|Thursday, August 31, 2000
Columnist proposes a simple solution to
end marriage bonuses and penalties in the income tax code
Today's edition of the San
Francisco Chronicle carried a commentary suggesting a solution to the marriage-penalty and
marriage-bonus quagmire of the federal tax code. The column was written by Maya
MacGuineas, a fellow at the New America Foundation, a nonpartisan think tank in
She says that President Clinton was right to veto
the marriage penalty legislation Congress sent to him, but not for the reasons he stated.
The chief problem with the bill is not that it is too expensive or slanted toward
wealthier couples, but that it leaves much of the unfair penalty in place. At the same
time, it actually increases the rarely discussed marriage bonus.
MacGuineas argues that the marriage bonus, the one that
almost 50 percent of married couples receive for no reason other than marital status and
is just as unfair as the marriage penalty. The exaggerated rhetoric on the topic of
marriage and taxes leaves many couples bemoaning their penalty, when actually they pay
less in taxes than they would if single. The legislation vetoed by the White House
addresses only half the problem, while making the other half worse.
According to MacGuineas, both
marriage penalties and bonuses are the unintended consequences of a complicated tax system
that tries to balance often- conflicting goals. The combination of progressive taxation,
where higher incomes are taxed at higher rates and taxing married couples as a single unit
leads to inequities in the treatment of couples and singles. The resulting peculiarity is
that almost all married couples face different tax liabilities than they would if they
were earning the same amount but were single.
Far from punishing all married couples, this arrangement
creates almost as many winners as it does losers. MacGuineas gives the example of an
individual earning $70,000 who marries a spouse who does not work. The couple's standard
deduction increases from the $4,400 deduction for singles to the $7,350 joint deduction.
They also qualify for a second personal exemption and wider tax brackets applied to the
same single income. All these changes allow more of the worker's income to be taxed at a
lower rate. Merely by qualifying as married filers, the couple receives about $4,000 in
Since couples are treated the same in terms of taxes, their
taxes are the same as for another married couple with two earners making $35,000 apiece.
This dual-earner couple is penalized by the joint standard deduction, which is less than
double the single deduction, and progressive taxation, which pushes more of their combined
income into a higher tax bracket. As a result, they pay roughly $1,500 extra in taxes.
MacGuineas does not understand why taxpayers should pay
either more or less based on their decision to wed -- yet almost all of them do. The
Treasury estimates that while 25 million couples are hit with an average annual penalty of
$1,100, 21 million couples receive bonuses of a slightly greater amount.
She says that if Congress is
serious about addressing tax unfairness, it has chosen a poor strategy to eliminate the
marriage penalty. The bill sent to the president increases the standard deduction and
widens some income tax brackets for joint filers to eliminate part of the penalty. But not
only do these changes fail to remove the penalty entirely, they further reduce taxes for
those couples already receiving bonuses.
The $70,000 single-earner couple would receive an
additional bonus on top of their $4,000 tax break. MacGuineas says this is hardly an
improvement in tax fairness -- particularly at a price tag of $290 billion over the next
10 years, much of which would go to those not being penalized.
MacGuineas suggests that a better approach, and one used in
most developed countries, would be simply to tax individuals rather than couples. Under
such a system, individuals earning the same incomes would pay the same in taxes, and their
liabilities would remain unchanged by marriage.
Addressing a failure of the current legislation, individual
taxation would fully eliminate all marriage penalties. And in keeping with principles of
fairness, undeserved marriage bonuses would be removed as well. By wiping out both
penalties and bonuses, individual taxation would be far less expensive than the current
proposal, costing virtually nothing to the Treasury.
As MacGuineas points out in the
column, changing the tax code is always challenging, because taxpayers are suspicious that
benefits will accrue to someone else at their expense.
If Congress successfully overrides the president's veto, as
it will surely attempt to do, singles will certainly have cause to complain. If the goal
of marriage penalty legislation is to rid the tax code of unfair treatment of married
couples, it will not be achieved by doling out tax cuts indiscriminately to married
couples whether or not they are penalized.
On the other hand, taxing individuals would simplify the
tax code while ridding it of unjustifiable marriage penalties and subsidies alike.
MacGuineas warns that if Congress chooses to move forward
with its boon for married couples, it should brace itself for the ensuing flood of
complaints about the resulting ``singles tax penalty.''
National marriage poll shows voters want politicians to strengthen the family
A story published today by Fox News reports that a new study by
Alliance for Marriage, a non-partisan, interfaith coalition, found registered voters from
different parties favor initiatives intended to strengthen the American family.
Among the results of the Wirthlin National Marriage Poll of more
than 1,000 registered Republicans, Democrats and independents: Nearly 60 percent view the
state of the family as "not strong"; 64 percent said strengthening families is
more important than increasing job opportunities; and 77 percent said strengthening
families is more important than creating a cleaner environment.
"What the poll found was that there is a high degree of
consensus among Americans which cuts right along party and ideological lines on the
importance of family," said Matt Daniels, executive director of Alliance for
While "family values" is a campaign battle-cry usually
associated with the Republican Party, the Gore-Lieberman campaign has stressed the message
for weeks. Gore's passionate embrace of wife Tipper during the Democratic convention and
Lieberman's emphasis on faith and morality have made headlines.
The Wirthlin poll also gauged voter support for "initiatives to
strengthen families." Eighty-seven percent said they favored encouraging businesses
"to offer flex-time / job-sharing / home-based work options," while 80 percent
support "recognizing and acknowledging the media when they accurately reflect or
portray the positive influence of marriage on the lives of adults and children."
Some 78 percent approve "requiring counseling to married
couples with children" before allowing a divorce, while 76 percent support
"decreasing taxes for married couples with children" and 63 percent approve of
"increasing tax incentives for adoptions."
The results are not surprising, said Karlyn Bowman, a resident
fellow at the American Enterprise Institute who studies public opinion and politics.
She observed that two-thirds of the electorate is married.
"Things like marriages and mortgages and families bring you into the voting
booth," Bowman added.
"You have more of a stake in society. In that sense, paying
attention to their views is very, very important."
AASP sent a letter to the author of this article, encouraging the
editors at Fox News to bring some balance to the news by writing something about the
concerns of single voters. To read that letter, click here.