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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