I don’t get all the hubbub over the fact that a couple gets less of a standard deduction than two single individuals. Unless I am missing something, doesn’t a couple have the option to file separately or jointly? So, if you file separately, won’t you get the full standard deduction?
Are the political candidates just putting up a smoke screen here? Please explain!
Jink notes: I recognize the fact that many couples do not even take the standard deduction because they itemize. However, for those who do not itemize, what’s the scoop?
Well, I can’t remember what my federal form looked like off the top of my head, but I distictly remember that on my state forms, the deductions allowed for “Married filling separatly” was less than the “Single” amount.
If your not the lead dog, the view never changes!
It’s not the standard deduction that’s the problem. The SD is proportional, i.e., you get twice the amount deducted than for a single person or married-filing-separately.
The problem is the tax rate. When you take whatever amount is your final taxable income, you look it up in the 1040 Tax Table. For married filing together, it’s higher than for singles.
With as much hype that lawmakers put on the virtues of marriage, you think there’d be a tax incentive for being married. Well, there is one, but that’s only if one person in the marriage works.
What would Brian Boitano do / If he was here right now /
He’d make a plan and he’d follow through / That’s what Brian Boitano would do.
There used to be an incentive for married filing jointly, back in the 1970s. And it was called the “singles penalty.”
Apparently the problem isn’t as easy to fix as the politicians would have you believe.
Oops, let me clarify my last message. If you prepared two people’s taxes as singles, their total tax due would be less that if you figured their taxes as a married couple or married-filing-separately.
E.g., if a woman’s taxable income was $40,000, she’d owe $7860 as a single. if a man’s taxable income was $30,000, he’d owe $5060. Adding these tax bills together: $12,920.
But if these two were married, their taxable income would be $70,000 and their tax bill would be $14,011, $1,091 more.
And filing separately? That only pays off if one isn’t working or made a very low wage. For the above example, this would be $8409 + $5609 = $14,018; basically the same as filing together.
What would Brian Boitano do / If he was here right now /
He’d make a plan and he’d follow through / That’s what Brian Boitano would do.
AWB: the deduction is not proportional. The standard deduction for a single person is $4300. The standard deduction for married filing jointly is $7200. The standard deduction for married filing separately is $3600.
In addition, if you are married, you will be paying more tax (as well as getting less deduction). For instance, say A earns $30,000/year. B earns $60,000/year.
Without figuring in deductions, single A pays $5060 in taxes. Single B pays $13460, for a total of $18520.00.
If A & B marry, their combined income goes to $90,000/year. They will pay $19,611.00 in taxes…a difference of $1091.00.
Add the fact that married people don’t get as much of a deduction to the fact that they pay more taxes when their incomes are combined (because it puts them in a higher tax bracket) and you come up with a pretty inequitable system.
Star Tribune, multiple articles, last year (my cite, now out of the way).
55% of married couples pay LESS money than they would if they were singles filing alone. That group pays LESS in taxes than the couples who end up with the “penalty.” The “penalty” generally happens when one partner makes 705 or more of the couple’s income; it also depends on whether or not they file jointly.
The penalty is demonstrably a lie, a ruse, and a smokescreen.
Bucky
Oh, well. We can always make more killbots.
I think, Bucky, that it is demonstrably NOT a lie, a ruse, OR a smokescreen. In fact, I think I actually demonstrated.
I’ll further the demonstration by showing what a couple with the above stats as A & B would be paying if they are married, filing separately.
A would pay $5609.
B would pay $14,249.
Total = $19858.00, which is, as you can see, more than the $18520.00 that A & B would be paying if they were single.
I don’t think that you can say it can be demonstrated that the marriage penalty is a falsehood, basing this on an article read in the newspaper, when you can see by looking at actual figures that the penalty does exist.
(And, in this example, B makes 66% of the household income, A makes 33%, so that discredits your “over 70% made by one spouse” rule)
Besides, if 45% of married people ARE being penalized, even by your standards, isn’t that enough to maybe come up with a different tax structure?
(All examples in this post and above were based on figures from the 1999 tax table and 1040, which I happen to have sitting on my desk because I just finished our taxes and had to scrape myself off the floor after I realized how much we owe.)
The Marriage Penalty is not a lie, as C3 has demonstrated, however, it is a misnomer. When this part of the tax code was implemented, no one in Congress said, “Hey, let’s impose a penalty tax on a married couple more than we would if they were both still single.” The so-called penalty does not affect all married couples either, it strikes particulaly hard at the “DINKS” (double income, no kids), and the DINKS have the money and the clout to gripe to Congress that their taxes are too high. Where one spouse earns much more than the other one, there is no marriage “penalty”.
