Marriage Tax: A Political Smokescreen?

Factual Questions
41

Well, Mr.Z, I must admit that I’m not really sure what point you’re trying to make with the 80,000 vs. 40,000 X 2 argument, even if you do seem to have the same opinion I do about the marriage penalty.
If anyone’s interested:
If a single person made $80,000 last year, he would pay $19,587 in federal taxes.
If he married someone who made no money, the two of them would pay $16,811.

If two single people each made $40,000 last year, they would each pay $7,860, for a total of $15,720. If they got married, they would pay $16,811.

So in the above example, 80K guy gets a marriage bonus, 40K couple gets a marriage penalty (another couple getting stomped by the system!!). I can’t see where 80K guy’s wife would be penalized…the tax is coming out of 80K guy’s salary and she is still making nothing/paying nothing (even though, you’re right, she’s now legally responsible for making sure that money gets paid, but it’s not coming out of her paycheck unless he skips town).

Why can’t we make the system so that it is proportional…meaning if you are single, you get the $4300 deduction, if you’re married/filing jointly you get a $8600 deduction. Also, the amount you pay in actual taxes should be propotional. In the above example, 80K single would still pay the $16,811, whether he’s married or not. 40k single would pay $8,405.50 single, when two 40K’s get married, they pay $16,811.

Another system would be one like we have here in SC for our state tax. There’s an additional deduction available for two income married couples. After the complex math problems I had to complete to figure out how much we owe, I’m still not really sure how they arrive at the final deduction, but, by gosh, it worked! We don’t have to pay out our ears!

It’s probably pretty obvious there’s no economics degree hanging on my wall, but this just seems like common sense to me.

42

You gotta be kidding! Families with children have always recieved a per-child exemption. Then they were recently given and addition $500 per-child credit, and now the proposal is to raise this to $1000!

If the elimination of marriage penalty goes through, the republicans will have used contradictory logic to give families with children multiple helpings of tax relief and the same contradictory logic to deny singles anything at all.

43

Ok, I sometimes know when I am babbling. Since I am sober this particular time, I will just stop. I am going to give up the $80k argument. I am arguing against an argument that bucky alluded to but never really explained. Besides, while I understand the philosophical juggling in my head, it is still philosophical juggling . And I am not explaining it well.

It is all sematics anyway. A couple making a total of $80k pays the same tax regardless of which spouse makes what.

In the real world, both partners usually have income when they are married. Especially those in the low and middle classes. For those people, it has been ampley demonstrated that they pay more in tax when they get married.

Sqweels said, indignantly

let me point out your earlier statement

children are expensive, dude. your ability to pay decreases with each child. By your own statement, those with children should get a tax break.

The bottom line is that it is good if our taxes go down. The marriage penalty, whether it affects 20% or 40% or 60% is a good thing. Especially since, as it stands, it penalizes middle and low income couples.

44

Mr. Z, you’re saying people SHOULD get a tax break for having kids…Sqweel says they ARE getting a tax break for having kids, already.
He’s right! I don’t have kids, so I’m not aware of the exact amounts, but there is a substantial deduction for each child. Additionally, an even more substantial deduction is in the works…Sqweel had the details in his above post.

45

That sums it all up right there. We got off track with the whole ratio / total benefit thing. The point is, even if “only” 42% of married couples are (for real or just in their heads) adversely affected, that’s a LOT of voters. A pro-family values Republican Congress simply must be all over that like {insert your favorite euphemsism here} in an election year.

Smokescreen? Nah. Election year agenda? Of course.

Sure, I’m all for moderation – as long as it’s not excessive.

46

c3 said

I feel like I was speaking choctaw yesterday.

I know that there is already a tax break for kids. sqweel seemed to be decrying the fact that people get a tax break. But he also said that taxes should be based on a person’s ability to pay.

You can’t say that taxation should be based on ability to pay and also be against a tax break for parents. Kids decrease one’s ability to pay.

I was just pointing out this contradiction.

47

Let me clarify my position. There are two ways to make things fair: One, eliminate the marriage penalty but also eliminate per-child tax credits, thus basing tax rates solely on income. Two, keep things the way they are, but try to collect marriage-level rates from two-income couples who are living together, thus taking household expenses into account all around. What’s happening now is that married couples are getting a tax cut that isn’t being shared with singles who also deserve one, and that isn’t fair.

48

I think what this thread points out is just how disjointed the income tax system has become. The tax system is such a rubik’s cube that adjusting one part throws another out of whack.

