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1 Claire M. Hintz, The Marriage Penalty 1 (1998)

handle is hein.taxfoundation/srhhxz0001 and id is 1 raw text is: TAt

March 1998
No. 77

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Many elements of the tax code vary with
marital status, including the amount of the
standard deduction, the earned income tax
credit, and the tax rate schedule. All of these
differences can cause a married couple to have

Figure I
Distribution of Marriage Penalties and Bonuses by Size of Adjusted
Gross Income, 1996

Less Than $20k


Percent with


Percent with

More Than $50k

Percent with

Source: Congressional Budget Office.

a different tax liability than two similarly
situated single people.
A married couple filing jointly incurs a
marriage penalty if their tax bill is higher
than the combined tax bills that they would
have paid if each could have filed singly.
Similarly, a married couple receives a mar-
riage bonus when the sum of the individual
tax liabilities had they filed singly is greater
than their tax liability under a joint return.
Marriage penalties result from the conflict
between three mutually exclusive goals of the
tax system:
*  Taxes should be progressive (specifically,
the progressive marginal tax rate structure);
*  The tax code should be neutral with
respect to marriage; and
*  The tax code should treat families equally
(families with equal incomes should have
equal tax bills).
Different balances have been struck with
regard to these goals over time. Currently, the
tax code is not neutral with respect to marriage.
The Congressional Budget Office esti-
mated that 42 percent of married couples
incurred marriage penalties and 51 percent
received bonuses in 1996. According to the
study, the average size of a marriage penalty
was $1,400 and the average size of a marriage
bonus was $1,300. '
A Brief History of the
Marriage Penalty in the
Federal Income Tax
The income tax expanded rapidly in the
1940s to finance World War I1. As a result of
the increasing number of families subject to
the income tax and higher marginal tax rates,
more states began to enact community
property laws that allowed couples to split
their income in half and, as a result, pay lower

B V Claire 1. Hintz
Senior Economist
Tax Foundation

)It 11

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