`Marriage Tax' Big Money Again
Nicklaus, David, St Louis Post-Dispatch (MO)
Love, honor, obey - and pay higher taxes.
In the interest of full disclosure, maybe the standard marriage vows need those four extra words.
For as long as we've had a progressive tax system, it has penalized married couples with two incomes. A couple earning $50,000 pays more in taxes than two single people earning $25,000 each. Any time a marriage puts two incomes together, the couple is likely to jump into a higher bracket.
The problem became less severe after 1986, when Congress reduced the number of tax brackets from 14 to three. The so-called marriage tax hasn't gotten much press since then.
But Congress seems to need to tinker with the tax structure every couple of years, and with the 1993 update, we are back up to five brackets, topping out at 39.6 percent.
As a consequence, a recent study by economists Dick Feenberg and Harvey S. Rosen finds, the marriage tax again costs couples big money. The couples getting soaked aren't necessarily high-income, either.
If two single parents making $10,000 apiece get married and file a joint return, their tax bill will go up by $3,717, Feenberg and Rosen say. That's a whopping 18 percent of the couple's income, just for tying the knot.
A pair of $25,000 earners in the same situation would pay just $727 more, a 1.5 percent tax increase. A pair of $300,000 earners would pay $21,627, or 3.6 percent.
Although the marriage tax has been around for decades, it's a greater social concern now than in the "Leave it to Beaver" days of working dads and stay-at-home moms. "If you go back a few years, there were relatively few women who earned incomes," said Feenberg, a former St. Louisan who is on the staff of the National Bureau of Economic Research. "The marriage tax was more of a curiosity than anything else.
"It's big enough to worry about now."
Between 1986 and 1992, Feenberg said, only the very rich faced a big marriage penalty. "Now, we're talking about similar magnitudes of marriage tax on people whose incomes are $18,000 a year," he said.
To have a government policy - in this case the tax code - working against a socially desirable behavior, economists look for where the perverse incentives might show up. …