An important nail in the coffin comes from, of all places, Citizens for Tax Justice, who have a new issue brief on the so-called marriage penalty. It's probably available on their web site (www.ctj.org, I think).
The key quote, for me, is the following:
"Those complaining about 'a tax on remaining single' apparently considered a married couple as one taxpayer instead of two, treating one spouse as the real taxpayer and the other, typically the wife, as the 'tax shelter.' Whether this outlook was ultimately based on outrageous sexism, unabashed self-interest on the part of singles or philosophical position that formed the basis for the 1969 attack on marital income splitting was bankrupt both then and now, and Congress ought to admit its mistake and fix the problem."
Whew! The burden of the piece is that marrieds ought to be able to split their income in halves and pay the same tax as two singles with identical separate incomes would pay, as was the situation before 1969.
What's wrong with this? If it isn't too obvious already,
if our two singles had equal aggregate income but unequal division of income between them, they will pay more tax than the married couple who can split their income and reduce the effect of progressive tax rates;
If these two singles with equal total income are legally barred from the use of 'married filing joint' because obviously, they are of the same sex, then marriage doesn't fix their problem. On the plus side, this might provide one slim straw of support for gay marriage, though I'm not holding my breath.
The worst case comparison is a householder with a dependent who has equal individual income to the married couple. With graduated rates of course this person is screwed most of all, relative to the married couple, notwithstanding the fact that the household has the same number of persons. If the separate household schedule compensated for this, there would be no problem, but it won't.
Here's a different argument I'd like to try out on you all:
A different sort of consideration attends the choice of marriage partner. Assume that in a household some income can be effectively shared (e.g., you only need one blender). So living together reduces the cost of some goods and services. Let's leave sex out of this, at least for the moment. Some persons will require marriage as a condition of living together. The tax system under marriage penalty reduces the savings from shared consumption. On the other hand, marriage also increases the aggregate income which may be shared, but this depends on the income of one's prospective partner. With no penalty, more savings from sharing accrue, so with no penalty there is more incentive to marry somebody with higher income. Since men have higher incomes, they will less often choose as a spouse someone with lower income. There will be less income mixing within marriage, less class mobility in society. I think that's bad, though clearly marriage should not be considered the only avenue of upward income mobility for women.
There is other useful discussion in the CTJ brief, so I don't mean to pan it across the board. I do think the particular issue I focus on here, however, is not well-served.
Comments appreciated.
Max Sawicky
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