When first created the idea of a standard deduction and exemptions was that those amounts represented the theorectical floor for taxes, that is, that one (or one and a spouse and possibly with children) earning below that floor shouldn’t have to pay any income tax. Now there is no connection at all between the standard deduction and exemption amounts and actual cost of living; such amounts are just figures. IMHO, adjusting these amounts back to the true cost of living would go very far towards eliminating the marriage penalty/bonus.

Merlin, I respect your opinions. You asked what tax benefits marrieds get that singles do not. Would you consider ERISA type benefits that are tax free benefits available to an employee’s spouse that are not available to singles as a tax benefit? In another thread it was debated whether employee benefits should be available to gay partners - leaving aside the gay issue, is the fact that such tax free employee benefits are available to an employee with a spouse but but not to an unmarried employee’s signifigant other a tax benefit a tax benefit to marriage? I say it is a real tax benefit available to married but not to singles. What say you?

49

Married people are NOT getting a tax cut! Have you read anything that has gone before your post here? Here, I’ll type more slowly. Before the wedding my now-husband and I paid less taxes than we did after the wedding. The only thing that changed was that we were legally married.

Children are a separate issue. You get a deduction for them whether you are married or not. You can also claim as dependents your aged mother whom you are supporting, or your great-aunt Felicity if she lives with you and you support her.

The fact of marriage should not change the total amount of tax which is paid by the two people who form the couple. Period.

-Melin

50

It’s Melin, BTW.

This is the first real example that we’ve seen on this thread, and I thank you for it.

I’m not familiar enough with the tax code to answer the question I’m about to ask: When an employer offers benefits to a “domestic partner” (as the company I work for does), is there any difference in the tax treatment of those benefits? Whether or not those employee benefits are offered to domestic partners is not a taxing authority’s decision; that decision lies with the employer or, in certain circumstances perhaps (thinking of San Francisco), local lawmakers. If, once offered, those benefits are treated differently for tax purposes for married rather than singles, then you’ve identified a true “tax benefit” to being married. But I don’t know that that’s the case, and would like to have it verified one way or the other.

Off the top of my head, the only significant tax break I can think of for marrieds versus unmarrieds comes with the estate/inheritance taxes. Under federal law, one spouse can leave any amount of money and property to the other spouse tax-free, plus up to $660,000 (I think that’s this year’s number) to other persons. The maximum that one single person could leave tax free, total, is $660,000.

-Melin

51

sqweels said

married folks (those that have two incomes) are paying $1000 or so more than single people. If the tax gets adjusted so that they are paying the same as single people, tehn we will all be paying the same amount whether married, single, living together, just having sex…whatever.

If we are paying the same amount, how does that penalize either party?

It is starting to sound like you are just mad that someone else is getting something and you are not. I had a dog like this. She could have a perfectly good bone. But if another dog had any kind of treat at all she would go nuts.

52

[QUOTE]
Originally posted by Melin:
** It’s Melin, BTW.

[QUOTE]

Sorry about that.

[QUOTE]
I’m not familiar enough with the tax code to answer the question I’m about to ask: When an employer offers benefits to a “domestic partner” (as the company I work for does), is there any difference in the tax treatment of those benefits?

[QUOTE]

If you’re asking if there is a difference in the tax treatment per each such employee on his/her own 1040, the answer is no. If it is a tax-free fringe benefit the employee does not have to recognize it as income, while the employer gets to deduct its cost on its company tax returns.

An ERISA tax benefit that spouses get that singles do not is protection concerning the ultimate disposition of pension plan survivorship benefits. An employee plan participant may not name someone other than his spouse as beneficiary without his spouse’s written consent, per Internal Revenue Code 401(a)(11). So a married person receiving benefits under a tax-qualified pension plan can’t name his mistress as his beneficiary without his spouse’s written consent, which the spouse is unlikely to give, obviously. Consequently a wife can’t be cut out of pension benefits, which is a tax code protection not afforded to unmarrieds.

53

True enough. But I’m willing to bet that the rationale behind that lies not with tax issues, but with marital property issues. In California, and several other states, community property laws mean that each spouse owns equally with the other spouse all the products of each spouse’s work. Most other states have marital property laws that reach more or less the same result. Without reading the cited IRS statute, or doing any legislative history search on it, I’d make an educated :wink: guess that it is simply there to reflect state-law marital property concerns.

-Melin

Siamese attack puppet – California

Still neglecting and overprotecting my children

54

When I wrote “getting a tax cut” I was referring to the legislation currently before Congress to not only eliminate the marriage penalty but to give an equivelant credit to those couples already benefitting from the (alleged) marriage bonus. I though this was more or less what we were debating here.