Kantoos has an excellent post offering more details on the implications of tax policy for the labor force participation of married women. He points out that the root cause here is the joint taxation of married couples, which seems like a hangover of the old-time legal doctrine of coverture, which held that a married woman basically lost her legal personhood. He shares an anecdote about how progressive Scandinavians feel about this:
I still remember a discussion with a young Norwegian couple who were outraged and disgusted by my explanation that Germany still had joint taxation of married couples. I was tempted to clarify that I didn’t say “marital rape is still legal in Germany,” as their state of shock was persisting. I just said that the tax code in Germany was based on a static conception of distributional justice and we therefore have joint taxation – much to my regret.
He also offers a link to Håkan Selin’s 2009 paper “The Rise in Female Employment and the Role of Tax Incentives: An Empirical
Analysis of the Swedish Individual Tax Reform of 1971” (PDF) which confirms that, yes, switching Sweden to a system in which a woman’s marginal tax rate is not a function of her husband’s income boosts women’s labor force participation.
Now note the important difference between this analysis and where we started with Robert Lucas. Lucas sees a GDP gap between the U.S., on the one hand, and Europe and Japan on the other. He notes that differential workforce participation of married women explains a lot of the gap and he notes that tax policy plays a role in this. So his analysis is that the problem in Europe and Japan is that their taxes are higher than ours, even though in fact Japan’s taxes are lower. The more logical approach is to look at this through a broader feminist lens and then address the tax angle with a specific solution targeted at overtaxation of married working women. As a matter of coalition politics on the American right, however, Lucas’ approach has a number of virtues. One is that the flipside of a tax penalty for married working women is a subsidy for couples composed of an affluent man and a stay-at-home mom, and social conservatives wouldn’t want to scrap that. The second is that cutting tax rates as a solution to all ills is the lodestar of American conservative economic thinking, so Lucas’ analysis produces the “correct” policy proposal. The third is that from a nationalist point of view, the “right” answer in America has to be explanation of why America (rather than, say, Sweden or Norway) is the best country.