Filing married raises the threshoholds at which the rates change too, so it's sort of wrong to say one spouse pays purely at the higher rate, because the other spouse is paying at a lower rate overall than they would if filing as a single. It doesn't quite line up if my memory is right, but in essence if $70K income has an effective rate of 22% as a single, $140K income has an effective rate of 22% as married.
The child care credit is rarely an incentive not to work. All income levels get at most 35% and at least 20% of the benefit, which is $3000 for one child and $6000 for two or more (I think, it's been a while since I looked at that code) So even the richest people can get a credit of $600 or $1200 because the phase out (stops once you reach 20%.
Of course, you can always go the DCFSA route and put away $5000 pretax to spend on expenses.
The net tax savings are pretty trivial to high income individuals though.
The childcare argument is not about the tax incentives, it's about paying $20000 a year for care instead of doing it yourself and not working. You'd have to look at the relative incomes of both spouses to determine when it is economically better to forego working, but I'll go ahead and say if you have two high income spouses, it's never advantageous to stop working. At least from a purely economic stand point. From a sanity stand point, and when you realize the one wage earner is functionally reducing their salary by that amount, you start to wonder if working is still worth it.
I'd agree, income tax really does not impact people with existing wealth. You can have $20 million and have zero income, and when you sell off a few capital assets you're paying a long term capital gain rate instead of income tax.
Edited 2 time(s). Last edit at 05/03/2017 10:31AM by zannon.