Domestic Diversions

Women’s loss is government’s gain: the last year of alimony deductibility

The ABA notes the tax law change eliminating the deduction for spousal support (alimony) payers, something around for the last 8 decades. The change is effective at the end of this year (2018). The practical effect in divorces was to facilitate income-sharing from the highly compensated spouse to the economically vulnerable spouse (usually the wife and often a mother who sacrificed career and income for the family).

Debra Cassens Weiss writes (excerpt):
“The repeal reduces the bargaining power of vulnerable spouses, mostly women, in achieving financial stability after a divorce,” Vertz told Politico.
Elimination of the deduction will lead to higher revenues overall for the government because the person who deducted the alimony was likely in a higher tax bracket than the spouse declaring the alimony as income, Morningstar says. Eliminating the deduction could also push the alimony payer into a higher tax bracket.

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