Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Posting-Version: version B 2.10.1 6/24/83; site ukma.UUCP Path: utzoo!watmath!clyde!cbosgd!ukma!red From: red@ukma.UUCP (Red Varth) Newsgroups: net.taxes,net.singles,net.flame Subject: Re: Marriage penalty Message-ID: <790@ukma.UUCP> Date: Wed, 13-Feb-85 13:56:57 EST Article-I.D.: ukma.790 Posted: Wed Feb 13 13:56:57 1985 Date-Received: Thu, 14-Feb-85 21:12:35 EST References: <285@calmasd.UUCP> Organization: Univ. of KY Mathematical Sciences Lines: 33 Xref: watmath net.taxes:656 net.singles:5857 net.flame:8338 >After looking at the tax tables, I figured out that married, we are at >the marginal tax rate of 38%. If we were single, both my SO and I would >be taxed at 30%. But because we are married, we cannot file as single. >There is a category of "married, filing separately" but that tax rate is >even higher than the married rate (I calculated that too). > >Spike >{ucbvax,ihnp4}!sdcsvax!sdcc6!calmasd!stj The "marriage tax" is a consequence of three conflicting policy goals of the tax system: a progressive tax rate, the desire to tax all individuals at the same rate for the same income, and the desire to tax all families at the same rate for the same income. Example: we wish to tax those making more than $20,000 a year at 40%, and those making under $20,000 at 30%. But do we define this for individuals or families? Consider four families: (1) A two-income married couple where each earns $15,000. (2) A one-income couple where one earns $30,000 and the other works for charity, keeps house, etc. (3) A single person earning $15,000. (4) A single person earning $30,000. Now, should we tax (2) at a higher rate than (1)? If not, should we tax (1) and (2) at the same rate as (3)? After all, their average income per adult is below $20,000. But if we tax them the lower rate, (4) is penalized for being single. This was the system in effect prior to about 1970. Now we penalize two-income married couples! The kicker is that it is MATHEMATICALLY IMPOSSIBLE to resolve these three goals: we may accomplish any two, but not all three. This is one clear advantage of a uniform tax rate (flat tax) : tax considerations would not be a factor in deciding whether to marry! Paul Hightower University of Kentucky