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The Marriage Tax Elimination Act and Clinton's Child Care Relief Plan: Which Would Go the Furthest Towards Ending Gender Bias in the Tax Code?

Christopher H. Suh JD/MBT

University of Southern California

Copyright © 1998 Christopher Suh.
First Published in Web Journal of Current Legal Issues in association with Blackstone Press Ltd.

Summary:

This paper starts by discussing the idea of fairness in the tax system, why the U.S. tax code penalizes some marriages, and how the U.S. tax code helps to promote gender bias through the secondary earner bias. It then goes on to describe two proposed laws by opposing parties, the Marriage Tax Elimination Act and the Clinton Child Care Plan, and what effect these proposals would have on gender bias in the tax code should they be enacted into law. Finally, the paper compares the two propositions, concluding that although both proposals would be beneficial towards ending gender bias, that the Marriage Tax Elimination Act would go further towards achieving that end. Neither proposal would go as far as a switch to mandatory separate filing, however.

Contents

1. Purposes of a Tax System and the Incompatible Ideas of "Fairness"
2. The Marriage Penalty
3. Gender Bias in the Code

A. The Essentials of the Secondary Earner Bias
B. Additional Aspects of the Secondary Earner Bias

4. The Marriage Tax Elimination Act

A. How the Marriage Tax Elimination Act Would Work
B. Arguments against the Marriage Tax Elimination Act

(i). Single Earner Marriages
(ii). Other Arguments Against the Marriage Tax Elimination Act

5. Clinton's Child Care Relief Plan

A. What is Clinton's Child Care Relief Plan?
B. Who will Clinton's Child Care Plan Benefit and Who Supports It?
C. Arguments against Clinton's Child Care Plan

6. Comparing the Marriage Tax Elimination Act and Clinton's Child Care Relief Plan as a Whole and in Light of Eliminating Gender Bias in the Tax Code, and Suggesting What Action Should be Taken

Bibliography

1. Purposes of a Tax System and the Incompatible Ideas of "Fairness"

A good income tax system should serve a number of purposes. Besides raising revenue for our government, it should also serve the objectives of fairness, efficiency, and administrability, among other possible goals. (Klein and Bankman 1997, p 18)

Fairness can be divided into two categories, horizontal and vertical equity. Horizontal equity can be expressed by the proposition that people in the same economic circumstance should bear the same tax burden. For example, an employee who is paid 18 thousand dollars a year, but is also given a car from his or her employer worth two thousand, should probably pay the same amount of income tax as another earning 20 thousand dollars a year. Vertical equity refers to the idea that as one's income rises the proportion one pays in taxes also rises. A notable feature of the current tax system, vertical equity dictates that our current tax system may serve a re-distributive function of resources in addition to its role as a collection vehicle to fund governmental duties. Alternate systems, such as the currently proposed flat tax system, place markedly less emphasis on vertical equity. (Kornheiser 1996)

Efficiency refers to the idea that one should carefully consider the economic effects of a tax decision to avoid distorting people's behaviour to less economically desirable effects. For example, excluding the value of employer provided parking from taxable income may have the effect of encouraging more people to drive to work, rather than using public transportation. If this is less than the most economical result, because of the resulting congestion and pollution, the tax may be inefficient as a result.

Finally, administrability refers to the proposal that the government's cost of enforcement, their level of intrusiveness, and the taxpayer's cost of compliance towards a tax policy should be as low as possible. For example, imputed income from services performed for oneself, which probably should be taxed, is virtually impossible to tax without subjective and intrusive invasion of privacy by the government, and thus is not.

Unfortunately, the many goals of a good tax system do not always coincide. William Gale, of the Brookings Institution, says that the problem of the marriage penalty results from the tension of three incompatible notions of what a "fair" tax would mean: that according to vertical equity, the wealthier should pay more tax, while according to a certain interpretation of horizontal equity that married couples with the same income should pay the same amount of tax regardless of who earns the income, while according to another interpretation of horizontal equity, taxes should be neutral between married and unmarried couples making the same amount of money. The current system meets the first two goals but fails to meet the third. "If you're willing to give up on one of those other two things, then you can reduce the marriage penalty," Mr. Gale says. (Goodrich 1997)

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2. The Marriage Penalty

What exactly is the marriage penalty, why is our current tax system biased against women, and why is all of this such a hot topic in Washington right now? To properly understand the answers to these questions, one must first achieve a basic of understanding of how our current tax system works, and how we got were we are today.

To start with, the income tax was first made possible in 1913 by the Sixteenth Amendment to the Constitution. From its very inception, our income tax system has been a progressive one, which means that, working like a ladder, our system has taxed successive amounts of income at higher rates, in accordance with the idea of vertical equity. Under a simple example of such a system, such as the one used by McCaffery in his book Taxing Women, a person earning under ten thousand dollars in income might not have to pay any income tax, a person earning more than ten thousand dollars income might have to pay the government 15% of his or her income earned between ten and thirty thousand dollars, a person earning more than thirty thousand might have to pay the government 30% of income earned between thirty and sixty thousand dollars, and someone earning more than sixty thousand might have to pay 40% of his or her income over that amount. (McCaffery 1997, p 14) A person who earns a hundred thousand in income, under this simple example of a progressive income tax system, would pay twenty eight thousand in tax - zero on his or her first ten thousand of income, three thousand on his or her next twenty thousand in income, nine thousand on his or her next thirty thousand in income, and sixteen thousand on the remaining forty thousand over sixty thousand in income he or she earned. This example is, of course, considerably more simplified than what really goes on in the Internal Revenue Code, but is substantially true enough to make our point.

The 1913 personal income tax was also mostly marriage neutral, because it made no provision for joint filing. Whether married or not, filing husbands and wives would both turn in their taxes separately, and be taxed separately as well. It is true that the tax laws of the time contained a specific provision in which a married man received a slight benefit if his wife did not file; however, the benefit was not nearly as large as the one which a sole earning married man would receive in 1948 (McCaffery 1997, p 30)

In 1948, as in 1913, the vast majority of people working outside the home were male, and the majority of households were supported by sole earning married men (ibid p 31). However, the tax system in place from 1913, due to its progressive nature, generally favored households of two equal owners over more traditional arrangements. This is because dual earner households would be able to enjoy the benefits of a lower marginal rate twice, while single earner households could only do so once. To use our simple example of a progressive tax system to illustrate this point, imagine two married people earning ten thousand each for a family total of twenty thousand. Both spouses would fall under the lowest tax bracket and thus not be required to pay any tax. Meanwhile, a sole earning spouse in a single earning family earning the same twenty thousand would fall into the 15% percent bracket by earning ten thousand over ten thousand in income, and that additional ten thousand would be taxed at 15% for one thousand five hundred.

Arguing that the separate filing system lacks proper horizontal equity, Congress adopted a joint filing system in 1948 (ibid p 14). Under the joint filing system, husbands and wives would generally file together, as one unit, at rates simply double that of the individual rate schedule. In other words, in a joint filing version of our example of a simple progressive income tax system, the first bracket should still range from zero to ten thousand for individuals, but for joint filing married couples, the same first bracket should range from zero to twenty thousand. Likewise, the second bracket for joint filing married couple should range from twenty thousand to sixty thousand, the third from sixty thousand to one hundred and twenty thousand, and income over one hundred and twenty thousand should be taxed at the maximum marginal rate of 40%. The effect of all these changes is essentially to extend to single earner married couples the same benefits that equal earning married couples already enjoyed.

Under this situation, everyone seemed to benefit. Everyone, that was, except sole earner singles, or the sole earners in unmarried couples, who generally still had to pay a much higher tax for earning the same amount of money as a sole earner married person. Such a system denied horizontal equity to those which chose not to get married, or those which may have wanted to get married but were unable to, such as single sex couples (ibid p 63).

As a result, Congress made adjustments to the tax system in 1969, the most notable of which was to adjust the rate schedule, shrinking the married rate schedule to make married couples pay more than two single persons with one half of the combined income, but still less than one unmarried person earning the whole amount. The effect this would have on our simple example of a progressive tax schedule would be to multiply the previously doubled married rates by .8, reducing each by 20% (ibid p 64). The zero bracket would then range from zero to sixteen thousand, the next higher bracket would extend from sixteen thousand to forty eight thousand, the next higher bracket would extend from forty eight to ninety six thousand, and the highest tax bracket would extend from ninety six thousand and up.

