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Divorcing Couples from the Marriage Penalty

Monday, July 22, 1996

OnLine

If the institution of marriage is one of America’s cherished family values, why does the government levy a tax on those who travel down the aisle? This so-called marriage penalty is one of the reasons people think the U.S. tax system is so unfair.

The penalty isn’t really intentional. It arises when the total income tax a married couple pays exceeds the amount they would pay if they were single and filed separately. The penalty occurs chiefly because married people combine their incomes for tax filing purposes and, because the progressive U.S. tax rates rise as income climbs, couples end up paying more tax. To add insult to injury, the tax bracket for figuring your tax and the limits on itemized deductions that apply to married couples are less than two times those for single individuals.

The issue has grown in importance to taxpayers in tandem with the growing numbers of women in the workplace. A married couple that relies substantially on the earnings of one spouse often earns a marriage bonus. This occurs when the total tax paid by the couple is less than what they would have paid if they filed separately.

The Republican party promised some relief from the marriage penalty in their Contract with America. In their original plan, married couples who file a joint tax return could be eligible for a credit of up to $145 to offset the penalty.

The final bill sent to the White House in November 1995 proposed a different method of providing relief: raising the standard deduction for married couples.

President Clinton vetoed that bill. Since then, Republicans in Congress have said they will try to reduce the marriage penalty as part of their 1997 budget resolution, but no changes look imminent.