[CWuestefeld]

A higher marginal tax rate is at most a minor disincentive since you still end up with more overall

That's not necessarily true. As I point out elsewhere, there's much more going on than just ones top marginal rate. I pointed out the discontinuity when one hits AMT.

But also, more topical to this aspect of the argument, is the other expenses involved in employment. It may be that I'm still making 60% of my labor after tax. But in so doing, I also have to forgo the work that I'd been doing myself, and pay someone else to do it.

Most relevant is childcare, since it's something that one can't readily avoid if both spouses are to be employed, and is extremely costly. It's quite possible that the loss to taxes plus the expense of childcare together exceed the potential income of the second spouse. Indeed, I'd guess that is a leading reason for single-income families.

[zweiterlinde]

Yes, you've hit the nail on the head. Especially in the case of dual-income homes, there is a discrete hurdle you must overcome that makes the marginal tax rate misleading. In this context, you have to make $40-50k just to break even. Ouch. And working hard enough to justify a $100k salary to bring home $30k? That's a disincentive, in my book.

Even further, consider the impact that this tax structure has on people deciding to take on debt for higher education (ok, so that's frequently a bad idea anyway, but there have been other discussions about that). A smart single person might well decide to take on $100k (or perhaps even $250k as the law professor seemed to imply) to raise their lifetime earning potential. But then two smart single people get married. They would like to have kids, but what was originally a reasonable investment is now quite a handicap because of the fixed cost + marginal tax cost related to the second income.