Taxing the Family

In All In The Family, Patricia Strach shows how the family is used by the US government to implement policies and explores the challenges that arise when employing something as nebulous and uncontrolled as family relations to administer policy.

Since 1948, family has been the basic taxable unit in the US. This not only results in different tax rates based on an individual’s familial role (spouse, dependent, single parent, single childless adult, etc.), but also sets expectations for how members of a family act toward one another and taxes based on those expectations.

For example, parents are expected to provide food, clothing, and shelter for their offspring, and they are awarded tax credits, deductions, and exemptions to assist with those expenses. In using such tax expenditures to pay parents to support their children, the government saves itself the cost of creating an agency to accomplish that goal. At the same time, it presupposes that parents will use the savings from these tax expenditures for the goals the government intends, but there is no oversight to insure that this is the case, as their would be for an official government agency.

The government’s assumptions that family units have combined resources and act to help their members are seen in the prohibition from deducting student loan interest when the loan comes from a family member, whereas the interest on a loan from a stranger is tax deductible. This can be seen as a limit the government places on individual taxpayers to help their family financially.   

As the average American household increasingly moves away from the nuclear family with a single breadwinner around which these taxes were originally designed, definitions of family within various parts of the tax code struggle to keep up.  The so-called marriage tax penalty came about when a significant number of married women entered the workplace: suddenly, a tax code that had been seen as equitable and progressive for families with a single breadwinner was seen as taking resources away from families. Similarly, untraditional households—from unmarried parents to individuals or couples caring for children who are not their biological offspring—are not recognized in the same way across the tax code.

Amongst debates over gay marriage, the role of family in immigration, and adoption rights, our laws continue to use family as a determiner of responsibilities as well as rights. And responsibilities that are not given to or taken up by individuals often fall to the government itself.

Comments

[Student Loan]

Students interested in paying for their college education with student loans should shop around before committing to any deal. There are different plans available, and many have specific conditions. Students should understand all of the possibilities.