Seeing Double?  Stay Single!

One of my favorite topics on which to harp is the marriage tax penalty, and since Congress has been doing such a good job of harping on just that issue lately, it seems the timing is excellent for the topic to be readdressed in this column as well. The tax computations I'll use in this column are based on 1999 tax rates.  

Just what is the marriage tax penalty, and why should those married couples get away with having their taxes lowered when nothing is being done about the tax burden that single taxpayers face?  

There's an odd provision in the tax laws that forces married couples to figure their tax at a different rate than their single counterparts. This creates all sorts of warm fuzzy feelings between the different taxpayers who must pay different amounts of tax on the same amount of money.  

How the tax is computed  

For example, if you are single and your taxable income is $60,000 in a year, you pay tax at one rate. If you are married and each of you has taxable income of $60,000 in a year, do you pay twice what the single person pays in tax? No way. The single person's tax on $60,000 is $13,460. Double that and you get $26,920. The married couple pays $28,483. Does this make sense?   

Married persons are worth less than their single counterparts when it comes to the standard deduction. The single person is worth $4,300 as the standard deduction that can be deducted from the single person's income. But two married people are only worth $7,200, $1,400 less than it would be if you simply doubled the single person's standard deduction. Why is this?  

Get married, cut costs?  

Somewhere the IRS probably latched on to the idea that two people can live more cheaply than one. There's only one house or apartment (usually), food is more economical if you buy in bulk, there's only one set of electric bills, you might be able to share a car, and so on and so on.  

But what about the married couple that can't live more cheaply than a single person? Married couples often produce little tax exemptions that pitter patter around the house (and the house may have to get bigger as the pitter patterers multiply), little exemptions eat more food, require more special furniture and toys and athletic equipment and summer camps and babysitters (who require more food). Some married couples necessarily live in two places to accommodate jobs or families.  

And you've heard of roommates, right? Two people share the expenses of one home, and if they're not married they pay less tax on their two incomes than they would if they married each other. Is this right?  

Sometimes the single person gets penalized  

On the other hand, if there is only one income in the married couple's home, the tax rate is lower on that income than the rate on the single person who makes the same amount of income. If a married person makes $47,000 and there is no other income coming into the house, the married couple pays $7,571 in income tax on that income. The single person with the same job pays $9,820 in income tax. What kind of fairness is this?  

Our representative have a different agenda  

Congress is scrambling to attempt to make the tax rates equitable so that there is no difference in rate between single and married couples. The Republicans in the House and Senate would like to see their final bill placed on President Clinton's desk in time for the July 31 Republican National Convention. President Clinton has promised to veto this bill, along with a bill to end the estate tax.  

Both of these bills have popular support, neither of these bills is going to pass this month, but Republicans are convinced that if they simply write the bills and whine that the President vetoed them, they will be able to gain the support of their constituents and create enthusiasm for Presidential candidate, George W. Bush. A lot of political posturing is creating excitement for something that is still a distant dream. For now, marriage planning still involves a visit with your friendly tax accountant.