Working Paper: NBER ID: w31805
Authors: Janet Holtzblatt; Swati Joshi; Nora R. Cahill; William Gale
Abstract: Although it is generally blind with respect to race, the federal individual income tax can create racial disparities when factors that affect tax liability are associated with race. We provide new evidence on racial differences in marriage penalties and bonuses in the income tax, using data from eight waves of the Survey of Consumer Finances. Our results support Brown’s (2021) hypothesis that, controlling for income, penalties are more frequent and larger for Black couples than white couples. We link these results to racial differences in relative spousal earnings, the presence of dependents, and the level of income. We show that marriage rates are much higher among white adults than Black adults, which implies that two policy reforms we examine end up benefiting a greater share of white adults than Black adults.
Keywords: No keywords provided
JEL Codes: H20; H24; J15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| black couples (J12) | higher marriage penalties (J12) |
| white couples (J79) | lower marriage penalties (J12) |
| black couples (J12) | less likely to receive marriage bonuses (J12) |
| white couples (J79) | more likely to receive marriage bonuses (J12) |
| income levels (J31) | marriage penalties for black couples (J12) |
| presence of dependents (J12) | marriage penalties for black couples (J12) |
| marriage rates (J12) | tax units benefiting from tax reforms (H29) |
| tax law changes (K34) | prevalence of marriage penalties (J12) |
| tax reforms (H29) | favor white couples (J15) |