[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.