Where Congress's attack on alimony tax exclusion came from: Both sides' explanations insufficient, not reality-based. Here's what we know:

The House-passed GOP tax bill shifts the tax burden on alimony from alimony payors to recipients. I.e., about 97% of the time, from divorced women to divorced men, who we all assume are in higher tax brackets than their exes. Currently, alimony is considered part of the recipient's taxable income, and not the payor's. The change would affect alimomy from post-2017 court orders or agreements, including modifications of earlier orders.(There's one feature of the bill that's completely good, and apparently not controversial: Including alimony payments pursuant to a written marital agreement, with no court order, in the definition of alimony.)

 It's important to sometimes pause from a search for subtle "incentives" and subliminal effects, and remind ourselves what the most basic and obvious effect of a policy change is: In this case, taxing men instead of women on tens of thousands, sometimes over $100,000, of annual income. Alimony is all or most of many divorced women's incomes, and can already take a very large fraction of some men's incomes. Virginia's guidelines call for at least 28% of a breadwinner's gross income as alimony to a non-working spouse, and that's before child support, and before any deductions from his paycheck for taxes, social security, etc. 

Lawyers, journalists and even the National Organization for Women have attacked the proposal, not for being anti-male, but for changing the law's current incentive for men to agree to pay alimony, and thus reducing the amount of alimony women would get. The change probably would have that effect, but that whole argument probably only occurred to them because this is a Republican proposal and it fits the narrative of a GOP "War on Women". Ordinarily, women's groups would be all for something that shifts divorce women's tax burdens wholesale onto their exes.

Blogger Stuart Levine, and many columnists quoting him, including Kevin Drum at the usually more thorough Mother Jones, have really only speculated about why anyone would want to do such a thing. Liberal writers and the supposably* conservative proponents of the change seem to share the mutually convenient illusion that this is an attack on divorce, on behalf of Christian morality. But that simply has nothing to do with how divorce, alimony or taxes actually work. The GOP Ways & Means Committee Summary says only this on behalf of the change:

• The provision would eliminate what is effectively a “divorce subsidy” under current law, in that a divorced couple can often achieve a better tax result for payments between them than a married couple can.
• ... spousal support as a consequence of a divorce or separation should have the same tax treatment as the provision of spousal support within the context of a married couple, as well as the provision of child support.
• ... the provision would increase revenues by $8.3 billion over 2018-27.

Frankly, living as close to Republican Washington as I do, it sounds like a young staffer who doesn't know anyone who pays alimony, who hasn't been invovled in a divorce, and just recently got off the parental  tax returns and started filing form 1040-EZ, was thrown mysterious, possibly garbled instructions for changing something about alimony taxation, and was given 15 minutes to come up with some Republican-sounding arguments for it. But actually, the proposal was part of an early-2014 "Tax Reform Act" introduced by former Ways & Means chair Rep. Dave Camp, now retired,  and the arguments above are repeated verbatim from the Committee Summary of that bill. 

The "subsidy" argument, to the extent that it's either launched or received as an attempt to discourage divorce, partakes of the long-standing and totally wrongheaded assumption that "a couple" decides to get divorced, and may be incentivized, rewarded or punished for doing so. This dates back to the early days of no-fault divorce reform, when reformers picked the most compelling poster-children, decent people who both wanted to divorce but who were caged in "Holy Deadlock" by laws that denied them a divorce even when they both wanted one. Some conservatives and moralists, being apparently unfamiliar with divorce, and gullible about letting their opponents pick the battlefield and define its terms, compliantly responded that these couples were hastily giving up on their marriage and should be incentivized, restricted, counseled, and/or made to wait to see if it's what "they" really wanted. And whenever any change to loosen or tighten divorce laws is proposed, the same old arguments are dusted off, even though divorce decisions have long been unilateral and the proposed changes hardly ever would affect the "poster children" whom the arguments describe. 

Individuals decide to divorce, pay taxes after divorce, and might or might not respond to incentives. Couples don't and can't.

The Committee's equality-based argument is even more surreal. Spousal support after separation or divorce is very different from what the Committee refers to as "spousal support within the context of a married couple", which it says should receive the same tax treatment. Uh, a married couple that isn't separated lives together as a family and an economic unit, and doesn't pay support checks to each other. And they can't get "the same tax treatment", because a married couple files taxes jointly or as the very disadvantageous "married filing separately", while divorced people file as single, or jointly with their new spouses. Again, this sounds like college debaters grasping for arguments about parts of adult life that they know nor care nothing about. 

