Email L. Henry Platt, Jr.
THE MARRIAGE PENALTY
It's been more than a quarter century since Vivien Kellems died, but many still remember her long and passionate fight with the Internal Revenue Service. One of her most ardent complaints was the "marriage penalty" which cost her thousands of dollars each year. (Actually, it was not until after her death that the IRS was finally able to collect the cash dollars Ms. Kellems continued to refuse to pay.) She had fought the penalty she was assessed because she was not married. Had Ms. Kellems chosen to marry, she would have been assessed more than $10,000 less in Federal Income Taxes each year.
Even under todays tax schedules, Ms. Kellems would save $5,000 each year in Federal Taxes based on her earning just over $100,000 and her husband's having no income. On the other hand, if she had a husband with income, at some level of earnings his earnings would reduce the tax benefits of marriage - and at some point marriage would cost more taxes than if the couple had remained single.
The Marriage Penalty in today's parlance is usually understood as the additional dollars the couple will pay by getting married versus remaining single (or head of household). Because of Social Programs included within the Federal Income Tax schedules, a couple with a combined income of $37,000 can face a net increase approaching $5,000 in federal taxes by getting married. So far this seems like a great penalty, but there are offsets!
When a head of household with two qualifying children and an income of $12,000 per year marries an unencumbered single taxpayer with an income of $25,000 per year plus a substantial benefit package, the increased taxation may be fully offset by savings and upgrades in housing, child care, insurance, and social opportunities for the entire family. To really grasp the full benefits of marriage, just begin to tabulate the many dollars divorce costs those couples who cannot make marriage work.
The only change I might endorse to alleviate the perceived Marriage Penalty is to allow individuals to file their Federal Income Taxes as Single, Married or Head of Household as they might choose provided that they were lawfully in that category for at least one day during the taxable year. Both marriage and divorce are costly and stressful, and I believe that a little consideration to taxpayers at this time of their lives might be in order.
No system is entirely perfect, but I believe that the system we have (with the suggested change above) is extremely fair and balanced. Perhaps each 1040 tax booklet could try to explain in its preface some of the facets and underlying reasons for portions of the tax code so that taxpayers might better appreciate their participation and contributions in the operations of our government for the benefits of all the people.
© L. Henry Platt, Jr.