July 31, 1999
ELIMINATE IMMORAL MARRIAGE PENALTY
Last week House Republicans pushed through a
huge $792 billion tax cut, largest since
the Reagan era. It repealed the tax on inheritances, paid by only one
percent of taxpayers, but hardly made a dent in the marriage tax penalty.
That has sparked outrage from a core of the
Republican political base: conservative pro-family groups who have been
promised for years that the tax penalty for married couples would be wiped
out. Some 21 million married couples with dual wage earners pay an
average of $1,400 in additional taxes compared to cohabiting couples with
the same income.
The House bill would only reduce the penalty by
''We at the Family Research Council believe that
any tax reform has to make as its crown jewel, the elimination of the
marriage penalty tax,'' said Janet Parshall, chief FRC spokesperson. ''But
we got very meager table scraps,'' she told me.
Dr. James Dobson, President of Focus on The
Family, was furious. Two weeks ago, after the Ways and Means Committee
reported its bill, on a recent radio show aired by 2,000 stations, he
recalled meeting with several Republican leaders ''who have made promises
they haven't kept.'' He interviewed Parshall who said the whole philosophy
behind the marriage penalty tax is ''immoral. It is our government's way of
saying, `We affirm you, cohabitants, over you, man and wife.'''
Dobson said, ''I am very disgusted with Congress
right now and especially with the Republican Party, because they tell us
year after year that they are pro-family. But then, when it comes time to
vote, they run for the tall grass.''
Together, they urged listeners to call House
Speaker Dennis Hastert, House Majority Leader Dick Armey and others and gave
their phone numbers. The result? ''A deluge,'' reported the Los
Angeles Times. Callers to Hastert's office jammed phone lines.
However, the bill that passed the House
contained the same tiny change, of allowing a married couple to increase its
standard deduction from $7,200 to $8,600, exactly double the amount single
people can claim, $4,300. That would save $240 in taxes.
Left unchanged in the House bill is the major
marriage penalty, the structure of tax brackets which push couples into
higher brackets faster than individuals. For example, a husband and wife who
each have an income of $23,950 would pay part of their income at a 28% rate,
for a total tax bill of $8,563. But if they were cohabiting couples,
each would be taxed at 15%, and would pay $3,592 each in taxes, for a
combined tax of $7,184.
The Senate Finance Committee approved a bill
last week that would give married couples the option of filing as single
people after 2004. That demeans marriage but would eliminate that marriage
penalty of nearly $1,400 in the case above.
Rep. David McIntosh, R-Ind., says the present
law has ''terrible social consequences. People tell us that because of
the extra tax, they are not going to get married. Some have said they
have gotten divorced because of it.''
He sent me some of his E-mails from taxpayers:
Harold Baird of Nashville wrote: We are both in our middle 40's and have
been engaged for over 6 years. We decided not to get married due to the fact
that it would cost us almost $3,000 a year in extra tax liability.
Doug Kirby says, ''My wife and I got refunds during the years we were living
together. When we got married we went from refunds to having to pay hundreds
of dollars in additional taxes.''
Could the marriage penalty be a factor in the
nearly 1,000 percent growth of cohabiting couples, soaring from 439,000 in
1960 to 4,236,000 in 1998?
The Wall Street Journal notes that there is a
''marriage bonus'' in the tax code for 25 million couples in traditional
households with one wage earner. They pay $1,300 less than a single
taxpayer. The newspaper calls this ''singles discrimination.'' It would
prefer to lower tax rates for everyone, rather than to have any preference
for marriage in tax law.
America leading economic newspaper seems
ignorant of some basic economics. First, one income is supporting two or
more people, which deserves some break.
Second, marriage has an economic value that
deserves encouragement. A forthcoming book, ''the Case For Marriage,'' by
columnist Maggie Gallagher and Un. Of Chicago Prof. Linda Waite, notes that
husbands earn 10-40 percent more than single men with similar work and
education, ''because they work longer hours and produce more.''
Eliminating the marriage penalty should be the
centerpiece of any tax reform.
Copyright 1999 Michael J. McManus.