The Wages of Wedlock
Blankenhorn, Allan C. Carlson and David
The Wages of Wedlock by Allan C. Carlson and David Blankenhorn All in the name of fixing the "marriage penalty" in the federal tax code, some good people in Washington are about to make a bad...
...The marriage penalty is triggered when two people get married and their joint income pushes them into a higher tax bracket than they were in (or one of them was in) before...
...One result of this trend has been an increase in the share of the tax burden falling on married couples with children...
...Moreover, because it would reduce the tax burden on two-earner couples while leaving everyone else's burden the same, it would further penalize parents who stay home...
...There is a way, however, to use the federal tax code to strengthen the institution of marriage and even to help revive civil society...
...The Wages of Wedlock by Allan C. Carlson and David Blankenhorn All in the name of fixing the "marriage penalty" in the federal tax code, some good people in Washington are about to make a bad mistake...
...Think of it also, if you wish, as a women's issue, since most of the parents who choose to leave the labor force to raise children, manage households, and contribute to their communities are women...
...This would apply to both two-earner and single-earner couples...
...This may sound like a mere technical matter, but it's not...
...In the economic sphere as in other areas of life, married people cooperate, trade off, give freely to each other, and specialize according to talent and inclination in order to achieve better results for the household...
...Under income splitting, a married couple at tax time would add up their income and divide by two, so that effectively each spouse would be taxed on half...
...And if one spouse earned $50,000 and the other nothing, the tax result would be the same...
...Consider the choice now facing members of Congress: on the one hand, a tax cut for relatively affluent two-earner couples that would "fix" the marriage penalty without costing too much...
...Finally, income splitting would permit couples to erect a buffer against the encroachment of the marketplace into family life...
...on the other hand, a more substantive and far-reaching shift in the way we tax, and therefore value, the non-market bonds of marriage and community...
...The second is that it represents the abandonment of the idea that government ought to tax, indirectly, the unpaid labor of spouses...
...This third objection is likely to be decisive...
...To correct this inequity, over 200 members of the House of Representatives, including the Republican leadership, are proposing to allow married couples to file their returns either singly, as if they were unrelated individuals, or jointly, whichever results in the lower tax burden...
...Income splitting would serve as a corrective to that fiction...
...It would cost a lot: probably $30-35 billion a year in lost tax revenues...
...In a society where the roles of worker and consumer increasingly usurp our time and attention and put pressure on the roles of spouse, parent, and neighbor, think of income splitting as a small blow for the sphere of intimacy and nurture, a modest encouragement to the unpaid work of parenthood and civil society...
...To be just, the tax code should treat married couples in a way that corresponds to the reality of the marriage relationship...
...It is a terrible idea...
...One is that it constitutes a special benefit for marriage...
...Well, of course it does...
...Especially if income splitting were combined with more generous dependent exemptions and credits (we favor doubling the personal exemption to $5,000 and the child tax credit to $1,000), it would probably require large spending cuts or revenue increases...
...It would cost more money than "single filing," now steamrolling through the House, but it has the advantage of being a good idea...
...that's the whole point...
...Many consistent champions of marriage and family have endorsed this proposal, introduced by Republicans Jerry Weller of illinois and David Mcintosh of Indiana...
...This is the heart of the matter...
...Far better than our current tax code, and far better than the Weller-Mclntosh single-filing proposal, income splitting reflects the economic truth of marriage...
...Quite the contrary...
...Thus, if one spouse earned $20,000 and the other $30,000, each would report a taxable income of $50,000 "split" in two, or $25,000, to be taxed at the basic rate...
...In short, the basic reality of marriage is that two become one...
...Even Dr...
...By rewarding couples for sharing their income for tax purposes, and by treating both partners as equal taxpayers, income splitting would better recognize the contribution of married people who are not in the labor force...
...Permitting income splitting would say to these people: You matter...
...The joint-filing proposal would cost the Treasury about $18 billion per year...
...that is an intention of the reform...
...Unfortunately, without a much fuller national debate on this subject, Congress is likely to follow the path of least yuppie resistance...
...It's called income splitting...
...But it's the wrong path for the country...
...David Blankenhorn is president of the Institute for American Values in New York City...
...It not only would increase the fairness of our tax code but also would clarify our vision of marriage...
...It has been proposed in the Senate by Republican Connie Mack of Florida and others...
...The third objection is that income splitting would cost too much...
...Permitting married couples to split their income would amount to a far-reaching reform in favor of marriage, family time, and community life...
...There are three arguments against income splitting...
...For more than three decades, the notion that the family is the social unit to be taxed has been weakening, as inflation has slashed the value of the dependent exemption...
...Another result, more subtle but more damaging, is a tax code based largely on a fiction: the belief that there is little meaningful economic difference between a married person and an unmarried person...
...Again, perfectly true...
...The single-filing proposal would further the conceptual shift away from taxation of families and toward individuals...
...Typically, married people are not autonomous economic actors...
...And it would be just...
...So would income splitting for tax purposes...
...Yes, it would eliminate the marriage penalty...
...It would replace the marriage penalty with a financial incentive for marriage and an equally clear disincentive for divorce...
...Allan C. Carlson is president of the Howard Center on Family, Religion, and Society in Rockford, Illinois...
...Laura Schlessinger spent a recent radio show touting the scheme...
...But it would also increase regressivity in the tax code by easing the tax burden on comparatively affluent couples...
...Legal notions like community property and the equal division of assets following divorce recognize this fact...
...As a result, the couple pays more in taxes than the two of them together would have paid if they had remained single...
Vol. 3 • November 1997 • No. 10
