01 Feb 2000 I Never Expected to Say “I Do” to Higher Taxes When I Married
My wife and I were married almost six months ago, but our marital bliss has been clouded. Our tax preparer recently told us we owed the government thousands more because of the “marriage tax.”
Nancy and I are proud of the fact that we overcame a major plumbing problem just 24 hours before hosting the wedding rehearsal dinner at our new home. We financed the wedding ourselves and toughed out Hurricane Floyd on our honeymoon. All the while, we have been able to keep out of debt, and even save a little for the future.
Our fiscal responsibility and decision to get married, however, led to our huge tax bill. Our savings and combined incomes pushed us into a higher tax bracket. Had we decided to live in sin, we would not have to give Uncle Sam so much of our paycheck.
We are not alone in our tax nightmare. The Congressional Budget Office estimates that approximately 21 million other American families pay an average of $1,400 more in taxes each year simply because they are married.1 When both spouses work, the combination of their income when filing jointly often puts them in a higher tax bracket than if they were to file separately. For example, a couple earning $30,500 each is taxed at a rate of 15% as an individual but 28% as a couple earning $61,000. In addition, the standard deduction the government gives to singles ($4,150) is better than for a couple ($6,900).2
Not only is this unfair, but it discourages the institution of marriage and encourages people to cohabitate. It even makes divorce an option for financial relief.
In this era of double-income families, it is often the second wage-earner who is the hardest hit by the tax code. As Barabara J. Ledeen of the Independent Women’s Forum points out: “Marriage taxes can impose a nearly 50 percent marginal tax rate on second earners, most of whom are wives and mothers. This is a state-sponsored discrimination against women, the unintended consequence of which is to discourage women from entering the labor force.”3
Relief, thankfully, may be on the way. With 85% of Americans polled by Wirthlin Worldwide agreeing that the marriage penalty is unfair, Congress is responding.4 On February 10, the House of Representatives passed “The Marriage Tax Elimination Act” with a bipartisan 268-158 majority. The bill increases the tax brackets and increases the standard deductions to put married couples on equal footing with singles. It also increases the earned-income tax credit to help lower income families.5
President Clinton, who has vetoed marriage penalty relief in the past, has threatened a veto of the bill just passed by Congress. He says he supports reform that “rewards marriage and family just as it rewards work,”6 but his plan will only slowly equalize the differences in the standard deduction between couples and singles over time. It won’t do anything to fix the problem of couples’ combined incomes forcing them to have a higher percentage of their income taken in taxes. It also puts off any tax relief for married couples until Social Security and Medicare are guaranteed solvent. He might as well link it to the Chicago Cubs winning the World Series, too.
We’re not talking about a tax cut for the rich. The Congressional Budget Office found that the marriage tax hits the middle class the hardest, typically couples where the higher wage-earner makes between $20,000 and $75,000 per year.7 Couples making more will still encounter a sizable penalty, but those with less will get the relief they deserve and often need to establish or support a family.
In our wedding vows, Nancy and I pledged we’d accept each other for richer or for poorer. The government has made sure that this year it is for poorer. But the Senate and the White House now have the ability to make our tax code fair for the married middle class in the future. As we adjust our own family budget to make sure we have enough to send the IRS, we certainly hope they will give the proposal serious consideration.
David W. Almasi is the director of publications and media relations for The National Center for Public Policy Research, a Washington, D.C. research and education foundation. He can be reached at [email protected].
1 “The Marriage Tax Elimination Act,” web site of Congressman Jerry Weller, downloaded February 15, 2000 from http://www.house.gov/weller/marriage.html (editor’s note: this link no longer functioned as of May 2001).
2 “The Marriage Tax Elimination Act.”
3 “The Marriage Tax Elimination Act.”
4 Eric Pianin, “House Votes for Reduction in ‘Marriage Penalty’ Tax,” Washington Post, February 11, 2000, p. A1.
5 “The Marriage Tax Elimination Act.”
6 Bill Clinton, “Remarks by the President to the Democratic Leadership Council,” George Washington University, Washington, DC, January 12, 2000, downloaded February 15, 2000 from http://www.whitehouse.gov/uri-res/12R?urn:pdi://oma.eop.gov.us/2000/1/12/6.text.1.
7 “Summary: What is the Marriage Penalty,” Freedom Works web site of the Office of the U.S. House of Representatives Majority Leader, downloaded February 15, 2000 from http://www.freedom.gov/taxcut/taxplan/mpsummary.asp.