Monday, October 14, 2013

Proposed Colorado Amendment 66: Pro or Con?

Colorado's proposed Amendment 66 will be on the ballot in a few weeks.  How would this amendment affect shared earning/shared parenting families?

Background and Summary of the Amendment:  

The amendment would add a progressive element to the state income tax, doing away with the current 4.63 percent flat rate. Taxable income of household (or individual income for those not married) up to $75,000 would be subject to a 5 percent levy; income over that amount would be taxed at 5.9 percent.

The measure would would attempt to make state and local shares of district funding more equitable by resetting the equation for funding lower-income districts.  It would pour $165.5 million into full-day kindergarten and $77.5 million into preschool programs. It also targets $100 million for education-innovation grants, such as expanded school days, and $381.3 million for student testing, professional development for educators, early literacy and school accountability.  It promises a net gain in funding for every district and financial transparency through a website that would allow the public to track spending at the school level.

It also intends to channel more money toward early-childhood education, at-risk students, English-language learners, charter schools and locally determined innovations such as longer school days and years.

How does the tax affect shared earning/shared parenting families?

(A) First, how does Colorado's current tax work?

Unlike the federal income and payroll (or Social Security and Medicare) tax, the state income tax is, generally speaking, applied to all types of income, from wage income to rental income to capital gains.  

Like the federal income tax, and somewhat like the federal payroll tax, Colorado allows the fiction of joint earned income measurement for married couples.  Even though there is a flat tax, because of the way the deductions work, two-earner married couples very often pay higher rates of tax than one-earner married couples with the same gross income.  The effect of the deductions can also mean that the lesser earner in the couple pays a "marriage penalty" or higher tax rate because of the marriage and the greater earner in the couple receives a "marriage bonus" or lower tax rate.  (I am oversimplifying this for the purpose of illustrating the effect of Amendment 66; you will want to check your own personal tax situation to know the details.) 

For this reason, as I've discussed in earlier blog posts, many shared earning/shared parenting families that are not already married may prefer to form a civil union.  Under a civil union, the tax on each partner's personal income will likely be measured for both federal and state tax purposes separately from the other partner, avoiding the distortions mentioned above.   As I've also discussed in earlier blog posts, this depends on the circumstances of each such shared earning/shared parenting family; the extra federal benefits (such as Social Security survivor benefits to the lesser earner in the couple if one partner's income is greater than the other) of marriage taxation may be of value to some families, or one or both partners may be employed by a company or a government (including the federal government) that offers other benefits that outweigh the costs of being taxed as a marriage.

(B) How would the Amendment 66 tax change affect things?

Because the Amendment 66 proposal would add a progressive element to the tax system, for married couples (in contrast to civil unioned couples) this makes the "marriage penalty" and "marriage bonus" problem in 2-earner marriages WORSE.  It will place greater pressure on families to put as much earnings as possible on one partner and to put as much unpaid work, including child care and other parenting, on the other partner.   It will also increase the accelerating pressure over time to do this that I've mentioned in other blog posts regarding the current federal system.  While there are many reasons progressive taxes are a good idea, to prevent the progressive tax working against its purpose, the fiction of joint earned income by married couples needs to be repealed at both the federal state level.

(C) Conclusion 

Regardless of whether they wish to see more funding or pay more tax to support public schools, most married two-earner families, including shared earning/shared parenting families, may want to reject the tax scheme of Amendment 66.  Civil unioned or nonmarried two-earner/two-parent families would probably be OK with it but, like married two-earner/two-parent families, would like to see broader tax reform that gets rid of the fictionalizing of joint earned income for tax purposes for married couples.

How does the proposed expenditure affect things?

(a)  Making state and local shares of district funding more equitable by resetting the equation for funding lower-income districts.  

This expenditure will not likely affect shared earning/shared parenting families differently than other types of families.

(b)  $165.5 million into full-day kindergarten and $77.5 million into preschool programs.  $100 million and other funds for local education-innovation grants, such as expanded school days and years.

