This chapter estimates marriage penalties and bonuses for low-income single parents to determine whether current tax and welfare policies influence decisions about cohabitation and marriage. Policymakers are concerned that tax benefits and welfare eligibility standards may be providing a disincentive to marriage. However, calculations of financial penalties and benefits are difficult because of the wide variations in earnings and living arrangements of families that impact the amount of assistance they receive or taxes they pay. The chapter identifies variables and proposes a formula for estimating the marriage penalty-bonus. Calculations for the states of Maryland, California, and Texas suggest that policies favor cohabitation over marriage and two parent families over single parent families. The authors recommend that tax and welfare policies be changed to recognize cohabiting couples as a family structure and to encourage the family stability necessary for child development. Suggestions include establishing a new filing status for cohabiting partners with children in common; providing more assistance to preserve married and cohabiting families; developing a universal child support program that reflects the diversity of nonresident parents; and offering health insurance to all low-income families with children. 29 references, 9 tables.
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Safety Net Programs, Marriage, and Cohabitation.
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