Unmarried Americans and President Bush's Tax Plan

bd10267_.gif (311 bytes)  Income Tax Reform

Under the tax bill sponsored by President George W. Bush (S-35), everyone who pays income taxes will get some relief, regardless of marital status or family status.

The plan's primary feature is to reduce personal income tax rates and combine five current tiers of rates into four. Today's rates are 39.6 percent, 36 percent, 31 percent, 28 percent and 15 percent. New rates would drop to 33 percent, 25 percent, 15 percent and 10 percent.

The bottom 10 percent rate, which applies to at least some of the money of all earners, would affect the first $6,000 of taxable income for singles, the first $10,000 for single parents, and the first $12,000 for married couples.

The $500 per child tax credit would double to $1,000. The extra savings would be exempted from calculations used to determine whether families must pay the alternative minimum tax. The credit now phases out at $75,000 for single parents and $110,000 for couples; it would instead phase out at $200,000 for both.

Therefore, under the Bush plan, unmarried taxpayers without children, as well as those with children, will save on their income tax bills, some more than others.

bd10267_.gif (311 bytes) Death Tax Reform

Under the Bush plan, the estate tax would be eliminated. Currently, it is levied when a person dies and transfers an estate worth at least $675,000, an amount that will rise to $1 million in 2006. However, current law does not impose tax when assets are left to a surviving spouse. In contrast, transfers from a single parent to a child or from a domestic partner to his or her survivor are taxed.

The Bush plan would repeal the estate tax and the gift tax for gifts made and decedents dying after 2008. Until then, each of the estate and gift tax rates would drop by 5 percentage points for 2002 and 2003, 10 percentage points for 2004, 15 percentage points for 2005, 20 percentage points for 2006, 30 percentage points for 2007, and 40 percentage points for 2008. So, for example, for estates of decedents dying in 2006, the current 37% estate tax rate would drop to 17% and the 55% rate would drop to 35%. After 2008, there would be no estate or gift tax.

Repeal of the so-called "death tax" would put asset transfers to unmarried people on the same par with transfers to surviving spouses because there would be no tax. Since this would help gays and lesbians who cannot legally marry, both the Log Cabin Republicans and the National Stonewall Democratic Federation support repeal of the death tax.

Whatever your other politics are on this issue may be, the current system perpetuates marital status discrimination, and gives preferential treatment to spouses over all other relationships, including parent-child, siblings, or domestic partners. 









bd10267_.gif (311 bytes)  Social Security Tax Reform

During the presidential campaign, George W. Bush proposed that the social security benefits fund be partially privatized. He wants younger workers to be able to take a small portion of the employment taxes now deducted from their paychecks and be allowed to invest them in private accounts which they would own.

This may have considerable appeal to unmarried workers who are currently cheated by the current program because they pay the same taxes as married workers but receive fewer benefits in the long run.

According to a Rand Corporation study, since most African-American adults are unmarried and because their life span is shorter overall, whites consistently earn higher rates of return than do blacks. Over a lifetime, the income transfer from blacks to whites is as much as $10,000.

Rand says that an unmarried, low-income black male born after 1959 will now get a negative rate of return on what he puts into Social Security. If he could privately invest that money, he’d gain nearly $100,000 over what he put in. He could then use it as he wishes, including passing it on to his heirs. It wouldn’t disappear when he dies.

bd10267_.gif (311 bytes) Democrats Target "Working Families"

Some Democrats, such as Senator Joe Lieberman favor "marriage neutrality" in the tax codes. But other Democratic leaders in Congress have taken a different approach. They want tax relief that is targeted to "working families."

That is why the primary Democratic tax reform bill in the Senate (S-9) is entitled the "Working Family Tax Relief Act of 2001". Why not the "Working People Tax Relief Act?"

And a bill (S-8) of Senate Democrats to increase the minimum wage is called the "Enhancing Economic Security for America's Working Families Act". Since most minimum wage earners are single, why all the focus on "working families" in a bill to raise the minimum wage?

With 44% of Democrats being unmarried, and with many of them being single workers without children, it seems odd that Democratic leaders in Congress would ignore unmarried taxpayers. One would think that the Democratic Party would have learned to broaden its outreach and its message considering that Al Gore’s campaign strategy of focusing exclusively on "working families" to the exclusion of single and unmarried voters did not win him the presidency.