Why The GOP’s ‘Marriage Penalty’ Is A Myth

Via Politico’s Pulse, the House Oversight and Government Reform committee is out with a new report arguing that the health care law implements a “marriage penalty tax” that will over time “directly cause fewer individuals to marry”:

1. Because the law links the tax credit to household income, two people who make above a certain combined income will not be able to get a tax credit if they file together (married), but if they get divorced or decided against tying the knot they would, individually, be eligible for a premium credit. Giving people pause about marriage could be a big “unintended consequence” of the law, the report says. (PULSE thought bubble: or provide a convenient excuse to those with commitment issues?)

2. Although the proposed rule on tax credits is somewhat unclear on the issue of affordability for families with employer-sponsored insurance, the GOP report suggests that the rule could be interpreted in a way where families with only one spouse receiving insurance through their employer could encounter a dilemma where they are forced to choose between a.) a divorce and tax credits b.) buying individual insurance without a premium subsidy or c.) paying a penalty and forgoing insurance.

Republicans first raised this concern during the health care reform debate and it’s still as meritless now as it was then. Here’s why: The affordability credits are pegged to the federal poverty guidelines, which treat married people as a unit and view individuals as separate parties filing separate tax returns. These guidelines assume, as Judith Solomon points out, that “people benefit from economies of scale when they’re living together” and recognizes that unmarried individuals have fewer resources (lower incomes, more money spent on basic necessities) than married families. In fact, since the majority of the uninsured are not married and marrying lowers uninsurance rates, providing more subsidies to individuals is a better way of targeting affordability credits to those who need them most.


That’s issue number one. Their second concern about an HHS rule offering insurance subsidies for workers if their employer doesn’t provide affordable individual coverage (as opposed to family coverage) is a worry health care advocates share. But to expand the affordability definition and allow more people to take advantage of the tax credits within the exchanges would cost the government “an extra $50 billion a year” — spending Republicans would surely oppose. The greatest irony of all, however, is that Republican health care prescriptions — look to the Boehner alternative introduced in the House for an example — don’t provide subsidies to anyone — married or unmarried Americans and it’s actually their efforts to repeal the ACA and do little to nothing for health care spending that would significantly strain families and their economic well being.