February 12, 2000
Column #963

MARRIAGE TAX PENALTY COULD BE REMOVED

     There is a real chance that the marriage tax penalty will be removed from the law this year.

     For the first time ever, President Clinton proposed in his State of the Union ''to reduce the marriage penalty, to make sure it rewards marriage.'' Rep. David McIntosh, R-Ind., who has long sponsored a bill to remove the extra tax on two earner couples, said, 'I'm glad he mentioned it in the State of the Union. Now all acknowledge the Democratic Administration and conservatives that we need to do something.''

     Second, the House is expected to pass a $182 billion reform this week that will provide relief to all married couples. The bill is about four times as generous as the $45 billion proposal of the President, whose limited benefits are targeted at marriages where both parties work. House Republicans are gambling that the President would find it difficult to veto a larger popular bill.

     In the current tax code, the marriage penalty taxes the income of a married couple at a much higher rate than that of a cohabiting couple. As the Family Research Council has noted, ''If a married couple with one income or two makes the same income as two singles, the married couple will likely be paying higher taxes simply for being married.''

     Tax law has thus been one of the engines driving down marriage rates by 41 percent since 1960 and helping spark a ten-fold increase in the number of cohabiting couples.

     For these reasons 85 percent of Americans believe the marriage tax penalty is unfair and 61 percent think it is very unfair, according to a poll by Wirthin Worldwide.

     ''The current tax code punishes millions of couples by pushing them into higher tax brackets,'' says Rep. Bill Thomas, R-Cal. ''This unfair system must be changed, and we have the solution.'' If two teachers each earn $25,000 and are single, they pay 15 percent of taxable income as tax. If they marry, more than $6,000 of their income is taxed at 28 percent.

     The House bill eliminates that differential by the year 2008, so a married couple would pay the same tax as a cohabiting couple. The President's proposal doesn't touch this tax penalty.

     Another marriage tax penalty is in the standard deduction. Married couples get $7,350, $1,450 less than double the $4,400 standard deduction for singles. Clinton's proposal would raise the standard deduction to equal that of a cohabiting couple, but it would only be given to couples with both spouses working. For couples where the wife is at home, taking care of children, the standard deduction only rises $500, a quarter of what employed women would get..

     By contrast, the House bill closes the gap immediately, and it applies equally to stay-at-home moms as well as working wives. This tax reform will make it more possible for millions of women to be full-time mothers while their children are small. It can give a long-needed shot in the arm to families with kids. Sadly, the Clinton proposal values employed women four times more than those who pour their lives into their children. It will induce more mothers to work.

     What does this have to do with faith?

     Dr. Richard Land, head of the Southern Baptist's Ethics & Religious Liberty Commission, says, ''One of the oldest truisms in politics is that which you tax, you will get less of; and that which you subsidize, you get more of. To tax people, to penalize them for being married is courting instability in our society and in the lives of children.

     ''As I read the Bible, there are only three divinely ordained institutions in society the family, the church, and the civil magistrate. For the civil magistrate to penalize people for getting married in how they pay their taxes is counter-productive and unfair.''

     He noted that former House Speaker Newt Gingrich never seemed to understand the importance of the issue. While he understood the importance of having social conservatives as part of his coalition, when bargaining time came, issues like the marriage penalty were bargained away. ''He was not a social conservative, but a libertarian conservative.'' Indeed, he is on his third wife.

     Can the nation afford a $182 billion tax cut? It is only a tenth of the projected non-Social Security surplus of $1.8 trillion according to the non-partisan Congressional Budget Office. Democrats as well as Republicans are expected to vote for the Marriage Tax Penalty Relief Act of 2000. The Senate is expected to pass the bill.

     But will the President sign it? Yes, if he meant what he said about having the tax structure ''reward marriage.''

Copyright 2000 Michael J. McManus.