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1 Nick Kasprak, Effects of Marriage on Tax Burden Vary Greatly with Income Level, Equality 1 (2013)

handle is hein.taxfoundation/ffdfcxz0001 and id is 1 raw text is: FUDTOFiscal Fact January 10, 2013 No. 352 Effects of Marriage on Tax Burden Vary Greatly with Income Level, Equality By Nick Kasprak Effects of Marriage on Income and Payroll Tax Liabil Singlefor various households Earner- Household i E/ :i..................................... ..... iiiiiii~ii...:........iii ........... ............::::::::::::............... (perc inc Wage Income 'SIV ity Joint filing has been a source of confusion ever since the filing status was created in 1949. Marriage has the potential to create a significant tax penalty, but it can also lead to a tax bonus in bonus other situations, and for most taxpayers, determining the effect is anything but simple. Neutral To illustrate how filing status affects tax liability, we've created a chart (left) that plots the two most 4.2% important variables against each penalty ent of other-on the Y axis, equality of me) incomes between the two spouses, and on the X axis, total household wage income. The color represents the theoretical marriage penalty or bonus for a household with only wage income, no children, and no itemized deductions. In general, there tends to be a marriage tax bonus when the two partners have widely disparate incomes and a marriage tax penalty when they have similar or equal incomes. There are two countervailing forces at work-on the one hand, the higher tax rate brackets kick in at greater income levels for joint filers than for single filers, but on the other hand, adding two incomes together can more than compensate for this effect. The need to balance these two effects is inherent in any tax system with a joint filing status-efforts to reduce the marriage bonus for certain filers will necessarily lead to a marriage penalty for others and vice versa. ao :.: Exactly. 50/50'