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The Free Market
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September 1999
Volume 17, Number 9

 

Government Attacks the Family
by Jeffrey Tucker

Making splashy headlines, the National Marriage Project of Rutgers University reported this summer that marriage rates are at an historic low. Americans are waiting longer to get married and are choosing alternative arrangements to marriage. Data showing that divorce is on the decline turn out to be more complicated: people are taking fewer risks with marriage in the first place. In thirty years, the percentage of adults living as a partner in marriage has slipped from 68 to 56.

This trend, of course, implies fewer children. Demographic surveys taken by commercial firms record an uptick in the number of children born to households in high income groups, a fact which has led left-wing commentators to denounce the rise of "trophy kids." But for medium income groups where the decline of marriage is most dramatic, the birth rate remains barely above the replacement rate.

What does this imply for economics and the future of freedom? In Joseph Schumpter's view, the decline of marriage carries with it potentially devastating consequences for the capitalist economic system. In his view, the family is as central to a market economy as private property. The family nurtures capitalist ethics of long-term thinking, saving, and investment, and is the historical mainspring of the profit motive. Family inheritance, moreover, is a crucial source of social stability within a constantly changing market process.

Where Schumpeter went wrong was in believing that advanced capitalism itself contributed to undermining the family (thus his pessimism regarding the future of free economies). In fact, if we look at the case of the United States, it is easy to see that it is not the market, but government policy that penalizes marriages by directly and indirectly discouraging their formation.

Taxation. Marriage used to provide economic security, and some protection from tax pillaging. No longer. The well-documented marriage penalty extracts discriminatory taxes from couples relative to singles (families pay an average of $1,400 per year more in taxes), but that's just the beginning. The real culprit is the advance of the tax itself. In 1957, according to the Tax Foundation's inflation-adjusted figures, the median married couple with two incomes paid about $8,200 per year in taxes (1997 dollars). Today, the two-income couple pays $22,100--a burden that results from the tax law's failure to treat the family as an economic unit.

In 1948, the average family paid 3 percent of its income to the federal government. Today, it pays 25 percent. All told, the family pays as much as 38 percent of its household income in taxes--higher than the tax burden of single people. The child tax exemption used to mean virtual elimination of tax for large families, whereas today it is virtually worthless.

This problem has an easy fix. As a start, the marriage penalty should be eliminated and the child tax deduction broadened. Allan Carlson of the Howard Center has further suggested that married couples be allowed to split their joint income in two parts and be taxed on each separately. Hence, if one partner makes $80,000 and one makes $10,000, they are both taxed on an income of $45,000 apiece, which makes the marginal rate and the overall tax burden much lower. This treats the family as an income-earning unit, which accords with the way marriage works in the real world.

But these are just quick fixes. Ideally, there should be no taxes on families. Absurd? That's the way it was in the nineteenth century, when there was no direct tax on anyone for anything. In the long run, getting rid of all direct taxes would do more to restore the family than any reformist tax scheme ever could.

Inflation. It was as recently as the 1980s that working, rather than stay-at-home mothers of younger children, became the norm. The boom in child care came around the same time. No surprise that the switch occurred after the most prolonged inflation of our century in the 1970s. To keep family income high, two incomes became part of the deal, which meant that men typically could no longer offer liberation from the workplace in exchange for marrying and then bearing children.

Since the inflationary runup of the '70s, it has become clear that both women and men are actually better off financially staying single. For example, once two incomes came to be the norm, when applying for mortgages (most of them indirectly guaranteed by the government), couples find themselves choosing between keeping large homes and moving to one income--a fact which provides a prop to the two-income family and diminishes the value of marriage for at least one spouse.

The government likes two-income households for a simple reason: more filers means more revenue. A key to reversing the problem of income pressure on the household is sound money, which implies increasing purchase power over time. Sound money also increases optimism about the future, an essential component in the decision to marry and raise a family.

Cost of Children. It's hardly surprising, then, that individuals see no economic gain associated with marriage. But it is surprising that the one-time benefits of children have been converted to costs by force of government policy. Child labor laws prevent children from contributing to the income of the household, and Social Security and Medicare mean that children no longer are necessary to provide security in old age.

Moreover, if you can't pass on money to children without getting clobbered by the tax police, you cannot guarantee their economic security either. If children are no advantage, marriage loses its caché.

Along with the nationalization of children, we have seen the rise of the Social Worker State. Parents are no longer free to raise their children as they see fit but instead must constantly answer to an army of social therapists, teachers, and civil activists who police their every behavior. Government is increasingly demanding that they have all children to "educate" as early as the age of four. All these interventions should be repealed, so that families can again control their own affairs.

Cultural Change. Cultural conservatives were quick to say the report from Rutgers illustrates a catastrophic change in cultural values. Men are not courting like they used to, and women are not really in the marriage market until much later than they used to be.

But this culture change has a cause, even if few commentators actually identified the key element in bringing about the change: the Civil Rights Act of 1964. Think about the absurdity: a federal law requires that an entire society pretend there are no distinctions between men and women.

Silly, right? That's what the Republicans thought when they attached the sex provision to a bill that originally only dealt with race and religion. The purpose of the amendment was to illustrate the dangers of the social-engineering mindset. They attempted to reduce the logic of the law to the absurd. Instead, the amendment sailed right through, and the categories of the official protected classes have been multiplying ever since.

Like private property, the family is an institution that is prior to the state and would exist in absence of the state. But what the state did not create, it hates and can destroy. Keep this in mind when the political class embarks on yet another season in which it promises to save the American family by increasing, rather than reducing, the role the state plays in our lives.

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Jeffrey Tucker is editor of The Free Market.

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