When I was looking up my new fave show I also took a look at the IMDB page. This is the Hollywood database that breaks down all the characters and episodes etc.
Well, they have a spot where they put factual errors that take place in the show. This is what it said for Arrested Development:
Factual errors: A relationship between first cousins, as played out in the "taboo" relationship between George-Michael and Maeby, is not, in fact, incestuous. First cousin is the closest rank of blood relationships that is not incestuous. A relationship with anyone in the direct line (one's parents, grandparents, children, grandchildren, etc.) is incestuous. In the collateral line, only the first and second degree (one's siblings and one's parents' siblings, IE, one's aunts and uncles) are incestuous. Their offspring (which would be one's nieces, nephews and first cousins) constitute the first degree of blood relation that is not incestuous, along with every degree of removal after them.
OK... What I want to know is HOW does this person know this? Maybe the person his/herself is having a cousin-to-cousin relationship? Because really, even if it isn't technically "incest" it's still creepy as hell! Funny on the show... but creepy in real life. Down with flipper babies!