With his state of the union address completed, President Obama has proposed another set of taxes that will surely rile up a lot of people (http://www.npr.org/2015/01/20/378680818/transcript-president-obamas-state-of-the-union-address). Besides the ever-popular attacks on investments and rich people, the president also mentioned a new tax credit aimed at “second-earners” in a family. I think this may constitute an attack on families where one partner decides to drop out of the workforce or work part time for some reason, say to care for children or an aging parent. Take two families making $60,000 a year: in one family a mother works full-time for an employer and in the other she does not. Under Obama’s plan, the first couple receives a large child-care credit and a new second-earner credit. The second couple does not — and so pays higher taxes than the first one. This in fact encourages families to abandon their hope of staying home with their children and penalizes them if they do decide to stay home.
On the other side of the equation are employers. Hiring managers may be excited about the prospect of this “second-earner” credit because it gives these people an incentive to actively join the job recruiting pool. Much like the Work Opportunity Tax Credit (http://www.doleta.gov/business/incentives/opptax/) encourages employers to hire individuals from certain target groups; hiring managers could use the “second-earner” credit to their advantage to recruit more qualified individuals into their companies.
What do you think? Does the second-earner credit punish those who wish not to actively seek work for whatever reason? Could employers use this to their advantage to lure hesitant workers into the recruiting pool? What other perverse incentives could arise from using this tax credit to influence a person’s decision to stay home?