Item from the Smart Marriages Archive, reproduced in the Divorce Statistics Collection

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The Penalty Box

Tuesday, April 11, 2000; The Washington Post

SENATE REPUBLICANS hope to force votes this week on a tax cut that
Democrats
have rightly condemned for its
cost --a quarter-trillion dollars over 10 years--and heavy tilt in favor
of the
rich. So the Democrats have come up with
an alternative, which turns out in some respects to be . . . even
costlier, and
likewise tilted. The election-year bidding
war has begun.

The bills are said to provide relief from the marriage penalty. But
marriage
penalty is a misnomer. In part what critics are
denouncing when they attack the marriage penalty is the progressive
nature of
the income tax. The tax code steadily favors
married couples, in the sense that a couple will always, and rightly,
owe less
than a single payer with the same taxable
income. The supposed penalty arises because two earners, particularly if
well-paid, will likely owe more taxes if they marry
than remaining single. But that's because the code correctly taxes
household
income, and does so by graduated rates.
The higher the income, the larger the bite. If it's fair to speak of a
marriage
penalty, then why not the pay raise penalty, to
say nothing of the widowhood penalty, which occurs precisely because
taxes for
single payers are higher than for couples.

The would-be tax cutters are undeterred by this reality. They use the
concept of
a marriage penalty as a gloss for an
indiscriminate tax cut mainly for the better off. A lot of the couples
who
would benefit from the Republican bill aren't even
subject to the so-called penalty. Because most of their income comes
from one
earner, their taxes are lower than if both
were single; they receive a marriage "bonus." A disproportionate share
of the
benefit would go to those in the highest income
brackets. The bill's true cost is also carefully masked, in that the
legislation is backloaded; the full benefits don't phase in until
the very end of the 10-year estimating period.

That's the Democratic critique, and it's all true. And so the Democratic
bill .
. . is even more backloaded. Its ultimate annual
cost is even higher, although its 10-year cost is lower, because it
starts so
slowly. In the end it would also mainly benefit the
better-off. It wouldn't benefit those already receiving a marriage
bonus; that
is a virtue. It would also rid the Democrats of a
pesky issue. But in the process of thus yielding for political reasons
it would
make the tax code less progressive in some
respects and create significant differences in the tax treatment of
married
couples with similar incomes. Many two-earner
couples would owe less than one-earner couples with the same income. No
doubt
that would be the next "penalty" that the
tax grandstanders would seek to reduce.

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