Sunday, January 19, 2003

A story published today by the New York Times reports that if politicians of almost every stripe agree so readily about an issue, it is usually worth a closer look.

Such is the case with an important but barely debated component of President Bush's $674 billion tax-cut plan: relief from the "marriage penalty."

As any two-income married couple knows, the marriage penalty kicks in when the husband and wife combine their incomes on a joint tax return and suddenly find themselves in a much higher bracket. A couple who together earn $80,000 owe hundreds more than two singles who each earn $40,000.

Small wonder that Democrats, who have attacked Mr. Bush's overall plan as reckless and overwhelmingly tilted toward the rich, have said virtually nothing about plans to alleviate this problem.

But for all the complaints about the marriage penalty, the current tax code is in many ways heavily biased in favor of married couples, especially those with children. Tens of millions of families actually receive big marriage bonuses, which would become even bigger under Mr. Bush's plan.

In an analysis prepared last week by Deloitte & Touche, the accounting firm, a single person in the income bracket of around $60,000 with no children would owe $7,943 under current law and receive a tax cut of $345 under Mr. Bush's plan.

By contrast, a married couple who have two children and file jointly would pay $3,300 under current law and $2,400 under the Bush plan. Did someone say marriage penalty?

Defenders point out that the married couple have more mouths to feed, more clothes to buy and more house to pay for. But consider the third household: a single mother with one child. She would have to shoulder child-care expenses that a married couple with a stay-at-home parent would not. Yet she would owe $1,800 more than the married couple under current law, and her tax cut would be about half that of the married couple.

The big winners under current law and the Bush plan are the Ozzie and Harriets — married couples with only one breadwinner and two or more children.

Two-income married couples are in some respects the biggest victims of the marriage penalty, and their problems do not disappear under the Bush plan. Single people pay the highest taxes of all, under current law and the Bush plan, though a single person earning $60,000 may still end up paying less than a husband and wife who together earn the same amount.

"The people who are treated the best are families with stay-at-home spouses, who, not surprisingly, are an important constituency for Republicans," said Edward J. McCaffery, a law professor at the University of Southern California and the author of "Taxing Women" (University of Chicago Press).