This depends on the degree to which a shared earning/shared parenting family outsources child care.

Many shared earning/shared parenting families use child care and would prefer that schools include preschool, full-day kindergarten and school schedules that run year round without a summer break.

On the other hand, many shared earning/shared parenting families don't use child care as much as 2-earner families where only one parent takes most or all of the responsibility for child care and they may prefer more options for parental care rather than the tax system requiring them to pay for full-time care of small children.

(c)  $381.3 million for student testing, professional development for educators, early literacy and school accountability.  It promises a net gain in funding for every district and financial transparency through a website that would allow the public to track spending at the school level.  

This expenditure will not likely affect shared earning/shared parenting families differently than other types of families.


(d)  It also intends to channel more money toward early-childhood education, at-risk students, English-language learners, charter schools.

To the extend this funding goes to remediate problems deriving from paternal neglect early in a child's life, it seems unlikely to draw support from shared earning/shared parenting families.  Because they are doing the prevention of these problems themselves, they would prefer to see measures that address parental neglect (including "rights of the child amendment" as I'll discuss in a upcoming post or a "two-choice model of parenting responsibility" as I discussed in a recent post) rather than allowing problems from paternal neglect to accumulate and thus require expensive remedial measures. 

What are some of the problems that have been traced to paternal neglect?   Psychologists and sociologists have identified a range of emotional disorders, from ADD to autism/Aspberger Spectrum problems to alcohol and drug addiction.   Also, propensity to perpetrate or become a victim of violence has been traced to paternal neglect.  School performance also improves with paternal responsibility for meeting children's needs and declines with paternal neglect.

Some of these may have biological causes related to DNA degradation associated with ""Paternal Age Effect".

To the extent this funding is going to address problems of the children of illegal immigrants, who comprise six percent of Colorado's population, one objection shared earning/shared parenting families may have is to demand for services of illegal immigrants, at below-market rates, being related to paternal neglect.  In other words, in families that are two-earner, but not two-parent, is the lack of responsibility by one parent (usually the father) being carried by the other (usually the mother) who is then hiring illegal immigrants to do some of this work?   Some working mothers who do not have husbands taking half the responsibility may be hiring illegal immigrants for child care and chores?

(e) Conclusion 

On balance the expenditures in the law will help those shared earning/shared parenting families that outsource a lot of child care; those that like to do their own child care may not like it as much.  Many shared earning/shared parenting families may object to the lack of attention in Amendment 66 to the role parental neglect, particularly paternal neglect, may be playing in the need for expenditures to (a) educate children with developmental problems tracing from paternal neglect and (b) educate the children of illegal immigrants who are being employed, at below market rates, to do work that fathers do in shared earning/shared parenting families. 

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Overall Conclusion 

Shared earning/shared parenting families that are married, rather than civil unioned or not married, will likely oppose Amendment 66 because of its tax structure combined with the fictionalizing of joint earned income for married couples for tax measurement purposes, related "marriage penalty" issues and  the continued subsidy to sole breadwinners/stay-at-home parents already built into the Colorado and federal tax system.  

Civil unioned and unmarried shared earning/shared parenting families will face less tax penalty and pay less tax subsidy to sole breadwinners/stay-at-home parents and the structure of a progressive tax works in its best form when applied to them, so the tax structure in and of itself is not likely to be an objection for them. 

In the expenditures, shared earning/shared parenting families who outsource child care will like the ideas of longer school days, all-day kindergarten, and preschool.   Those who like to do more child care themselves will not be as interested in these programs.

Most shared earning/shared parenting families will likely object to the law's failure to get at problems of parental neglect, particularly paternal neglect, however, including how that may relate to (a) causing developmental disabilities in children and (b) demand for services of illegal immigrants.  These problems then in turn cause ever more increasing expenses for the public educational system and do not give children access to the good outcomes they could have if the paternal neglect problem were resolved.
























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