 Here's what might have led to this: Veteran Congressman Lloyd Doggett D-TX last year was pushing a plan to require 1099s for alimony payments, citing a Treasury study showing about $2.3 billion a year in alimony excluded from payors' income but never reported by recipients. He wanted to use the revenue it gleaned to help states improve their foster care systems."He has been discussing the issue with Ways and Means Chairman Kevin Brady," Congressional Quarterly Roll Call reported. Perhaps the drafters set out to do what Doggett proposed, then realized that it would be simpler, cheaper, and revenue-positive to eliminate the tax code's recognition of alimony entirely, and seized on the 2014 proposal and arguments. It's probably the pet project of one Ways & Means member or staffer who's been there since Camp was Chair.

But where are the deeper, more extensive arguments that ordinarily would lead to something like this? To find out I traced backwards from the only article I found in favor of the change, "A Human Capital Theory of Alimony and Tax", by feminist law professor  Tessa Davis in the  George Mason Law Review. The only part of it I've thoroughly read is its abstract, every word of which is totally wrong, except for the stuff about "Family Law Theory", the entire posited existence of which is not only wrong, but should not be conceiveable in a rational world where people care about the real-life effects of anything. Even to utter its name, silently to oneself,  throws down a gauntlet and crosses a Rubicon into a world where mere Families and Laws will henceforth be trivial playthings in the tiny hands of academic Theories and their adepts and familiars.

And yet I cannot help but admire Davis for having the monumental audacity to claim to speak for "a scholarly consensus" in favor of some kind of fundamental change. She cites only two previous proposals for tax law to disregard alimony: Rep. Camp's 2014 bill, and Donald H. Berman, "The Alimony Deduction: Time to Slaughter the Sacred Cow," 4 Am. J. of Tax Pol’y 49 (1985). Berman called the exclusion "inequitable, complex and arbitrary", and above all, unnecessary now that marginal tax rates had declined from a healthy, vigorous 91% to a negligible 50%. More of the history of dissent from the current regime can be learned from another, very solid, article Davis cites, Deborah Geier, "Simplifying and Rationalizing the Federal Income Tax Law Applicable to Transfers in Divorce," 55 TAX LAWYER 363 (2001).  It recounts that in the mid-1980s, Senate Finance Committee staffers proposed totally eliminating the alimony exclusion. They tried to rally women's groups to their side. The ultimate results they got, and possibly what they were aiming for all along, were incremental restrictions that may have helped increase revenue and predictability.  (Id., pp. 404-406.)  The article advocates letting couples choose who'll pay the taxes on any forms of support or property transfers, with a default rule that the recipient has to pay them. It cites a very similar proposal, Laurie L. Malman, "Unfinished Reform: The Tax Consequences of Divorce," 61 N.Y.U. L. REV. 363, 367 (1986).

 Davis's own argument is that alimony in a divorce is mostly viewed as compensation for "human capital," or return on investment or compensation for loss, none of which are taxed, and that any distinction between it and property transfers is artificial. (See pp. 50-55 of her article, downloadable from the abstract web page.) (Malman made similar arguments for her free-choice proposal.)

But the problem is, normal alimony, the kind that qualifies for the tax exclusion, almost always comes directly from someone's income -- where, unlike property, it get taxed if the Code doesn't exclude it -- and goes to provide income for someone else. The IRS has established clear, easily-followed boundaries between regular alimony and non-qualifying lump-sums that are more like property division. And in real alimony negotiations and trials, alimony is almost totally based on income -- needs and ability to pay. Yes, decisions are sometimes influenced by arguments about spouses' contributions to the marriage, but when statutes,  judges and litigants look at women having sacrificed their own careers for the sake of a husband's career or to raise children, their point is that the women have a legitimate reason for needing supplemental income, and that it may take time for them to wholly or partly "rehabilitate" their earning potential.

Once again, this time on the left, the theorists are looking at the subtler reasons for alimony and missing what it obviously IS and what it's almost always FOR in real life.

 

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* "Supposably" is a real word. It's from Seinfeld.