This 1969 adjustment brought the marriage penalty into being. The marriage penalty is separate from the overall disadvantage that the 1969 adjustment brought to all married couples compared to the previous 1948 rate. Instead, the marriage penalty does not hurt all married couples, merely those in which the earnings of both spouses are relatively evenly allocated between both partners, making them pay more than they did under either the 1913 or 1948 schedules (ibid p 66). Lower income taxpayers may suffer the most from the higher tax rates because the penalty comprises a higher percentage of their income. (Anonymous 1997) Single earner marriages, or those in which the incomes of the two spouses are heavily skewed in favor of one earner over the other, on the other hand, continue to generally receive a benefit over the 1913 system, even though they do not receive as large a benefit as they generally did under the 1969 system.

To illustrate, using our simple progressive tax schedule example, an unmarried single earning sixty thousand would have to pay twelve thousand in tax in 1913, 1948, or 1969, regardless of which schedule. The same person earning sixty thousand but married would have paid twelve thousand in tax in 1913, six thousand in tax in 1948, and eight thousand four hundred in tax in 1969. Identically, two married people, each earning thirty thousand each would have paid six thousand in 1913, six thousand in 1948, and eight thousand four hundred in 1969. Lastly, two unmarried singles earning thirty thousand each would combined pay six thousand in tax in 1913, 1948, or 1969.

As we can see, the conflict described by Gale above is clear. According to vertical equity, the unmarried person earning sixty thousand should pay more in tax than the two unmarried people each earning thirty thousand. According to a certain interpretation of horizontal equity, a married couple that looks like the single person earning sixty thousand and a married couple that looks like the two single people earning thirty thousand each should pay the same amount of tax regardless of who earns the income. Meanwhile, according to another interpretation of horizontal equity, taxes should not distinguish between a married couple in which a sole earner is earning sixty thousand and an unmarried person earning sixty thousand, or between a married couple in which both spouses are earning thirty thousand and two unmarried singles both earning thirty thousand. But this is precisely what the current system has done since 1969, penalizing couples in which the earnings of both spouses are relatively evenly allocated by making them pay greater taxes upon getting married.

Do these penalties actually have an effect on whether people decide to get married? Undoubtedly, to some couples they do. There are many specific cases of people who have decided to forestall marriage, or arrange amicable divorces where the couple continues to live together due to the tax consequences of their matrimony, some of which we will discuss later. While the Congressional Budget Office confirms that the majority of people will probably choose love over money, it also reports that economists James Alm and Leslie Whittington found "small but statistically significant effects of marriage penalties in reducing the likelihood of marriage for women" (Meinert 1997). Some might argue that such effects may lead to the overall weakening of the American family structure as a whole, which many see as a necessary foundation for a stable country and an important necessity towards preventing many of America's social problems.

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3. Gender Bias in the Code

A. The Essentials of the Secondary Earner Bias

Meanwhile, the change from separate to joint filing in 1948 also led to another very important effect: that of the secondary earner bias. Even though there was no marriage penalty under the 1948 schedule and all married couples seemed to benefit from the system, the switch from separate to joint filing had consequences beyond helping families with single earners. In families where the spouses both earned income, whichever spouse earned less money found themselves taxed at a higher relative rate than they would have been had they been single.

The easiest way to explain how this worked would be to contrast the 1913 and the 1948 schedules from our simple example, using a marriage in which both spouses earn thirty thousand each. In both 1913 and 1948, both families would pay six thousand in tax. However, in 1913, both spouses would have filed separately, and each have paid nothing in tax on their first ten thousand in income, and 15% of their twenty thousand in income over ten thousand in income, or three thousand each. On the other hand, in 1948, both spouses would have shared the same married rate schedule, at double the rate of the single rate schedule. This would mean that the first thirty thousand earned, that of the first spouse, would pay nothing in tax on its first twenty thousand, and a marginal rate of 15% on its ten thousand over twenty thousand, for a total of one thousand five hundred. In addition, the second spouse would pay 15% on his or her thirty thousand piled on top of the first spouse's thirty thousand, for a total of four thousand five hundred in tax. Adding the one thousand five hundred and the four thousand five hundred up, we get the six thousand in tax the family would have paid in 1948, which seems identical to the tax they paid in 1913. However, in reality it is different, since the first spouse is actually paying less in tax than he or she did in 1913, while the second spouse is paying more.

How do we know which spouse's income should be counted first? Well, one should probably count whichever income is considered either more essential or less optional by the family first, because in making decisions whether or not to dispose of one of the spouse's incomes, one will probably discontinue the less essential or more optional income before the more essential or less optional one. In the example above, of course, it does not make a difference, since both incomes are completely identical.

But in reality spouses incomes are rarely so indistinguishable, and there are numerous factors which people may often look to in determining which income should be seen as primary. Three important ones are: size of income, job opportunities, and societal gender roles. Unfortunately, all three of these can often lead to women being placed in the role of secondary earner.

In terms of size of income, generally people will see a larger income as more essential than a smaller one. This is because most families want to earn as much money as possible, in the absence of a countervailing negative, and thus prefer a spouse's job that provides a higher income to a job providing lower income. In 1997, married women still only made about sixty percent of what married men did. (McCaffery 1997, p 21) This implies that women are more likely to be seen as the secondary earner on the basis of income, due to their greater likelihood to be earning less money.

In addition, women are less likely to have opportunities to advance as far in their careers as men. For example, only 2.6 percent of corporate officers of Fortune 500 companies are women, a fact which implies that women are less likely to receive the same opportunities for advancement as men are, because if women are not having much success breaking the glass ceiling in some of the most prestigious companies in the country, the chances are that they are having similar difficulty obtaining advancement in other careers as well (Anonymous 1991). As a result, a male spouse's career may be seen as more important to a family than that of a female spouse, because the male spouse may have a greater likelihood of achieving higher earning potential in the future.

Finally, societal gender roles can also play an important role in which spouses' income is seen as primary. For example, in our society, women are still more likely to see work as optional than men are, and are more likely to be willing to take up domestic work such as child rearing and housekeeping (McCaffery 1997, p 193). In fact, in 1983 Michael Boskin and Eytan Sheshinski reported in an article that "the compensated wage elasticity of wives (generally measuring how firmly rooted women are to their existing work patterns) is five or six times as large as that for husbands" (Boskin and Sheshinski 1983, p 180). This means that women as whole are much more likely to be willing to stay at home and leave the outside work force. Whether the reasons for this disparity are due to societal gender roles or other causes may be debatable, but it would be naïve to assume that socialisation does not continue to play an important role in setting men in the role of breadwinners.

As a result of these three and possibly other unmentioned reasons, women are more likely to be seen as the secondary earners in their marriages, and a bias in the tax code against secondary earners also translates into a bias against women as a whole. Like all secondary earners, women generally find themselves placed on the margin in the current joint filing system, and taxed at a much higher rate than they would have been under 1913 style separate filing, by virtue of their husbands' primary salary hogging up the lower tax brackets, leaving only the more highly taxed marginal rates available for their secondary incomes. The result of this is that secondary earner women end up bringing in less income from their work than they would have as a primary earner or separate filer in 1913. Given such a disincentive to pursue careers outside the home, they are more likely to turn back to the traditionally gendered roles of housekeeper and child bearer. This effect is made even more powerful by the reality that women are less obstinate in their choices between domestic and professional lifestyles as men are, as is shown by their higher elasticity rates.

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B. Additional Aspects of the Secondary Earner Bias

In addition, there are five other aspects of the secondary earner bias which make its effect even more powerful. The first of these, child care and work related expenses, is the most pertinent to this article, because it touches directly on Clinton's Child Care Relief Plan. As pointed out by the Haig Simons definition of income, taxpayers should pay income taxes on what they spend for personal consumption ( McCaffery 1997, p 107) The question therefore is whether child care and work related expenses should be considered taxable personal consumption or untaxed business expenses. In the 1937 case of Smith v. Commissioner, the Board of Tax Appeals ruled that child care expenses were nondeductible because they are caused by the personal decision to have children (Smith v. Commissioner (1939) 40 BTS 1038). Since then, Congress has acted to give some tax relief to child care expenses, such as the 1997 bill overhauling the welfare system, which provided $4 billion in new money for child care (Seelye 1998). However, administration officials say that this is not enough for families at any income level to reconcile their work schedules with raising children. The end result of the continued taxation of child care benefits is that women, upon whom the brunt of the expectation of child care falls, incur an additional cost beyond normal tax, the secondary earner bias, and discrimination in the workplace for their decision to enter the workforce, which may further discourage them from leaving domestic work. Further exacerbating the problem is the fact that many normal additional costs required to properly prepare a secondary worker, such as dry cleaning, eating out, commuting, etc. are also generally not tax deductible. A 1991 study by Hanson and Ooms suggests that up to 68 percent of the second income of middle and upper income two earner couples are sacrificed to work related costs (McCaffery 1997, p 119). As a result of these extra tax burdens, it becomes more likely that women, with their higher degree of elasticity, will decide that working outside of the home is simply not worth it, and choose to remain at home instead.

