Taxing Two-Income Couples
Washington has become comfortable in handing out tax breaks for worthy causes, favored industries, and all sorts of social engineering. From a politician's point of view, it beats raising taxes to spend more money.
Now, in the heat of election races and just before the April 15 tax deadline, the GOP is racing to fix a tax quirk that forces 25 million married couples to pay more in taxes than they would if they were single.
Every tax season, many husbands and wives who earn about the same income discover this "marriage penalty" when they calculate the deductions for filing separately as opposed to filing jointly.
But for those couples where one spouse doesn't work or makes far less than the other, the tax code actually produces a "marriage bonus."
Thus, for all couples earning less than $100,000 total, the "bonus" can be as high as $3,368 or the "penalty" can be as high as $1,086, depending on a couple's gap in income.
The Republican bill heading for a House vote this week would end the penalty but not the bonus. And it would put more middle-income couples in the lowest tax bracket (15 percent). The bill would reduce tax revenues by $182 billion over 10 years.
The "New" Democrats and President Clinton are following the GOP down this tax-cutting path, but their proposal comes with less loss in revenue ($45 billion) and no tax break for higher-income couples.
Either way, the measures have all the right election-year labels: pro-marriage, a tax cut, tax fairness.
So what's wrong with the picture?
For one, it's just the kind of Washington game-playing that voters have come to resent. Sure, getting married shouldn't mean adding to one's tax burden. But is this the way to fix it?
The Republicans, who couldn't get a bigger tax cut past President Clinton last year, hope this microcut will win votes this fall and fend off charges of a do-nothing Congress. Ending the "marriage penalty" also projects Republicans as being pro-family.
Republicans can't even wait for a bipartisan consensus on the overall budget for the next fiscal year. And what of the "marriage bonus"? Do we really want to use the federal tax code to reward marriage?
Congress should consider the "marriage penalty" in a larger effort to bring equity to taxes next year. Lawmakers shouldn't pass out goodies to win votes. They should set standards of tax fairness and not use tax breaks as a policy tool.
(c) Copyright 2000. The Christian Science Publishing Society