Marriage penalty? Who are they kidding? I was filling out my tax return last weekend and came to realize that I could have saved myself about $3,000 had I just checked the box that says “Married” instead of the one marked “Single.” Even if I had to hire a “wife” for say, $1,500 for the audit, I’d still have come out ahead.
Of course, that’s all just fanciful. But with Congress poised to pass some form of “marriage penalty” relief, it’s worth pondering how the language has defined the debate—or more accurately, precluded it entirely.
Our esteemed president, George W. Bush, presumably would not be so ardent in pursuit of his tax goals if everyone referred to it as “increasing the tax differential for single filers.”
Nobody likes to admit it, but that’s a more accurate description of what’s on the table.
The concept of a marriage penalty reflects an artifact of the tax code in which married couples with roughly equal incomes find they are paying more in taxes together than they would be if they hadn’t gotten married.
The reason is progressive taxation: as a family’s income rises, it moves into higher tax brackets, which means it pays a higher rate of taxes on the incremental income. Generally speaking, Americans support progressive taxes, believing that it’s fair for those with more to contribute more to the costs of running the country. Flat-tax proposals—in which everyone would pay the same proportion of income—surface from time to time and go nowhere. Steve Forbes made it the centerpiece of his presidential campaigns, which turned out to be a ticket back to Basking Ridge, N.J.
But politicians periodically fan the resentments of yuppie couples by talking about the marriage penalty, given that it has a neat demagogic appeal. Meanwhile, too many people who should know better are too timid to tell them to quit whining.
Basically, the income tax works on the principle that taxes are paid based on the income of the family unit—whether that is a husband and wife who both work, a wage-earning spouse with a homemaker partner, or a single person.
But even then, there is disparate treatment. Single people pay higher taxes and get a lower standard deduction than married people with the same income level. Critics of the “marriage penalty” are not saying that married people should be taxed in the same way as individuals with the same income. They are saying that they should be taxed like people with half their income.
The argument is a straw man: Couples who live together without getting married do get a tax bargain—getting to live the same lifestyle as a married couple without paying taxes at the rate their combined income would require. While it is absolutely true that such couples are getting the better of the tax code, there aren’t enough of them to justify otherwise distorting the tax system (especially considering that many such couples are merely in a temporary transition to marriage anyway).
There is, of course, one other group getting similarly preferred treatment in the tax code: homosexuals who want to be married. However, ironically enough, the same Republican orthodoxy that says they can’t get married also assures them a little tax consolation.
As things stand now, a household earning $80,000 in taxable income is taxed this way:
♦ Two singles making $40,000 each and filing separately: $15,590
♦ Married couple: $16,707
♦ Single person: $19,489
For about half of the married couples—those with roughly equal incomes—marriage makes them pay more in taxes; for the others—those whose earnings are dramatically disparate—the tax tables treat them much more favorably than singles.
The proposals the president and congressional Republicans are currently pushing simply would lower the taxes on couples with roughly equal wages—in essence widening the gap between what singles in the same circumstances pay—while leaving those married couples who already benefit alone.
If someone tried to have a serious debate about the rights and wrongs here, they would focus on whether it was more appropriate to relieve a single person with income equal to the married couple or one with half the income of the married couple. But that is a slam-dunk argument—we tax households in this country; not individuals. Single people don’t get to pay half the property tax on their homes, even though you could make an argument for it as a matter of fairness. After all, they put much less of a burden on government services than married couples, especially ones with children.
Of course, the real argument is just that it’s good politics, even aside from the expectation that singles won’t kick up much of a fuss. Politicians always like to talk about how they want to help “families,” because it reflects a commitment to traditional values and the idealized Beaver Cleaver world of Ward, June, and the boys.
In making that argument, Republicans are falling into the same folly that they criticized Democrats for last fall: saying that tax breaks should only go to those who live certain acceptable lifestyles.
But it would be worthwhile to keep in mind what’s at stake here. In taxation, there are two basic issues—how much revenue to generate and how to design the tax structure. The latter deals with the question of who feels the greatest weight of taxation. When certain classes of people feel that they are being singled out to bear a disproportionate share of the burden for irrational reasons, democracy itself is undermined.
Still, politics is seldom about making intellectually honest cases. More of the time, it’s the person who packages the concept into the right catchphrase that triumphs. But instead of trying to achieve equity by cutting taxes on some married couples, Bush should focus on closing the “shacking-up loophole.”