Social security taxes, state and local taxes, the non taxation of imputed income, and the structure of tax favored fringe benefits can also greatly contribute to the tax system's bias towards keeping women at home. Unfortunately, due to space considerations and these factors' limited applicability to a comparison between The Marriage Tax Elimination Act and Clinton's Child Care Relief Plan, we will not be able to go into these issues in great detail. Suffice to say that these additional factors, covered in great detail in McCaffery's book Taxing Women, make the bias against secondary earner women already present in the tax code from the secondary earner bias and the non deduction of child care and work related expenses even more powerful.

As a result of all these additional aspects of the secondary earner bias, it should be clear that the current tax system penalizes many women who pursue careers outside of their home. So what should be done about it? Gender bias in the tax system is deeply rooted, and it is unlikely that Congress will be able to or want to remove all these biases immediately. However, two recent proposals hold some promise to bring about at least some change: the Marriage Tax Elimination Act and Clinton's Child Care Relief Plan.

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4. The Marriage Tax Elimination Act

A. How the Marriage Tax Elimination Act Would Work

In 1997, a couple in the 2^nd District of Indiana, Sharon Mallory and Darryl Pierce, wrote to their congressman, Representative David McIntosh, complaining that as a result of a $3,700 marriage penalty, that they were postponing their marriage. Meanwhile, Janice and Mike Reading of Monee, Illinois also complained to their congressman, Representative Weller, that they were paying $1,000 more a year because they were already married.

"Why should I be penalized because I'm married and somebody else is not paying near the taxes that I am paying? It doesn't seem fair, does it?" asked Mike Reading.

A year later, the two couples have become poster children for Weller and McIntosh's HR 2456, the Marriage Tax Elimination Act (Meinert 1997). This act would allow married couples to file either jointly or as separate unpenalized singles, in effect eliminating the marriage penalty and lessening the effect of the secondary earner bias.

The way this would work is simple. Under our example, the unmarried person earning sixty thousand would continue to pay twelve thousand in tax, as he or she did in 1913, 1948, and 1969. The two separate people earning thirty thousand each would also continue to pay six thousand in tax combined, as they did in 1913, 1948, and 1969. The married primary earner with the sixty thousand income and no income from his or her spouse would continue to pay eight thousand four hundred in tax, which would continue to give them a lower tax rate from the twelve thousand in tax they were paying in 1913. The major change would be for married couples in which both partners are earning income; at some point as their incomes become more evenly distributed, it would become more beneficial for the two of them to file separately. The Marriage Tax Elimination Act will give them this option, and two married people each earning thirty thousand each, filing as singles, would be able to pay the same six thousand in tax that they would have as singles, and no longer have to pay the eight thousand four hundred they would under the current plan. People such as Mallory and Pierce and the Readings, would no longer have to pay higher taxes for their choice to walk down the aisle.

The Marriage Tax Elimination Act would also have a significant effect on the secondary earner bias, since only marriages in which there is a sizeable disparity between husbands' and wives' incomes will people continue to file jointly. With these families, the secondary earner bias might continue; however, in marriages where the spouses' salaries are relatively close and the family decides to file separately, the secondary earner bias will essentially no longer exist. As we can see, therefore, to a certain extent the elimination of the marriage penalty goes hand in hand with an elimination of the secondary earner bias, since the elimination of the marriage penalty will lead to the option of separate, unpenalised filing, which will lead to the elimination of the secondary earner bias in certain marriages, which may lead to less secondary earner women being penalised for their decision to work outside the house.

Of course, one must remember that a sizeable portion of marriages will continue to file jointly, and will thus perpetuate the secondary earner bias. Just how many would this be? According to a June 1997 Congressional Budget Office Study, the marriage penalty currently affects 21 million working couples, or 42% of all American couples, with an average penalty of $1,400 per couple (Zaldivar 1998). It is these people who would generally benefit from HR 2456, and probably decide to file separately as if they were each single, thereby also eliminating their secondary earner bias. Meanwhile, 51% of couples receive a tax bonus, averaging $1,300, from their marriage. It is these people who would probably continue to file jointly, and therefore continue to suffer the bias.

The amount receiving the tax bonus is much lower than was originally intended back in 1969. The marriage penalty first appeared in the Internal Revenue Code back in 1969 when most families only had one breadwinner, and was designed to benefit those families. But it failed to envision the growing number of women in the workforce. Currently 75% of families have both husbands and wives working, and two worker couples have risen from 48% in 1969 to 72% in 1995 (Stepanek 1997). In addition, women's wages have risen in proportion to men's wages, which has also increased the number of couples suffering from the marriage penalty, because a more level distribution between female and male wages implies a more even distribution between female and male incomes in many couples (Goodrich 1997). The result of all these changes is that the marriage penalty affects a much greater percentage of the population than it was ordinary intended to, due to changes in our country's employment demographics over the past several decades.

As a result of its increasing pertinence, it is not surprising that the idea of abolishing the marriage penalty has growing popularity among the public, even if in a recent Wirthlin poll commissioned by Weller, 72% of a thousand polled adults have never heard of the penalty. The same poll also found that 84% those adults, once informed, found the marriage penalty unfair, and 77% thought that the penalty was so unfair that it should be eliminated (Meinert 1997).

Support for HR 2456 has extended to Washington as well. Notable supporters of the Weller-McIntosh Bill include House Speaker Newt Gingrich, the Christian Coalition, Americans for Tax Reform, the National Independent Women's Forum and Steve Forbes' Americans for Hope. HR 2456 has special appeal to conservatives because many see it as an issue with which they can reach out to working women, which is consistent with their plans to attack the current tax system in the next election. In addition, conservatives, such as House Majority Leader Dick Armey claim that the Marriage Tax Elimination Act "does not get in the way" of a flat tax. "Look at this as a down payment towards the flat tax," said McIntosh (Shlaes 1997). Meanwhile, aspects of HR 2456, such as its limited neutralizing effect on the secondary earner bias, have appealed to certain liberals as well. Clinton himself, while supporting his Child Care Relief Proposals and criticizing this bill, agrees that the marriage penalty is not defensible. "I don't like the marriage penalty on principle," he said in a December 1997 news conference (Federal Document Clearing House 1998).

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B. Arguments against the Marriage Tax Elimination Act

Nevertheless, there are many arguments against the Marriage Tax Elimination Act. "It's still not going to work," said Joel Slemrod, a business professor at the University of Michigan. "Different couples with the same income and deductions are going to find that they're paying different taxes. It's slippery." (Zaldivar 1998) Even with the Marriage Tax Elimination Act, the tax system will still not be able to reconcile all three ideas of fairness listed by William Gale, because the three goals are inherently incompatible.

(i). Single Earner Marriages

Single earner families will keep their current marriage bonuses under the Weller-McIntosh Bill. However, since many two earner couples will be receiving tax cuts under HR 2456, single earner families may be irked to find that other families with the same net income and deductions could end up paying a lower tax than them, upsetting the idea that in fairness, married couples with the same income should pay the same amount of tax regardless of who earns the income. "The new rally cry is going to be that this is a `Stay-at-Home Mom tax," says Slemrod. Corroborating Slemrod's predictions are commentators such as Steve Smith, author of "If You Can't Make Time, Don't Make Babies, " who argues that Stay at Home Moms are actually in a much more precarious financial situation than people think, and that they need more support. "I spoke before a group of (Stay At Home Moms)," Smith writes. "Most are on careful budgets....`People think that just because we're at home with our kids that we're rolling in dough,' said one mom....Rich in money they are not; rich in family and priorities they are....Being a SAHM (Stay At Home Mom) is not glamorous. Hollywood doesn't make many movies with SAHMs in the leading role and when they do, they are shown as weak." Smith lauds SAHM Patricia Ciewell of St. Louis for summing up his argument perfectly: "Why would we (SAHMs) need a tax break since we're so obviously living the high life over here? Never mind that I drive a 13 year old car and that I'm cooking everything from scratch. I make a genuine effort to be supportive of parents who work outside....I guess I wish I felt a little of the same recognition coming back at me without presumptions - both from my personal encounters and from my government." (Smith 1998)

Single earner marriages make two major arguments against the Marriage Tax Elimination Act. The first is that the Marriage Tax Elimination Act, by giving the option of greater tax benefits to some two worker families, unfairly favors those two worker marriages over single worker marriages. Whether this is truly fair or unfair is highly debatable. One might argue that fairness means that the government should not use the tax code to encourage one type of family arrangement over another. In other words, in our example the government should tax two families earning the same sixty thousand in net income the same amount, regardless of whether it is earned by one person or by two. If the government taxed single earner marriages higher than dual earner marriages earning the same amount, this would lead to more secondary earners than there would normally be with non preferential laws leaving domestic life and entering the workforce. Vice versa, if the government taxed dual earner marriages more than single earner marriages with same income, more secondary earners than there would normally be with non preferential laws would leave the workforce. In either case, the government would be leading people to do other than what they themselves would naturally choose, which would be wrong because it violates the idea that fairness means the freedom to independently choose either a traditional or modern system of income raising within one's family, free from interference by the government.

