Government Subsidizes Cohabitation by Michael J. McManus

Here's a long but significant quote from an article by columnist Michael J. McManus posted at Virtueonline.org: However, did you know that the government is subsidizing cohabitation for low income people, which fuels its growth? A rule of economics is that whatever is subsidized, will grow. For example, if a man in California working full time at $7 an hour cohabits with a woman working half-time at the same pay, their combined monthly income is $1,820. However, if she has two children the government supplements her income by $196 a month in an Earned Income Tax Credit (EITC). She also receives $440 a month in welfare, $114 in food stamps and a big $662 monthly in housing subsidy. Including other subsidies, her monthly income is $2,106, yet she pays no taxes. In fact, her EITC comes from the IRS. By contrast, her live-in boy friend earns $1,213 a month, receives no subsidies, pays $157 a month in taxes and, as the father of her children, pays $200 in child support. That reduces his income to $857; however combined with her income and other subsidies, the couple has an income of $2,963 a month if they are cohabiting, and don't report it to the IRS. What if they marry? First, they lose her $440 welfare check and their food stamp allotment is cut from $114 to $68 a month. The housing subsidy drops from $662 to $445, and the EITC falls Why? The government assumes her need is less since she has access to his earned income. However, if they are living together, she already has access to that income. The bottom line is that if the cohabiting couple marries, even though he no longer pays child support, their combined income will drop from $2,963 a month to $2,552. Their annual income falls from or $35,556 a year to $30,624. Thus, government is paying this couple $5,000 a year NOT to marry.