For a long time, Republicans have been screaming about a "marriage penalty" in the income tax system. They've never explained it, of course, because they don't want people to know the truth. Even worse, recent events show that despite their hollering, they actually like marriage penalties.Back in the "old days" when women made up an insignificant percentage of the workforce, and those women who did work generally earned far less than men, the tax system was designed to reflect that fact. Specifically, it assumed that a joint tax return showed a total income that was primarily (or totally) earned by the husband.
For instance, if the joint return showed a combined income of (in today's terms) $100,000, it was assumed that the husband earned almost all of it. So the deductions and tax rates were designed to benefit the couple in that situation. After all, if they were unmarried and he earned (let's say) $85,000 and she earned $15,000, she would pay almost no income tax while he would pay a lot. The tax system actually rewarded marriage by allowing them to combine their income and pay what amounted to a lower tax than the combined total they would pay if they were separate.
The problem with that system would be if it didn't adjust to the fact that women now earn far more than they used to. But it did, eventually.
For example, a combined income of $100,000 may reflect a 50-50 split. If this had happened in 2003 and the couple had simply used the standard deduction, they would actually get a "marriage savings" of $506. That's right, a marriage savings!
If, however, let's say they're a more "old-fashioned" couple where he works full time and earns $85,000, and she works part time and earns $15,000. In that case, the marriage savings would be $3,688!
In other words, the greater the difference in incomes, the greater the savings earned for being married!
This is, of course, a ridiculously simplistic example. Many people have investment income. Many couples also itemize their deductions, which can cut into the marriage savings. Also, different income levels will show different results. The basic fact, however, is that there is rarely a marriage penalty any more.
So why are so many people still complaining about a "marriage penalty"? Perhaps it's because perception often lags behind reality. Perhaps it's because the Republican propagandists don't want the truth to get out. Probably, it's a combination of both.
So what recent event demonstrates that the Republicans like marriage penalties? The recent Medicare drug law does just that. Under the law, elderly people may qualify for drug benefits this year, but only if their earnings fall under a strict limit. For single people, that limit is $12,569. For married couples, however, that limit is $16,862 -- an $8,000 marriage penalty.
Perhaps the Republicans don't like marriage after all. Or perhaps they just don't like old people.
Copyright 2004, Dan Jacoby
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