On the other hand, there are many counter arguments one might make to this criticism of the Marriage Tax Elimination Act. First of all, one might argue that what appears to be equal really is not. Beyond the mere numbers of the actual tax rate and the palpable effect that interference by the government might have, one might argue that there are a number of less obvious socio-economic forces which have already loaded the dice in favour of single earner marriages in our society, making the apparent fairness of an equal tax rate for all married couples an illusion. We have listed many of these before: inequities in job opportunities and income, societal gender roles, the extra child care expenses and work related expenses secondary earners may have to pay, social security and state and local taxes, the non taxation of imputed income, and the structure of tax favoured fringe benefits. These factors, one might argue, tilt the supposedly level playing ground in favour of the traditional system of income raising, and if we really want a level playing ground in which people have the freedom to choose between either traditional or modern systems of income raising then the government should counterbalance these socio-economic forces which unfairly favour one earner marriages with a tax system which takes some of these benefits away. Thus even if this type of tax system may seem unfair strictly based on its tax rate, the overall effect might be equity after all.

A second counter argument to the single earner marriage's criticism of the Weller-McIntosh Bill is one of equity between married and non married couples. One might argue that, given that we accept the idea of a progressive tax rate for non married people, fairness means that we should also apply that same progressive tax rate to married people as well. Married couples with the same income are not currently doing this, since they are all being taxed the same regardless of how the progressive tax system would have taxed them before they were married. One might further argue that people should not pay a higher or lower tax simply because of their marital status. The current system of taxing all married couples equally flunks this test of fairness by essentially giving single earner marriages tax benefits at the expense of other groups. Under our example of how the current system has worked since 1969, a single earner marriage receives a tax benefit of twelve thousand minus eight thousand four hundred or three thousand six hundred over the same couple unmarried. This tax benefit for the married single earner couple also translates into a tax punishment to the unmarried single earner couple for their choice to not get married, which might be seen as unfair to the latter.

One might, of course, argue that our government has a stake in preferring married couples over non married ones. As mentioned above, married couples might be seen as more stable and better building blocks for society. However, one can question whether married couples are necessarily better than unmarried ones, and even if one accepts that they are, one must also remember that certain groups, such as same sex couples, remain unable to marry in many states in this country. And even if one believes that such circumstances are just because we do not want to encourage such alternative lifestyles, one must also remember that the current system without the Marriage Tax Elimination Act not only rewards certain married couples; it also punishes other ones as well. As mentioned earlier, the equalising of the tax rate of the single earner and dual earner marriages not only gives the single earner couple a three thousand six hundred tax cut; it gives the dual earner marriage a two thousand four hundred tax hike over the same couple unmarried. This means that not only are single earner marriages being benefited at the cost of single earner couples; they are also being benefited at the cost of other marriages as well.

In a nutshell, our tax system is a progressive one which naturally favours two separate incomes of thirty thousand over a single income of sixty thousand. This is the standard we should look to, and the standard that our taxing of married couples should be compared to. Since our current system distorts this natural pattern by abnormally raising the tax rate of the two people earning thirty thousand when they get married, and abnormally lowering the tax rate of the single income of sixty thousand when he or she gets married to a non working spouse, there is no inequity in removing these abnormalities, since all you would be removing would be a distortion of the normal system of how a progressive system should work.

A second common argument used by single earner marriages is the one which we heard from Slemrod and the SAHMs: that single worker families are having a difficult time as it is, and need help if we want staying at home to remain a viable option for secondary earners. Parents who stay at home, it might be argued, lead to better and more personal child care and more stable families, which leads to a more stable, wholesome society. Once again, this subject is highly debatable, but common counter arguments are that the benefit of increased child care caused by stay at home parents is counterbalanced by an unfair displacement of the stay at home spouse to a position of relative weakness and dependency in their marriage, that the burden of child care falls disproportionately on women as a whole, and that dual earner marriages can also provide excellent child care as well as marriages with stay at home spouses, when both spouses take time off from their work to contribute equally to raising their children. We will discuss this issue again in greater depth in considering Clinton's Child Care Relief Plan.

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(ii). Other Arguments Against the Marriage Tax Elimination Act

There are four other major arguments against the Marriage Tax Elimination Act. The first is that HR 2456 fails to remove the tax bonus single earner marriages received in 1948. As mentioned before, the Marriage Tax Elimination Act makes separate filing optional, not mandatory. The result of this is the Weller-McIntosh Bill will bring equity between some identical income, identical earner arrangement married and non married couples but not to others. Under our example, there will be horizontal equity between the married and non married dual thirty thousand earning couples. This will happen because it will be to the advantage of dual thirty thousand earner marriages to file separately, because in doing so they will be able to pay the unmarried couple's six thousand in tax, as opposed to their former eight thousand four hundred. As a result, both couples will look identical to the IRS because they will both be filing separately, and there will be fairness between the two couples because neither will be paying more in tax. On the other hand, for the single earner marriage earning sixty thousand, there will be no reason to file separately because in doing so, the marriage would lose its three thousand six hundred bonus. The inequality between these identical income, identical earner arrangement married and non married couples would remain under the Weller-McIntosh Bill, and some might argue that the failure to account for this inequity is a major flaw to the Marriage Tax Elimination Act.

This argument is similar to the second counter argument we saw earlier to the single earner marriage's criticism of the Weller-McIntosh Bill. In that case, the argument for parity between married and non married couples earning the same income was used to defend the Marriage Tax Elimination Act against the idea that it was unfair because it denied parity between single earner and dual earner marriages earning the same amount of net income. In this case, the same argument for parity between married and non married couples earning the same income is used to attack the Marriage Tax Elimination Act for failing to live up to its own standards of equity between identical income, identical earner arrangement married and non married couples. Of course, as discussed above, a common response to this argument is that equity between married and non married couples should only be enforced when it favours marriage, because the government has a stake in encouraging marriage over non marriage. We will discuss this issue further when we consider the price tag attached to HR 2456, and still later when we weigh the arguments in favour of a return to 1913 style mandatory separate filing.

The second major argument against the Marriage Tax Elimination Act is that it would not eliminate all marriage penalties. For example, Kathy Burlison, a tax specialist with H&R Block in Kansas City said that the Weller-McIntosh Bill would not provide as much relief for single parents who decide to marry as for childless couples (Zaldivar 1998). Single parents who marry would still lose the "head of household" filing status that lets them make larger cuts in their in their taxable income. "It won't overcome the penalty all the way," says Burlison. McIntosh said that allowing the choice of "head of household" filing would have raised the bill's already sizeable cost, a major sticking point of HR 2456 which we will discuss in greater depth later.

In addition, the Marriage Tax Elimination Act does not address the loss of certain people's Earned Income Tax Credit when they get married. The Earned Income Tax Credit is a government payment administered through the tax system, given to Americans working near the poverty level and raising families to supplement their wages. Unfortunately, when two low income single parents marry, their combined income often puts them out of range for the credit. This is considered by some to be one of the steepest marriage penalties in the tax laws, and this bill does not address it.

The third major argument against the Marriage Tax Elimination Acti s that in eradicating the marriage penalty, or at least most of it, Congress would be removing a substantial money maker for the government. According to Treasury Secretary Rubin, the price tag of HR 2456 would be very expensive - $29 billion in revenue in fiscal 1996 (Price 1998). Other estimates of the cost of the Weller-McIntosh Bill go as high as $33 billion and as low as $18 billion a year (Zaldivar 1998). Either way, eliminating the marriage tax would not come cheap. Proponents of the bill argue that the importance of what HR 2456 is trying to achieve outweighs its expense, and that since the Congressional Budget Office has recently reported that America can expect a fiscal surplus sooner than expected, that the government should take swift action to provide tax relief to working families. Critics respond that, nevertheless, money to pay for the Weller-McIntosh Bill would have to come at the expense of existing programs, greater debt or by taking more money out of the taxpayer's pocket. "We've come so far in restoring fiscal responsibility," says White House spokeswoman Nadra Chitre. "We won't do anything to anything to explode the deficit." (Price 1998) Once again, we will discuss this last possibility in greater detail later in this paper when we consider the argument for mandatory filing.

