise in 2013 for all taxpayers.

"So if we can't get a good deal-a balanced deal that calls on the wealthy to pay their fair share-then I will absolutely continue this debate into 2013, rather than lock in a long-term deal this year that throws middle class families under the bus," she said. "And I think my party, and the American people, will support that."

Inasmuch as Obama and his party went along two years ago with an extension of all tax rates to avert an across-the-board rise, and with the economic recovery tepid, Rep. Murray's threat may be regarded as bluster. Both parties are engaged in pre-election sparring over legislation to be passed in a post-election session. The larger truth is that neither party wants an across-the-board rise in tax rates, especially with economic growth so weak.

Still, worst-case outcomes sometimes occur, especially in a politically venomous atmosphere, so Murray's threat merits examination.

Allowing taxes to rise in January-from 10 percent to 15 percent at the bottom, from 35 percent to 44 percent at the top, from 15 percent to 25 percent on long-term capital gains, from 15 percent to 44 percent on dividends-would throw the American economy under the bus. And that would particularly hurt women.

The latest Internal Revenue Service data, for 2009, show 54 million joint tax returns out of 140 million returns filed. The law requires married couples to file jointly, combining their incomes, if both work or have investment income, or else file separately at a higher rate. Despite the more generous tax rates offered to couples, joint filing sometimes leads to a larger combined tax. That is known as the "marriage penalty."

Higher tax rates discourage married women from working. (Men, too, when the male earns the secondary income.) When single women work and are considering marriage, higher rates may discourage wedlock. Sometimes higher tax rates result in women quitting the workforce altogether, especially if added to the cost of paid child care, work clothes, and transportation.

Women already have it tough in today's economy. The American economy has 5 million fewer jobs than in December 2007, the start of the recession. It officially ended in June 2009, but its effects persist because job recovery is weak.

Women's unemployment rates have risen by a full percentage point since President Obama took office in January 2009, from 7 percent to 8 percent. The male unemployment rate is higher, but it has declined from January 2009 to the present, from 8.6 percent to 8.4 percent. There were 40,000 fewer women employed in June 2012 than there were in January 2009. In contrast, employment for men has risen over the same period, by 268,000.

Fewer women are participating in the labor force-women's labor force participation rate was 57.8 percent in June, down from 59.4 percent in January 2009. The labor force participation rate for men is higher, at 70.3 percent (down from 72.4 percent when the president took office). Women can't progress if they are so discouraged they don't even look for a job.

My analysis of data for women in a new edition of my book Women's Figures: An Illustrated Guide to the Economic Progress of Women in America, shows that, given the right economic conditions, women can make significant progress without affirmative action. But, with no economic growth and no jobs, women are stalled.

President Obama, who has boasted that he has reduced pay discrimination by signing the 2009 Lily Ledbetter Act, supports raising marginal tax rates for upper-income earners. That would discourage some women, especially married women, from working. Although Obama says he simply wants to make the rich pay their fair share, his proposals would have a disproportionate effect on working women.

In contrast, Governor Mitt Romney, the presumptive Republican candidate, wants to lower all tax rates by 20 percent, so that the bottom rate would be 8 percent and the top rate would be 28 percent. This would help working women because the penalty for entering the workforce would be less than at higher rates.

Our tax system shouldn't make it harder for women to work. The penalty falls most heavily on married women who have invested in education, hoping to shatter glass ceilings and compete with men for managerial jobs. The Obama plan would exacerbate the penalty.

Married mothers are more affected by the marriage penalty than other women because they are more likely to move out of the labor force to look after newborn children and toddlers, and then to return to work when their children are in school.

It doesn't have to be this way. Men and women could be taxed on their income separately, as is the case in Britain. Since 1990, British married couples have been taxed independently, with deductions and allowances split between them.

Women are a majority of Americans, 51 percent. The majority of registered voters are women, 53 percent. And the majority of voters who elected the current president were women, 56 percent. Yet they have elected a government that all too often ignores, or even worse, militates against the interests of women. This is particularly true of the economic interests of women.

The war on women is not an economic necessity. It is an economic outrage. With increases in marginal tax rates, ten of millions of American women would be shunted into higher tax brackets, discouraged from working, and given every incentive not to pursue advancement.