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About 3.5 million unmarried opposite-sex couples are living together in the United States today, up from 2 million a decade ago. If you think this is merely an explosion of passionate anti-authoritarianism, guess again: Many of the couples who are joining the boom may simply be making a sound fiscal decision.

Some observers link the widespread acceptance of cohabitation with recognition that the economics of marriage are often unfavorable. To begin with, there's a 50 percent chance that a marriage will fail, and divorce is expensive. Beyond that, tax laws and other government policies -- in a country that says it wants strong families -- may actually be discouraging marriage.

It's well known that the poor are often victims of tax and government-benefit marriage penalties. When marriage reduces welfare eligibility, many decide against it. In addition, as Joseph Spiers notes in Fortune (July 11, 1994), married low-wage workers may be at an income-tax disadvantage. For example, the standard deduction and Earned Income Tax Credit are often lower for working couples than for two singles. Spiers concludes that 'the task of welfare reform might get easier if government first removes this disincentive to build stable families.'

The problem persists higher up on the economic ladder, too. In Forbes (May 22, 1995), Janet Novack describes tax penalties that affect well-to-do couples, including income taxes higher than singles pay and business expense ceilings that don't double for marrieds. '[Had] Congress set about to create a tax code to encourage people to avoid marriage, it could scarcely have done a better job,' says Novack. She concludes: 'We hate to say it, but if you are a prosperous person contemplating marriage with a well-heeled partner, maybe you should forget the ceremony and just move in together.'

Middle-aged couples of more modest means face another hurdle if either partner is divorced or widowed and has college-age children. Colleges routinely include stepparents' income in calculating whether a student will receive financial aid and, if so, how much. This forces potential stepparents to take on burdensome responsibilities for children who are not their own, and it may result in the denial of aid. Divorced parents have to decide between remarriage and their children's education.



In the American Association of Retired Persons magazine Modern Maturity (May/June 1995), Linda Stern describes the various marriage and remarriage penalties that threaten older people: Social Security earnings limits, capital gains exclusions on home sales, and Medicaid eligibility limits, for example. As a result, unmarried couples quietly move in together and enjoy companionship, while long-married couples sometimes divorce in order to avoid financial disaster.

Are these penalties causing cohabitation? It's impossible to say for sure, but the fact that older couples are an important part of the boom suggests a connection. 'The Census Bureau estimates that the percentage of cohabiting unmarried couples has doubled since 1980, and older couples are keeping pace,' writes Stern. 'In 1993 some 416,000 couples reported that they were unmarried, living together, and over 45. That compares with 228,000 who fit the description in 1980.' And in the New York Times (July 6, 1995), Jennifer Steinhauer reports on the research of Professor Larry Bumpass of the University of Wisconsin, who found that the biggest increase in couples choosing to live together was not among twentysomethings, but among people over 35. Bumpass found that 49 percent of his subjects between 35 and 39 are living with someone, up from 34 percent in the late 1980s. Among people 50 to 54, the practice has doubled. Using data from his survey, Bumpass showed that only a small segment of people disapprove of cohabitation and sex outside marriage. He concluded that 'the trends we have been observing are very likely to continue, with a declining emphasis on marriage.'