The fourth argument against HR 2456 is simply one in favor of caution and conservatism. "The tax code has become so complex that well meaning changes have had unintended, negative ripple effects," says Pete Sepp, a spokesman for the National Taxpayers Union (Meinert 1997). This may not seem a very strong reason to deny change in and of itself, but it does present a note of caution that one might want to consider before rushing off to make wholesale change to the system.

In sum, there are powerful arguments both for and against the Marriage Tax Elimination Act. Proponents of HR 2456 argue that the current tax system is unfair because it favors some non married couples over married couples, and it perpetuates the secondary earner bias. Critics argue that the Weller-McIntosh Bill will favour some two worker marriages over single worker marriages, that the single worker marriages are in greater need of assistance from the government, that HR 2456 fails to remove the tax bonus and secondary earner bias from single earner and similar marriages, that the bill fails to eliminate all marriage penalties, that the elimination of the marriage penalty would be very expensive, and that one should be cautious in making changes to the tax code, because even well meaning changes can have unintended, negative ripple effects. For the most part, these are all very good arguments. However, there is more to the story than just this. A proposal can be a very good one, but because of limited resources, it still not be the right decision, because there could be another alternative which might use those resources even better. Therefore, before deciding whether or not to endorse HR 2456, one should also consider the alternatives. One important such alternative is Clinton's Child Care Relief Plan.

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5. Clinton's Child Care Relief Plan

A. What is Clinton's Child Care Relief Plan?

As he unveiled his plan to pump $21.7 billion into child care for working families over five years in early January of 1998, President Clinton spoke nostalgically about his own experiences with child care.

"I've often wondered how my mother, when she was widowed, would have been able to go back to school if I hadn't been able to move in with my grandparents," he said. "I was lucky, and it turned out reasonably well for me. But how many children are out there with exactly the same potential, who never got the same break by pure accident of family circumstance? You don't know the answer to that and neither do I. But we know what the answer should be. The answer should be, not a single one."

With this declaration, Clinton set into motion what he calls "the single largest national commitment to child care in the history of the United States." (Anonymous 1998) It is also the largest item on Clinton's domestic agenda in 1998, and if all nine proposals that make up the plan pass, it would be the most expensive social policy initiative of Clinton's presidency (Harris 1998).

The first proposal of the plan is to invest 7500 million over five years to increase the Child Care and Development Block Grant. This block grant is the primary federal subsidy program to pay for child care, enabling low income parents to work. Funds are distributed by formula to the states to operate direct child care subsidy programs, as well as to improve the quality and availability of care. The President's plan would effectively double the number of children receiving child care subsidies to more than two million by the year 2003 (Federal Document Clearing House 1998).

The second proposal of the plan is to invest 5200 million over five years to provide tax credits to families earning under sixty thousand with children under 13 or dependents. The credit would be equal to a percentage of the taxpayer's employment related expenditures for child or dependent care, with the amount of the credit available on a sliding scale depending on the taxpayer's income. The White House predicts that this proposal will help three million working families pay for child care, cutting their annual tax bill by an average of $358 per year, and would eliminate the small federal tax now paid by a family of four living on thirty five thousand a year or less. Nevertheless, some commentators have questioned how much of this second proposal is designed to help low income families and how much of it is designed as an election year ploy. Families making sixty thousand a year, argues Laura Scott of the Kansas City Star, are not in as great need for tax credits as low income families. Even if it is true that families spend more on child care as their income increases, Scott argues that "given the costs of this $20 billion package over five years, and the need to keep the federal budget balanced, the expanded tax credits for middle income workers cannot be justified" (Scott 1988). We will discuss this criticism in greater detail later in this paper when we consider whom the Clinton's plan will benefit, and also again when we discuss arguments against the plan.

The third proposal of the plan is to invest 500 million over five years in Tax Credits for Businesses which offer child care services for their employees. Under this proposal, businesses would receive a tax break of 25% of the money which they spend on qualified child care programs, up to a maximum of a hundred and fifty thousand dollars per year. This would help to raise the standards and the availability of child care to employees, and would give employers the option of providing support either on site or through benefit packages.

The fourth proposal of the plan is to invest 800 million over five years in after-school programs for up to half a million children per year. This would be accomplished by expanding the 21^st Century Community Learning Center program to provide greater funds to school-community partnerships to establish or expand programs for school age children. In addition to the benefit of assisting working families with their child care duties, the White House also argues that after school programs will have the added benefit of reducing juvenile crime, which has not dropped as much as the overall crime rate over the past year. The program is expected to have this effect because it is targeted to address the riskiest candidates for juvenile criminals during the hours when they are least likely to be supervised: latch key kids during the hours 2 pm to 6 pm (Harris 1998).

The remaining four proposals of the Clinton plan are aimed at improving the quality of child care. The fifth proposal of the plan is to invest 3000 million over five years in an Early Learning Fund. This fund would provide challenge grants to the states to distribute to communities in order to improve the quality and safety of care for children under the age of five. The funds would be used for a variety of activities, such as: providing basic training to child care providers (including first air and CPR), connecting individual child care providers to centers for education and support, assisting child care providers to meet accreditation and licensing requirements, linking child care providers with health professionals, reducing group sizes and child to staff ratios, and providing home visits, parent education and consumer education about child care.

The sixth proposal of the plan is to invest 3800 million over five years in increasing the Head Start Program. Head Start is a program intended to provide early, continuous and comprehensive child development and family support services. The President's plan would double the number of children served by this program.

The seventh proposal of the plan is to invest 500 million over five years in a Standards Enforcement Fund. This initiative would assist state efforts to improve and enforce child health and safety standards, including unannounced inspections and background checks of child care providers.

The eighth proposal of the plan is to invest 250 million over five years in a Child Care Provider Scholarship Fund. This program would help 50,000 people to attain proper child care training credentials.

The ninth, and final proposal of the plan is to invest 150 million over five years in a Research and Evaluation Fund. This fund would help support a new National Center on Child Care Statistics to study what types of child care programs work well, as well as establish a hot line to help parents find child care. (Federal Document Clearing House 1998)

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B. Who will Clinton's Child Care Plan Benefit and Who Supports It?

On its face, the purposes of the nine proposals making up Clinton's Child Care Plan may seem very different from the purpose of the Marriage Tax Elimination Act. The primary purpose of passing HR 2456 is to remove certain marriage penalties from the tax code, while the purposes of Clinton's plan are to provide more child care to working parents, improve the quality and availability of child care, and reduce juvenile crime. The consequences of the two plans would coincide, however, in terms of the indirect effect they would have in reducing the unfairness of gender bias in the tax system.

As mentioned above, HR 2456 would probably constitute a significant step towards the elimination of the secondary earner bias. The Marriage Tax Elimination Act would lead to a number of dual earner marriages filing separately, in which case the secondary earner bias would no longer apply. This reduction of the secondary earner bias would probably lead to greater horizontal equity between the sexes, because as we discussed earlier the brunt of this secondary earner bias falls disproportionately on women.

Clinton's Child Care Plan would also lead to greater horizontal equity between the sexes. As mentioned before, child care is a major aspect of the secondary earner bias. For many lower income secondary earners, there may not be a choice whether or not to work - their income might be so critical to their family's success that they would be unable to stay at home even if they wanted to. To these people, Clinton's Child Care Plan comes as a straight out boon, with very little effect on how likely secondary earner women are to work.

However, there are many other families whose income is high enough to make work from the secondary earner no longer mandatory for the family. It is these secondary earners who are often the most easily induced by the secondary earner bias and other considerations to stay at home. This is not very surprising because, as discussed above, a secondary earner woman considering whether to make changes in her employment arrangements is presented with an unfairly weighed question, in which she will be unable to simply decide the question based on its own merits. Instead, she will also have to consider that in addition to the fact that she is likely to earn less, have less job opportunities, and will find less societal support from her decision to work, that if her spouse earns more than her, she will be taxed at a higher rate than normal for working by federal income, social security and state and local taxes, that she will be losing out on the basis of the non taxation of imputed income and the structure of tax favoured fringe benefits, and that if she has children, the care of which falls disproportionately on her, she'll find it difficult to finance, locate and self justify the child care necessary to care for her children while she works.