I disagree that there is no “penalty” even where one spouse earns much more than the other.
I earn twice what my husband makes (I’m a lawyer, he’s a teacher). Not only do we pay taxes at a higher rate together than we would if we were single, we – or at least, he – loses deductions due to my income that he would have if he were single, such as the right to deduct an IRA contribution. Further, it makes it impossible for him to meet the various “floors” for deductibility of things such as business expenses (union dues, continuing education classes, licensing and testing fees) and medical expenses. Forget anything in the way of child care credits, either.
I think when this system was developed it was the norm for only one spouse to be employed, or be significantly employed, and so it may actually have been a tax benefit to be married. Now it is only a tax burden.
-Melin
As currently discussed, it is a lie/ruse/smokescreen. “The marriage penalty” is used in common parlance as though ALL married couples paid more than they would if they were single. This is not true. Nor is it true that, on average, married people pay more–it is neither the most common instance nor do the numbers slant towards a penalty.
That said, I should apologize for suggesting that it NEVER happens. BUT, and this is a very big but, it is a lie to suggest that the penalty is the norm.
I mean, what would be acceptable? If ALL single people always paid more than married people? You already, as a group, get far more tax breaks than the rest of us. (I willnot go into any other rants on marriage benefits denied to singles, gay or straight.) How many of the breaks have to go your (collective your, not individual) way before we start to talk of a “Single Penalty”?
Bucky
Oh, well. We can always make more killbots.
Really? What tax benefits do I get for being married, with my husband and I both earning an income?
I think what would be acceptable would be if marital status had no effect on the tax situation at all.
-Melin
Hey Manny, looks like this thread ought to be headed towards GD, with an “Incoming!” warning to David B. Gaudere. < g >
-Melin
Bucky:
Bucky, “lie” is not a word I’m particularly fond of, especially since a large part of your argument has already been debunked. Perhaps politicians are lying (although I’d be shocked! Shocked! to learn that 
), but I’m quite confident that the people posting to this thread are trying their best to Fight Ignorance. If they’re wrong, correct them. Got another cite? Or a site? (They’re out there)
Melin:
Looks like it, doesn’t it? I’m going to leave it here for now, in the hopes that someone will do or find the work that lays out exactly what incomes and proportions of income lead to taxes higher (or lower) than would be paid by two single people cohabitating. Then we’ll kick it over there. My faith in the TM remains high.
Livin’ on Tums, vitamin E and Rogaine
Two thoughts –
Maybe we should go to a flat tax rate with no deductions. Maybe we could get a rich guy to run for president on this idea. Maybe he would have to drop out of the race.
Maybe when hell freezes over I’ll believe that congress has my best interests at heart in anything they do.
well well said the royal desiccation my political opponents back home always maintained
that i would wind up in hell and it seems they had the right dope
Don Marquis
archy interviews a pharaoh
Manny (aka “many”)
I’ve never heard anyone but a politician (Or a local TV anchor, which around here is a person who will soon be a politician) use the term. I had not met any real people talking about it before. I do NOT mean to suggest that they (the real people) are lying, and apologize for having sent that impression.
I, too, am SHOCKED to learn that members of a grand old party might attempt to manipulate evidence to gain political advantage.
Other cites–my friend Cam, grad of Harvard Law; my friend Amy, grad of Penn Law; my friend Susan, grad of Cornell Law–but I would agree with anyone who is wary of using “this guy I know” cites as proof. (On the other hand, they maintain that the majority of marrieds DO pay less than singles and that the total amount of differential favors marrieds. So, I still would say that the “penalty” is not across the board and that the problems of some are being manipulated by various political creatures. I also still ask, are single people just suppposed to get shafted in this?)
Bucky
Oh, well. We can always make more killbots.
Harvard and Cornell don’t impress me – I graduated from Boalt.
And I’m still waiting for you to specify what tax breaks I get that aren’t available to you, Bucky.
-Melin
I don’t know why “married” or "single are even on the tax tables. What difference does it make to how much you should owe? Deductions for dependents aught to take care of the family thing.If you don’t have an income, you don’t file. Simple.
Peace,
mangeorge
I only know two things;
I know what I need to know
And
I know what I want to know
Mangeorge, 2000