Tax codes, by design, should strive for fairness, efficiency, and adaptability to societal shifts. However, historically, tax policies have often reinforced gender roles, reflecting societal norms that assumed a traditional, single-income household structure. While these codes may appear gender-neutral, their effects have perpetuated gender disparities, especially in dual-income households and among those balancing paid and unpaid work. As modern families and workforce dynamics evolve, the tax code’s alignment with traditional gender roles presents a pressing need for reform to promote fairness and economic equality.
Pay Gap and the Tax Code
According to the Pew Research Center study, women earn about 82 cents for every dollar men earn. This pay disparity directly influences women’s tax liabilities, as lower wages result in lower overall tax burdens. However, while this may seem to benefit women in the short term, after marriage, they have to bear what is known as the “Marriage Penalty.”
Although both spouses’ incomes are taxed together, the system disproportionately affects dual-income households, where one spouse, typically the woman, is penalized for entering or remaining in the workforce. For married couples with both partners working, the U.S. tax code applies higher marginal tax rates on the combined income, impacting the “second earner” more heavily than it would if they were taxed as individuals.
Caregiving Disadvantage
The U.S. tax code has significant implications for women’s role in caregiving, a responsibility that disproportionately falls on women. According to a 2020 report from the AARP, nearly 60% of family caregivers are women, and they are more likely to provide care for extended periods of time. Tax policies have not evolved sufficiently to recognize the economic contribution of caregiving, leaving many women financially strained.
The lack of tax breaks for unpaid caregiving also means that women who leave the workforce to care for family members—whether children or aging parents—face a compounding financial disadvantage.
While neutral in theory, the U.S. tax code has far-reaching effects on women’s financial well-being. Women face unique challenges navigating the tax system, from wage disparities to caregiving responsibilities and tax deductions.
However, with Donald Trump’s election as the new president of the USA, the ruling government may introduce a 15% tax rate cut and other changes in the tax code, which might help ease the financial strain on women.