Thus even if Clinton's Child Care Plan may not be specifically intended to reduce gender bias in the tax code, if passed it will end up doing so, because it will help ease the burden secondary earner mothers experience when considering whether to work or stay at home with the kids. This decision is faced by more than just lower income taxpayers, and thus one can question whether Laura Scott is correct in her assertion that extending tax credits beyond low income families to families earning up to sixty thousand is merely an election year ploy. It might have a legitimate end beyond that of supporting only lower income families, or appealing to middle class voters - that of reducing at least part of the tax burden which many secondary earner women experience.

That is not to say that a large part of Clinton's plan is not politically motivated. With Clinton at its helm, the Democratic party has been targeting two swing voting blocs with 2000 in mind - aging men approaching retirement and working mothers with young children (also known as "day care moms," as opposed to SAHMs). Day care moms represent a key voting bloc for both parties, because about 75% of U.S. families have working mothers, and these families are disproportionately represented in booming states such as Colorado, Nevada and Arizona. (Dunham and McNamee 1998)

So far, the Democrats' attempts to appeal to this group seem to have been successful, thanks in part to proposals such as Clinton's Child Care Relief Plan. Polls have showed that the child care issue is a critical one to many female votes. It (child care) "is absolutely critical" to Democrats in 1998 says Colorado Governor Roy Romer. Most day care moms voted for Clinton in the last election, and Republicans fear that with this Child Care Relief Plan, the group's support for Clinton will carry on into 1998. Frets a GOP strategist: "The President has successfully placed these issues on the 1998 agenda." "This strikes at the core of voters Republicans want to attract," says Democratic political consultant David Doak. (at p 43) One might also question whether part of the reason many Republicans support the Marriage Tax Elimination Act might also partially be due to its appeal to working mothers.

However, Clinton has also striven to make his Child Care Plan as palatable to conservatives as possible. His nine programs expose the president to almost no risk, and are chock full of Republican inspired policies, such as block grants, tax credits, tax breaks for corporations and a lack of federal mandates. As result, Republicans have responded to Clinton's Plan with guarded support, even though some commentators predict that most of Clinton's proposals will not be passed (Shribman 1998).

It also has been attracting a lot of support from key Washington personnel. First Lady Hillary Rodham Clinton herself has been a very active proponent of the issue, in her first major appearance since the end of heath care reform. According to former campaign manager Dick Morris, the First Lady realised "that there was a zero sum game between her and the president. The more powerful she was, the more people thought that he was weak." As result, Mrs. Clinton consulted with historian Doris Goodwin, who told her that Eleanor Roosevelt made similar mistakes as the Clintons early on. According to Goodwin, Mrs. Roosevelt ran into a great deal of opposition upon initially taking on a semi formal role in the government. It was only after she went to being an advocate for women, workers and minorities that she gained greater acceptance (Federal Document Clearing House 1998). As a result, Mrs Clinton has thrown her full support behind issues affecting women workers, writing a book on child care in 1996 called "It Takes a Village," and now championing these Child Care Proposals (Harris 1998). She says that the goal of her husband's plan is to offer choices for families. "By cobbling together all of these tax credits and other kinds of incentives together plus raising the minimum wage - all of these things are giving people real choices," she said in a Newsweek interview (Anonymous 1998).

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C. Arguments against Clinton's Child Care Plan

As mentioned earlier, Clinton's Plan has met with skepticism by opponents, but little outright hostility (Seelye 1998). Nonetheless, there have been some earnest criticism to the plan. The largest question raised has been how the government will pay for all these programs. If passed in its entirety, Clinton's Child Care Plan would be one of the most expensive social policy initiatives of his presidency. And despite reports of a balanced federal deficit in the next year or two, some commentators remain sceptical, asserting that the encouraging news on the deficit has been overstated. Rob Reischauer, former director of the Congressional Budget Office is one of these people. The projected budget surpluses are "an illusion," he claims. "They only occur because the budget includes the surpluses in Social Security. Apart from Social Security, tax payments will still fall tens of billions of dollars short of covering the full costs of providing government services." Even the projected surpluses are "small and uncertain" he adds, noting that in his estimation, an average recession would turn a balanced budget into a deficit of $100 or $150 billion (Winn 1998).

Administration officials insist that we can still balance the budget next year with Clinton's Child Care Plan, because they are not specifically looking to money from the surplus to do it. Instead, the administration proposes to pay for about two thirds of the costs for the plan from as of yet unspecified cuts in other programs. The remaining one third of the costs of the proposals is planned to come from settlements with the tobacco industry (Federal Document Clearing House 1998). Nevertheless, critics such as Wyoming US Senator Enzi stridently argue that these settlements do not exist and may never be reached. "The federal government is famous for spending money that we are supposed to receive tomorrow," Enzi said. "Improving child care is a worthy goal, but we have to use money that's there rather than rely on hopeful windfalls." (Federal Document Clearing House 1998) Other commentators also caution that the Clinton administration should be cautious in rushing to negotiate settlements with the tobacco companies, lest they settle for too little too early in their eagerness to get their hands on the money.

Supporters of the proposals counter-argue that child care is important enough to make the necessary commitments, and that the plan's high price tag is actually a positive, because it is painful enough to taxpayers so that men and women who have not cared about child care will finally pay attention. (Nappi 1998)

The second major argument against Clinton's plan agrees that child care is critically important and people should be paying attention to it; however, it goes beyond by arguing that child care should be considered a family problem, not a government one and that there should be no substitute for direct parental care. Says David Murray, director of research for the Statistical Assessment Service and social anthropologist, "Parents are pressured to be out of the home so we can hire other people to take care of (children)....It's the government designing the family." He portrays the Clinton plan as "a long range, slow effort for the next 20 years to increase the federal role in child rearing. It'll be offered as incentives and tax breaks and block grants, as a gift to families in America, but it'll be `back-doored' to them in that they'll have to pay more taxes to afford this. This could become a Rube Goldberg setup....Why not let parents stay home to raise their own kids?" Anita Blair, of the Independent Women's Forum agrees: "If you subsidize child care, it will cost more in taxes which will force more mothers into the work force," she says. She also argues that it will drive out smaller providers of child care because it will become too expensive (Duin 1998). Columnist Ann Melvin also adds that in her opinion, Clinton's Child Care Plan is just a band aid, that keeps a broken wheel running, when the real problem is the lack of a strong family (Melvin 1998).

This second argument is not really a single argument, but rather a series of multiple arguments. The first of these is that Clinton's Child Care Relief Plan will be funded by higher taxes, which will tragically result in families having greater monetary problems, more women having to work, and parents having less time with their kids. The administration responds to this argument by clearly stating that funding from the new plan would come solely from program cuts and tobacco settlements. Supporters also respond by arguing that many families have no choice about using child care, particularly single parents. Nevertheless, critics argue that the funds used to support the child care proposals could also be used to fund tax cuts, which would help families raise their children just as well as any 21.7 billion "nanny state." (Shiner, Wright, and Dowd 1998)

The second component of the second argument against Clinton's Child Care Plan is that the government has no business in the realm of family. Clinton's response: "we know that the government cannot raise or love a child, but that is not what we are supposed to do. What the government is supposed to do is to help to create the conditions and give people the tools that will enable them to raise and love their children while successfully participating in the American workplace." The administration, therefore, is arguing that this plan is not attempting to supplant parents with government funded day care centers, but rather giving parents who make the choice to work the option to do so.

The third component of the argument is a minor one. Some critics of the Clinton plan assert that it will drive small care providers out of business. Caroline Schomp, a small child care provider herself, strongly disagrees, arguing that child care is in trouble as it is and that even more help beyond the Clinton Plan is needed. "We need child care because all those clichés - children are our most precious natural resource, children are our future, yadayadayada," she writes. "Saccharine but true. If you want children to turn out well, give them a good start. Staying home with mom is nice, but not every mother is Ozzie's Harriet. Besides, these days even Harriet works. Moreover, studies show that high quality child care actually helps children develop intellectually and emotionally....Turnover in most child care centers is horrendous and largely is because the jobs pay diddly squat and carry little respect. It really is true that you get what you pay for. The president proposes tax cuts to 3 million families for an average of $358. That's one month's tuition at a less expensive child care center or about half a month's tuition at an expensive one. What's the difference between them? In some cases, it's as simple as subsidized rent in a church or rec center. In others, it's because the teachers are paid minimum wage. In our center, just to break even we can't provide child care for less than about $28 per day. The state of Colorado only pays about $18 per day...the Republican answer to the President's proposal includes encouraging retirees to work in child care. How little they understand the work." (Schomp 1998)

Schomp does not specify which Republican answer to the President's proposal she is referring to, which might be considered confusing because there have been several. The most prominent Republican response to the Clinton plan, the "Family Friendly Workplace Act" or "Flextime Bill," is probably not the one which she is directly referring to though, because it does not directly address the issue of child care providers. Instead, the Flextime Bill, sponsored by Senator Ashcroft, relies heavily on the fourth component of the argument against Clinton's plan, which is that Clinton's plan will solve nothing because the problems of child care cannot be solved by the government. The true problem, Ashcroft argues, is the weakness of the family unit and the lack of traditional values. Without going into great detail of the flextime bill, it would allow more flexible work hours for private sector employees, so they could spend more time with their children. (Flextime Bill 1997 S. 4, 105th Congress) "There are circumstances in which time is more valuable than money," says the Senator. "At some point, no matter how much money you have - all the money in the world cannot replace the time you miss with your child or spouse." Opponents of the bill argue that the bill would make it too easy for employers to force their workers to take time off instead of overtime pay, and would benefit employers more than it helps workers, although Ashcroft insists that flexible schedules could not be imposed. Incidentally, Clinton has also endorsed the concept of flex time, to provide further support for children, but would prefer to expand the family leave law to do it (Lowe 1997).

