[Congressional Record (Bound Edition), Volume 159 (2013), Part 7]
[Extensions of Remarks]
[Page 9964]
[From the U.S. Government Publishing Office, www.gpo.gov]




          INTRODUCTION OF THE MAKING WORK AND MARRIAGE PAY ACT

                                 ______
                                 

                          HON. THOMAS E. PETRI

                              of wisconsin

                    in the house of representatives

                        Thursday, June 20, 2013

  Mr. PETRI. Mr. Speaker, today, along with Rep. Niki Tsongas of 
Massachusetts, I am introducing the Making Work and Marriage Pay Act of 
2013. This legislation will establish a bipartisan commission to study 
the negative impact that high effective marginal rates can have on 
families as they attempt to improve their circumstances through work or 
marriage. The National Commission on Effective Marginal Tax Rates for 
Low-Income Families would provide an important opportunity for removing 
the disincentives that hold many back, in spite of their personal 
efforts to get ahead.
  Federal and state governments provide financial assistance to low-
income families through many means-tested programs and a variety of 
income tax credits. Each of these benefits is income-based, and as 
income rises benefits are reduced through phase-outs. These reductions 
occur at various earnings levels and on differing schedules.
  While it is appropriate for benefits to be withdrawn as family income 
increases, not enough thought has been given to the combined impact on 
behavior of these multiple phase-outs. Different programs are created 
within separate Congressional committees and are implemented by 
assorted federal and state agencies. No one entity has the authority to 
consider our vast system as a whole. The Commission established under 
this Act would be given this task and charged with the responsibility 
to propose a legislative package to remove the disincentives to work 
and marriage that these high effective marginal rates impose.
  Marginal rates matter. Economists have long contended that high tax 
rates affect the investment decisions of affluent individuals. People 
at all income levels, however, respond rationally to economic 
incentives and disincentives. If we want people to work their way into 
the middle class, we need to change a system which says that if you're 
poor and you struggle to earn a higher income, you won't be able to 
keep enough of it to make it all seem really worthwhile.
  I have looked at the impact these marginal rates have on a typical 
single mother with two children living in Wisconsin. From $17,000 to 
$40,000 in earnings, this single parent would experience combined 
effective marginal tax rates in excess of 50 percent--averaging 59 
percent between $24,000 and $41,000. At lower income levels, she even 
approaches a rate of 100 percent. Putting this into perspective, the 
U.S. corporate tax rate is 35 percent (the highest in the 
industrialized world). The top U.S. income tax rate for individuals is 
39.6 percent.
  Thus, for every dollar of new income earned by increased effort or 
the acquisition of new skills, this single mother finds herself only 
incrementally ahead and, perhaps, wondering whether her hard work is 
being justly rewarded. Despite the good intentions, these programs, in 
effect, offer no incentive to get ahead. Rather, the incentives are 
backwards and low-income workers often are encouraged to stay where 
they are.
  The same dynamic can also affect an individual's decision whether to 
marry. Experts from across the political divide agree that marriage is 
good. Government policy, however, as enacted in this assortment of 
programs and phase-outs actually discourages marriage among low-income 
couples.
  Varying benefit levels across the fifty states produce different 
results, but in Wisconsin, for a married couple with two children, the 
marriage penalty starts rising from about zero at $19,000 of combined 
income to $7,000 in after-tax income at $28,000 of combined earnings, 
which is what you get if two people earn minimum wage. At $42,000, the 
cost of being married reaches $8,154. That's a high price for a 
marriage license.
  This penalty results from the high effective marginal tax rates 
produced by taxes and the phaseout of various benefit programs. As 
income rises, taxes go up and benefits go down. The couple that has 
combined their lives and their income sees a steeper loss of income 
than does the comparable couple that has remained unmarried. If 
marriage is a recognized good for both society and for individual 
couples, then government policy should not stand in the way of people 
choosing to marry.
  It's time that Congress rationalizes this web of programs to ensure 
that hard work brings rewards by removing the punishingly high 
effective marginal tax rates faced by low-income individuals and 
families.
  This is why I am introducing the Making Work and Marriage Pay Act.
  My bill would authorize a Commission made up of Cabinet Secretaries, 
Governors, and recognized policy experts to recommend solutions for the 
problems posed by these high effective marginal tax rates. The 
Commission would be constructed to achieve partisan balance, input from 
states offering varying levels of income support, and expert 
participation from government and private sector experts.
  The Commission would be charged with seeking a solution along certain 
policy lines, but would have full authority to offer additional policy 
recommendations. The Commission's recommendations would be in the form 
of a legislative blueprint to ease consideration of its comprehensive 
solution by the wide range of Congressional committees.
  For too long, Congress has neglected to clean up the mess of 
uncoordinated federal benefit programs. The Making Work and Marriage 
Pay Act is the first step toward a benefit structure that rewards work 
and effort and reflects our shared belief that marriage is the basis of 
stable communities. I urge my colleagues to support this important 
legislation.

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