Better off divorced thanks to the marriage tax penalty
This headline is hard to miss. “Why is the Government Trying to Force Me to Divorce My Wife?” But even more noticeable is the $80-100,000 dollars Scott Sumner and his wife will miss over their lifetime simply because they’re married.
Sumner opines about the marriage tax penalty on the Wall Street Pit blog, and points out that the new health care bill “makes the marriage penalty even worse for married couples earning between $250,000 and $400,000.”
Contrary to what Obama says, workers making $130,000 (married to each other) might have to pay higher taxes as a result of the health care bill. So it isn’t just the “rich,” the upper middle class will also be affected. Under the bill a cohabitating couple where each person makes $200,000 from interest, dividends, or rental income will pay an extra $5900 in taxes if married, but no extra taxes if “living in sin.”
The marriage penalty affects lower income couples by a much greater percentage:
BTW, this isn’t just a problem that affects the upper middle-class; low income workers also face a large implicit marriage penalty, as benefits like the EITC [Earned Income Tax Credit] get phased out much more quickly if two low income people get married. Indeed in percentage terms this probably affects them much more than me. (Interestingly, as the marriage penalty got worse for low income workers, their marriage rate fell.)
I would think that both Democrats and Republicans would have something to gain this election season by championing the end to the marriage penalty. Married Americans tend to be high earners, responsible tax payers—and voters.
...See the four responses to “Better off divorced thanks to the marriage tax penalty”
http://www.citizenlink.com/2010/08/better-...
Sumner opines about the marriage tax penalty on the Wall Street Pit blog, and points out that the new health care bill “makes the marriage penalty even worse for married couples earning between $250,000 and $400,000.”
Contrary to what Obama says, workers making $130,000 (married to each other) might have to pay higher taxes as a result of the health care bill. So it isn’t just the “rich,” the upper middle class will also be affected. Under the bill a cohabitating couple where each person makes $200,000 from interest, dividends, or rental income will pay an extra $5900 in taxes if married, but no extra taxes if “living in sin.”
The marriage penalty affects lower income couples by a much greater percentage:
BTW, this isn’t just a problem that affects the upper middle-class; low income workers also face a large implicit marriage penalty, as benefits like the EITC [Earned Income Tax Credit] get phased out much more quickly if two low income people get married. Indeed in percentage terms this probably affects them much more than me. (Interestingly, as the marriage penalty got worse for low income workers, their marriage rate fell.)
I would think that both Democrats and Republicans would have something to gain this election season by championing the end to the marriage penalty. Married Americans tend to be high earners, responsible tax payers—and voters.
...See the four responses to “Better off divorced thanks to the marriage tax penalty”
http://www.citizenlink.com/2010/08/better-...