Many are suspicious however of the overall argument that child care problems are a result of weak families, because this same argument can lead to calls for women to leave the workplace and stay at home. Writes Rebecca Nappi of The Spokesman Review, "Those against the government helping out say it's a family problem, not a government one. But the child care crisis will take collaboration among families, business and the government. The (Clinton) plan recognizes this. Some argue that if women would stay home and take care of the kids, the problem would go away. That choice is not available to all women, and if all women workers stayed home, our economy would collapse." (Nappi 1998)

Along this line is the Republican criticism of the Clinton plan on the basis that the proposals do not offer any benefits for parents who take care of their kids at home. Representative Deborah Pryce from Ohio calls the lack of help for SAHMs the plan's "glaring omission." Senator John Chafee of Rhode Island agrees, questioning why the president's proposal should give credits to families who place their children in someone else's care, but none to those who care for their own children (Duin 1998). Republicans have as a result been pushing an "income splitting plan," in which each family would pool their incomes together into a common pool, which would then be split in half and taxed separately. This income splitting plan seems very similar to the tax system in place back in 1948, with the only major difference being that the combined rate would be split in half and taxed at half the rate twice, with the same result as before. As can be expected, this arrangement would generally favour traditional single earner arrangements over more modern dual earner families, and is susceptible to the same criticisms as the 1948 plan, such as that it is outdated in an era where the majority of families are dual earner ones.

The "lack of help for stay at home moms" criticism is seen by some supporters of the Clinton plan as similar to an argument that women should stay at home, and thus sexist, because one might argue that support by the government of SAHMs leads to greater encouragement of women to become SAHMs, which leads many women to place themselves in a position of comparative disadvantage to males. Knowing though that not everyone will agree with this chain of logic, supporters also argue that adding support for SAHMs to the plan would add even more cost to it. "The problem," Clinton says, "is how you pay for it. Some of the proposals that have been put forth up `til this point would be extraordinarily expensive and provide very little money to individual families." (Federal Document Clearing House 1998)

Aside from the entire second argument that child care should be a family matter, not a government one, there is a third argument against Clinton's Child Care Plan. This criticism comes from child care experts, rather than political opponents, and one which we have heard before, from people like Caroline Schomp. According to these experts, the problem is that Clinton's plan doesn't go far enough to create change. In particular, some experts think that the proposal should make federal funding contingent on raising health and safety standards. "The president's initiatives are a great beginning," says Gail Nourse of Focus on our Future, "but we're particularly concerned with quality issues." (Hawkinson 1998) Currently, there is money for states who want to improve child care quality, but no federal guidelines. Clinton's response is that this is the best that we can get done for the time being and that "we don't think that having national standards is a workable model...frankly, we didn't think we could get political support at the federal or the state level for such a set of national standards." (Federal Document Clearing House 1998)

Ironically, this third criticism flies directly in the face of the fourth one, which claims that Washington has done enough already. According to critics like Representative Bill Goodling, "the federal government already sponsors more than 50 child care programs. The president is trying to tell us we need even more while ignoring the tremendous child care reforms implemented by Congress." Goodling is probably referring to the four billion in new money for child care that the government provided last year (Seelye 1998). This money provided tax relief to parents with children in college and a $500 per child tax credit. Nevertheless, the widely shared view is that this is not enough. Clinton has branded child care "part of America's unfinished business" and former US Attorney General Elliot Richardson says that even the Clinton program, while a major step forward, "still meets less than half the established need." While even many conservatives agree that more support is needed for child care, some of them, like Representative Bill Archer, argue that Congress must first examine whether the expanded child care rules passed in 1996 are working before making a greater commitment.

The fifth, and final common criticism of Clinton's Child Care Relief Plan is that not many people actually rely on outside child care. Clinton himself was raised by his relatives when his mother went to back to school, and the US Census Bureau indicates that this is not an unusual scenario. According to the Bureau, relatives cared for half of America's pre-schoolers whose mothers worked for pay in 1994, and these statistics are even higher for poor families, black families and Latino ones (MacPherson 1998). Twice as many poor people - those making less than $10,000 a year - have their children cared for by relatives than do rich people, adds David Murray (Duin 1998). To put this all in context, pre-schoolers are about evenly split between ten million children whose mothers are employed and ten million whose mothers do not work for pay (MacPherson 1998).

Critics of the Clinton Plan also add that there may be a good reason that more parents do not send their children to family day care centers, such as widespread media reports of child abuse and neglect. Day care has its own hazards, says Murray, citing a 1996 study released by the National Foundation on Infectious Diseases that said seven million children under five in day care are three times more likely to be infected than are children not in day care. Sixty percent of all employee absenteeism is to take care of these sick children (Duin 1998). Obviously, parents want quality child care for their kids that they can trust. "We don't want just anybody taking care of our kids," says Senator Daschle of South Dakota, "and we don't want to warehouse our kids." (Haugen 1998)

Nevertheless, supporters point out that according to that same Census report, 30% of pre-schoolers whose mothers work for pay do attend organised facilities, which means that there is a sizeable percentage of parents that do rely on child care (MacPherson 1998). In addition, four proposals of the Clinton plan are specifically aimed at improving the quality of child care: the Early Learning Fund, the Head Start Program, the Standards Enforcement Fund, and the Child Care Provider Scholarship Fund. With the help of these programs, they argue, quality and public confidence in organized child care should improve, requiring fewer parents to depend on relatives for help, and giving greater alternatives to parents without such options.

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6. Comparing the Marriage Tax Elimination Act and Clinton's Child Care Relief Plan as a Whole and in Light of Eliminating Gender Bias in the Tax Code, and Suggesting What Action Should be Taken

It is very difficult to compare the Marriage Tax Elimination Act and Clinton's Child Care Relief Plan, because on their face the two proposals have seem to have different purposes in mind. As mentioned before though, the two proposals coincide in terms of the indirect effect they would have in reducing the unfairness of gender bias in the tax system, as expressed by the secondary earner bias and its additional aspects in the areas of child care, social security taxes, state and local taxes, the non taxation of imputed income, and the structure of tax favoured fringe benefits.

In deciding between the two plans, therefore, there are two ways in which one could compare them. First, one could measure them by how worthy they are of being passed overall. Or one could compare the two based on what effect each would have on their common ground, that of reducing horizontal inequity based on gender in the tax code. It is plausible that a proposal could succeed on one ground, but fail on another. In order to properly assess both proposals, we will thus have to compare the two plans on both basis.

Given that there is significant controversy concerning the passage of the Marriage Tax Elimination Act and Clinton's Child Care Relief Plan, it is not surprising that there are powerful arguments both for and against both proposals. When strong arguments are made on both sides of an issue, oftentimes one's ultimate decision concerning which side has the better argument comes down to matters of political orientation, personal gain, and individual opinion. Realising this, we will nevertheless attempt to assess the two proposals objectively, relying on subjective opinion only when necessary.

Assessing the Marriage Tax Elimination Act as a whole, it seems that HR 2456 should be passed. The current tax laws were written in a time when the employment habits of the country were very different than they are today. Two worker couples have risen from nearly half of the couples in the country in the sixties when the Code filing structure was last radically changed, to nearly three quarters of the couples in the country in the nineties. Currently 42% of working couples are being discouraged from marriage by our tax code. This might be seen as wrong, because our government may have a stake in promoting the institution of marriage for social stability. Even if one argues that our government does not have such a stake, it is hard to see how our government can benefit from discouraging matrimony. In addition, the Marriage Tax Elimination Act would have the additional effect of significantly reducing the secondary earner bias, which is a compelling argument if one believes that the secondary earner bias is a problem creating gender bias in the code, and that gender bias in the code is a bad thing.

