NCPA - National Center for Policy Analysis

A Better Way To End The Marriage Penalty

April 23, 2001

The House of Representatives recently passed a bill that would relieve much of the so-called marriage penalty. But it also increases the marriage bonus for nonworking spouses and increases the disparity in the tax burden between married couples and singles.

A marriage penalty results when a two-earner married couple pays more federal income taxes than they would if they were unmarried and each were taxed as a single or head of household filer. No single-earner couples ever pay a marriage penalty, and most receive substantial bonuses from the Tax Code.

Thus the marriage penalty is less a penalty on marriage than a penalty on work by lower paid spouses. In effect, the lower-paid spouse is taxed at the higher-paid spouse's marginal tax rate -- the tax applied to the last dollar of income.

  • According to a Treasury Department study, 25 million couples -- 48 percent of all joint filers -- paid a penalty in 1999 for being married.
  • Collectively, they paid $28 billion more because of the marriage penalty, averaging $1,141 per couple.

The House-passed bill would increase the standard deduction for married couples to twice that for singles. For couples who itemize deductions, it would gradually raise the amount of income covered by the 15 percent tax bracket to twice that for single people. And for low-income working couples, it would raise the limit on the amount they could earn and still be entitled to the Earned Income Tax Credit.

To completely end the marriage penalty, Congress must allow couples to choose their filing status. That way, they could continue to file jointly or with each spouse filing as a single, depending on which way they would pay less in taxes.

Source: Bruce Bartlett (senior fellow, National Center for Policy Analysis), "The Marriage Penalty: A Tax On Working Couples," Brief Analysis No. 358, April 23, 2001, NCPA.

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