get some temporary tax relief
so long ago, almost half of America's married couples discovered
each April 15 that they had exchanged an unspoken vow during their
wedding ceremonies to pay more taxes.
to the peculiarities of the tax code, those couples found that when
they earned roughly the same salaries, they tended to pay more in
taxes than they would if both were single filers. This so-called
marriage penalty showed up in 1969, when Congress tried to equalize
what was then an unfair advantage couples held over single taxpayers.
in the last few years, lawmakers have made tax-law changes that
have helped ease the penalty. There's just one problem. The relief
is temporary. All
marriage tax relief provisions are set to expire Jan. 1, 2011. This
sunset date was added by lawmakers to ensure that all the bill's
tax changes, marriage penalty included, met federal budget limits.
There are some proposals to make these temporary changes permanent,
but the size of the federal deficit poses a political challenge.
marriage penalty machinations are just the latest in a long-standing
tax-code balancing act by politicians.
The trick is to agree on exactly which method helps the most couples
without hurting another segment of the taxpaying public.
origin of the penalty -- trying to level the tax playing field for
singles -- points out the difficulties lawmakers face when tweaking
the tax code. They must find another source for the tax money the
budget will lose by eliminating the offending provision while not
hurting another group in the process.
complicating the marriage penalty fix is the fact that an almost
equal number of couples have enjoyed a marriage "bonus," actually
paying less taxes because of the way the tax rates were set up.
Neither they, nor their Congressional representatives, wanted to
take that break away.
didn't necessarily get the same tax breaks as one
Congress tweaked the tax brackets, the marriage penalty arose primarily
because of the standard deduction and the progressive nature of tax
rates. So Congress focused on these areas in making changes.
Congress devised the standard deduction, the amounts were based
on the assumption that married couples generally share expenses
and therefore live less expensively than do two single individuals,
even if the singles make the same amount of money. So the singles,
based on the two-live-more-cheaply-than-one rationale, were given
a more generous per-person deduction.
working against some married filers was the fact that that more
of their combined income often ended up being taxed at a higher
rate than if they'd stayed single and computed their tax bills separately.
brackets are progressive, meaning that the rates
increase as income goes up; this phenomenon is felt more acutely
when two incomes are combined to arrive at the taxable amount, especially
the way the brackets were previously designed. Often two singles
would find they each paid taxes at the 15 percent bracket, but when
they combined their income and looked at the married filing jointly
brackets they landed in a higher bracket.