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The Terrible Economics of Dual Income Print E-mail
Personal Finance - Taxes
Written by Omie Ismail   
Article Index
The Terrible Economics of Dual Income
Dual Income Tax Rates
Other Expenses
Unintended Consequences
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Many families understand all too well the burden of having two working parents. Any debate over whether one parent should stay home needs to include an analysis of tax implications. Of course, some households don't have the luxury of engaging in this debate - two paychecks are needed to support the family and they simply can't get by without the extra income. But federal and state tax laws penalize dual income households at such a high rate that when the additional costs of commuting, childcare, and work-related expenses are factored in, many families might discover that the second income is just not worth the hassle.

There are non-monetary reasons and long term economic considerations that factor into this debate but are beyond the scope of this article. There are certainly advantages of dual income families. The spouse that continues to work may have a career that requires working at least part time during early child years. Some people simply enjoy working and can't handle the demands of 24/7 parenting chores. Also, there is always the unspoken fear of a divorce or breakup that compels many women to stay engaged in their careers.

Work experience counts and re-entering the job market after years of absence is difficult and often obliges you to resume climbing the career ladder from the first step. The second job may provide better healthcare than the primary one and there may be long term consequences for leaving the workforce - even for a few years. Even in these uncertain economic times, the probability of both parents losing their job is still remote. With only one parent working, all the bets are placed on one work horse.

Still, when it comes down to household cash flow, the short-term economics of both parents working are driven primarily by tax policy and the ever increasing cost of childcare.

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