Love and Taxes

In Republican circles any issue that manages to combine family values with tax cuts is considered a winner. Concocting such a twofer, Reps. Jerry Weller (R-Ill.) and David McIntosh (R-Ind.) and Sen. Lauch Faircloth (R-N.C.) have introduced bills to abolish the notorious marriage tax penalty, which they estimate costs 21 million American couples an average of $1,400 per year.

The Marriage Tax Elimination Act would allow married people to file as single taxpayers if doing so would reduce their tax liability. Today, for instance, the first $24,000 of a single filer's income is taxed at 15 percent, but a couple filing jointly starts paying the 28 percent rate when the household earns only $40,000. This bill would increase the 15 percent rate ceiling to $48,000 for married couples who file as individuals. The standard deduction, currently $6,700 for married couples, would increase for each to the $4,000 now allowed for individual filers.

A husband and wife could individually account for all financial transactions that can be pegged to one spouse, such as earned income, investment income, IRA contributions, and alimony payments. Deductions that are not easily pegged to one person, such as child exemptions and the home mortgage interest deduction, would be proportionally assigned to each spouse depending on their respective shares of the household's income.

With 222 co-sponsors in the House and 37 co-sponsors in the Senate, hearings on these bills are expected to be held after Congress returns from its Christmas break. Perhaps at these hearings Congress could revisit all the marriage penalties it added through income thresholds in the 1997 tax bill. These income penalties include the deductibility of interest on student loans ($40,000 for singles and $60,000 for married couples), IRA expansions ($30,000 for singles and $50,000 for married couples), and even the child tax credit ($75,000 for singles and $110,000 for married couples).