Taxes raise revenue. That’s why we have them. But we implement them for at least four secondary reasons as well.
Taxes serve as a disincentive (e.g., gasoline tax); as punishment (e.g., sin taxes on alcohol and cigarettes); as a user fee (e.g., property taxes); as a source of revenue that’s easy to administer (e.g., sales taxes).
There's one tax that would raise revenue and meet all four of the secondary reasons that drive taxation. It ought to be on the plate of every innovative legislator, but apparently has never even been considered.
A divorce tax.
A divorce tax would raise substantial revenue in an area that sorely needs it. In my home state (Michigan), approximately 50,000 divorce suits are filed annually. Divorce and related actions (child custody, child support, alimony) account for the greatest burden on the harassed civil courts in Michigan and the rest of the nation.
To justly alleviate the burden of divorces, I would propose an “estate tax” that is calculated as a percentage of the divorcing couple’s estate. If a couple, for instance, has $100,000 worth of assets, and the tax is levied at 4%, the tax would equal $4,000. I also propose exempting poor estates under $15,000, if the couple has a combined annual gross income under $40,000. I'm guessing that 40% of the divorces would be exempt, and the average taxable divorce would have an estate of about $40,000, which would result in a $1,600 divorce tax. When multiplied by the estimated number of non-exempt divorces in Michigan (30,000), the tax would raise $48,000,000 for Michigan courts. If merely half of this amount were pumped back into the court system, each Michigan county would receive, on average, nearly $300,000 per year, which could be used to hire judges and clerks to relieve our harassed court personnel. These dollar figures, of course, would vary from state to state, but I believe Michigan offers a good example of what could take place in all fifty states.
The divorce tax is also a disincentive. We don’t expect people to sell their cars because of the gasoline tax, but we hope to send a message that driving is bad for the environment and our national resources. The divorce tax would do a similar thing: act as a disincentive, but reasonable enough to preserve people’s freedom to get a divorce if they so choose.
It also acts as a sin tax. We hope people will stay away from booze and cigarettes because they take a high toll on people’s lives, so we tax them hard. The same is justified for divorce. Probably more so, when you consider the harm divorce inflicts on children.
The divorce tax would also act as a user fee. We can’t shut the barn door on divorce itself, but we can be honest about it being the result of a bad personal decision. The effects of divorce ripple through society, and we can’t prevent most of them, but we shouldn’t have to pay the tremendous overhead of others' bad decisions. Let the users of the divorce courts pay the bulk of the money to fund them.
Finally, and perhaps most alluringly, the divorce tax would be easy to administer. Its administration would be similar to death taxes. When a person dies, many states prohibit the courts from closing the probate estate until the executor receives tax clearance from the state's treasury department.
The same could be done with divorces and, even better, there’s a “self-policing” mechanism in divorces. In probate, neither the state nor the local court knows if the executor is omitting or under-valuing assets. But in a divorce, the husband and wife are often battling over the property settlement. Both want to make sure everything gets put on the table. As long as the rate is modest, like 4%, couples won’t hide assets for purposes of avoiding the tax, except maybe in friendly divorces (which, contrary to popular opinion, are rare). After the property settlement is done, a copy of the settlement would be sent to the state treasury department with a check for the divorce tax, the couple would receive a tax clearance certificate, and the divorce judgment could be entered.
To the best of my knowledge, the prospect of a divorce tax has never been raised. It would be a big issue, and this article is merely an opening shot, an attempt to get the concept into the marketplace of ideas. A lot of issues would need to be worked out and discussed: Do we tax the gross or net estate? Do we give couples a deduction for amounts paid in marriage counseling? Should retirement benefits receive special treatment? What adverse effects could it have (is it an incentive to shack up)?
In any event, it’s a fair and appropriate tax: It would raise revenue for sorely-underfunded family law courts. It applies only to those who use the divorce court system. It discourages and punishes harmful conduct. It’s easy to administer.
We live in a Christian culture that has always regarded divorce as a bad thing. All churches, in the words of C.S. Lewis, “regard divorce as something like cutting up a living body” and they “are all agreed that it is more like having both of your legs cut off than it is like dissolving a business partnership.”
Lewis wrote those words in the 1940s, well before the sexual revolution spread the leprosy of divorce across our culture. Today, divorce is not only bad, but also a major societal problem.
The only question is, are any legislators brave enough to step up and treat it like a problem?
© Copyright 2005 Catholic Exchange
Eric Scheske is an attorney, the editor of The Wednesday Eudemon, a contributing editor of Godspy, and the former editor of Gilbert Magazine. You can view his work at a www.ericscheske.com .
