Newspaper article St Louis Post-Dispatch (MO)

There's No Easy Way to Erase `Marriage Tax'

Newspaper article St Louis Post-Dispatch (MO)

There's No Easy Way to Erase `Marriage Tax'

Article excerpt

During the election, the Republicans promised to repeal what they called the unfair and unconscionable "marriage tax." That's the extra tax that most married working couples pay, compared with two singles who earn the same income.

As an example, take Sally and Joe, each with taxable incomes of $25,000. As singles, they pay $3,965 apiece in federal taxes. If they marry they pay a joint tax of $8,930. That's $1,000 more.

But the dream of repeal has shrunk to a symbol, in legislation working its way through the House of Representatives. A symbol worth just a few bucks a month to most working couples but $2 billion or more a year to the federal budget. Deficit hawks should say no thanks.

What's more, this bill overlooks the marriage bonus that one-earner couples enjoy - which is equally unfair. Here are the rules that tell you whether you're helped or hurt by the way today's tax system deals with marriage:

A penalty for working couples, like Sally and Joe above. Around 52 percent of all married couples pay some sort of penalty, according to Harvey Rosen of Princeton University and Daniel Feenberg of the National Bureau of Economic Research (their study used itemized deductions and made a bunch of other assumptions).

An even bigger penalty on low-earning workers who marry, especially if they have children. Take a single mother of two, earning $10,000. On her own, she gets the maximum credit of about $3,000 this year. If she marries a man earning $15,000, however, her credit drops to $200 - because it's phased out as incomes rise.

A bonus for one-earner families or where one spouse earns pin money. If Joe is at $50,000 and Sally earns nothing, his tax drops from $10,965 as a single to $8,930 as a married man - a savings of $2,035. Around 38 percent of taxpaying couples now collect this marriage bonus, Rosen and Feenberg believe. Middle-income families fall into this happy category if the major breadwinner earns at least 84 percent of the joint income, says Tom Ochsenschlager, a partner in the accounting firm, Grant Thornton.

A big rap on most singles. Their taxes are higher than those of couples with exactly the same income. …

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