It is true that single earner families argue that the new system would unfairly give tax breaks to dual earner couples over single earner ones. In response, one could argue that it all depends on how one defines the idea of fairness. Dual earner families might argue that the system is already biased against dual earner families as it is, and that if we accept the idea that a progressive tax system is fair, then it is natural that dual earner couples should be taxed less than single earner ones. Single earner families also argue they are in need of greater tax support from the government, which the Marriage Tax Elimination Act lacks. However, one can question whether single earner families are speaking out of genuine need relative to other groups, or whether they are simply speaking out of self interest. In any case, this argument seems highly debatable. Another argument against HR 2456 is that it fails to remove the tax bonus single earner marriages received in 1948. Once again, this is a question of how one decides to construe the differing ideas of fairness listed by Gale. If one decides that vertical equity should apply equally to married couples as it does to single people, then this is a powerful criticism. However, one might still argue that horizontal equity between single earner marriages and dual earner ones makes sense as long as it does not discourage marriage, in which case HR 2456 could still be seen as fair. One might also argue that the Marriage Tax Elimination Act fails to eliminate all marriage penalties. This seems like a minor argument however, since one might argue that while HR 2456 may not remove all marriage penalties, it certainly is a step in the right direction. Another major criticism of the Weller-McIntosh Bill is that it would cost too much money. This is probably one of the greatest criticisms of HR 2456, and one that is not easily explained away. Nevertheless, supporters argue that the importance of what the Marriage Tax Elimination Act is trying to achieve outweighs its price tag, and they also point out that America can expect a fiscal surplus sooner than expected. The final argument is simply one of caution and conservatism; that we should be careful before making radical changes to the Code. While helpful to keep in mind, this does not seem a very strong reason to deny change in and of itself. Thus despite all of these criticisms, it seems that overall HR 2456 should be passed.

Assessing Clinton's Child Care Relief Plan, it seems that as a whole it should be passed as well. Clinton's plan, the administration claims, would provide more child care to working parents, improve the quality and availability of child care and possibly even reduce juvenile crime. In addition, by making child care easier for families, it would also help women workers, upon whom the brunt of the burden of child care falls. It is true that some critics question where the funding for this plan would come from, since the government has yet to settle with the tobacco industry. This is probably a pretty good argument, but one might question whether this, along with the calls by Representative Bill Archer to study the effect of previous child care tax credits first, might merely be dilatory tactics by opponents for political reasons. Another argument against Clinton's plan is that child care should be a family matter, not a government one. In response, supporters argue that Clinton's plan is not for the government to take things over, but merely to offer much needed support in order to give families the option of working, if they should so choose. They agree that there is no substitute for direct time with one's children, but think that family leave law can be expanded to support this option. Many supporters are also suspicious of conservative calls for more support for SAHMs, because they question whether some of these plans, such as the income splitting one, would be repeating the mistakes of the 1948 tax code, might be gender biased in nature and overly expensive to boot. Other critics of Clinton's plan argue that the plan does not go far enough, and should have greater federal control. The administration argues back that it remains an important step in the right direction, and might be all that is politically feasible at this juncture. Ironically, other critics argue exactly the opposite way, saying that with the tax relief for child care last year, the government has already done enough. This is not a widely held view, however, and former US Attorney Elliot Richardson estimates that Clinton's program still meets less than half of the established need in the area. Finally, other critics also argue that many people do not use organised child care, partly due to suspicions of quality problems. Supporters answer that a sizeable percentage of people do use organised child care, that Clinton's plan includes four proposals to increase quality, and that maybe the reason that many people are relying on relatives for child care is because there is not enough quality organised child care currently available. Thus, despite all of these criticisms, it seems that overall Clinton's Child Care Plan should also be passed.

Comparing the Marriage Tax Elimination Act and Clinton's Child Care Plan based on how much each would reduce horizontal inequity based on gender in the tax code is very different from judging both on their worthiness of being made into law. Judging the two plans by overall worthiness is a linear test of positivity, whereas judging them by how far each would go towards ending gender bias in the tax code is a more complicated test of judging the pertinent parts of each plan by breadth, as well as depth. In other words, in the first test based on overall worthiness we merely added up the positives and negatives to each proposal. If the overall sum of the arguments was positive, we endorsed the plan. If not, we disapproved of it. In this case, we approved of both the Marriage Tax Elimination Act and Clinton's Child Care Plan because we felt that overall the arguments for each proposal were more powerful than the arguments against them. In the case of judging the same proposals on the basis of bringing about gender equity in the tax code, we must first decide in what aspects each proposal could bring about such change. Next we must ascertain, given that each plan will bring about greater horizontal gender tax equity, which people will each plan bring greater horizontal gender tax equity to, and which people will each plan bypass. This is the test of breadth. Finally, one must figure out, given that each proposal will bring greater horizontal gender tax equity to certain people, how much change will each proposal actually bring to these people. This is the test of depth. By comparing HR 2456 and Clinton's Plan on the basis of promoting greater fairness based on sex in the tax code in terms of both breadth and depth, we can ultimately decide which will create the most change in the issue overall. This might also help expose some of the shortcomings of these plans, which might ultimately lead us to endorse other alternatives as well.

As previously mentioned, the Marriage Tax Elimination Act would affect gender equity in the Code by partially eliminating the secondary earner bias for certain married couples. This effect would be limited in breadth to only those married couples which are currently paying a marriage penalty, 42% of all American couples, or 21 million working couples in total. This means that the majority of couples will not fall under the protection of the Marriage Tax Elimination Act, especially those with relatively wide disparities between spouses incomes, who might be considered to feel the strongest effects of the secondary earner bias. Therefore, it becomes clear that while an important step in the right direction, HR 2456 does not go as far as it could to remove gender inequity in the tax code, at least in terms of breadth. In terms of depth, it probably does a pretty good job. To those couples which fall under the Marriage Tax Elimination Act, the act should completely obliterate the secondary earner bias for those marriages which decide to save themselves money by filing separately. It is true that HR 2456 will not remove socio-economic forces which may discourage women from entering the workforce, or the secondary factors of child care, social security, state and local taxes, the non taxation of imputed income or the structure of tax favoured fringe benefits. Nevertheless, when applied it would represent a tangible blow to gender inequity in the code, because secondary earner women would no longer find themselves taxed at a higher rate than they normally would be were they single. Therefore, overall the Marriage Tax Elimination Act would represent a convincing, if not perfect, step towards making the tax code gender neutral.

Clinton's Child Care Relief Plan would affect gender equity in the Code by reducing the burden of child care on working parents, a burden which tends to fall primarily on mothers. Unfortunately, in terms of breadth, it would only affect working women with children in need of child care, and not all working women as a whole. In addition, in terms of depth, Clinton's Child Care Relief Plan would help ease the secondary bias mothers experience when considering whether to work or to stay at home with the kids. It would not go beyond that though, and a secondary worker mother given support by Clinton's plan would still find that her income was piled on top of that of her husband in terms of computing their tax if their incomes were disparate enough. Therefore, overall Clinton's Child Care Relief Plan would represent merely a moderate step towards making the tax code gender neutral.

All in all, the Marriage Tax Elimination Act would thus probably go further towards bringing about gender equity in the tax than Clinton's Child Care Plan. However, as pointed out both plans have serious problems when it comes to breadth, since both selectively remove gender inequality in taxes from certain people, while serendipitously skipping over others. A much better plan, from the standpoint of gender equity in the tax code might be one which covers a wider area, such as a return to 1913 style mandatory separate filing. This would entail completely abandoning the notion listed by Gale that horizontal equity means neutrality between married couples with the same income regardless of who earns the income. Single earner families would, of course, seriously object to such an abdication, since the benefits they currently receive relative to two singles with the same net income and equal earning families with the same net income under the current progressive tax system would be completely stripped away. This new "Stay-at-Home Mom tax" would make the Marriage Tax Elimination Act look relatively toothless, and the SAHMs would probably mobilise all their political clout to stop it.

On the other hand, there would be many very positive results that would result from mandatory separate filing. First of all, we could unequivocally affirm the idea of a progressive tax system, in which taxpayers are taxed equally, regardless of marital status. Secondly, the problems of the marriage penalty and secondary earner bias would completely disappear, since every individual would be judged only by their personal income. Finally, this plan would cost nearly nothing, maybe even making the government more money. Abolishing the marriage penalty would cost us about $29 billion per year (Price 1998). Abolishing the marriage bonus would make us about $33 billion in previously uncollected taxes (Blumner 1997). The end result: a surplus?

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