By "marriage tax penalty", I mean the following:
Look at the current 2012 tax brackets:
http://www.forbes.com/sites/moneybuilder/2011/09/30/2012-federal-income-tax-brackets-irs-tax-rates/
For the 10 and 15% tax brackets, the limit for married filing jointly is exactly twice that of the single rate. For the 25%, 28%, 33%, and 35% brackets the limits for married filing jointly are 1.7x, 1.2x, 1x, and 1x the limits for the single rate, respectively.
Additionally, the standard deduction for a married couple is currently double that of the single rate. According to this link, it used to be only 1.7x the single amount (prior to the 2001/2003 Bush tax cuts):
http://www.smartmoney.com/taxes/income/how-the-expiring-bush-tax-cuts-affect-you/
The above link also outlines several other ways in which married couples could be penalized vs. singles with respect to taxes.
Why was the tax policy setup like this in the first place? I did some searching and came across this link:
http://www.ncpa.org/pub/ba445
It claims that prior to 1948, married couples filed separate tax returns. In 1948, Congress passed a law that originally set the married filing jointly tax bracket limits at 2x the limits for singles. This was later amended in 1969 to make the married filiing jointly limits and standard deductions 1.6x the limits for singles.
In effect, they were apparently trying to strike a balance between couples who saw a tax benefit by getting married and singles who saw a tax penalty by not being married. The article above outlines two hypothetical situations that illustrate this point.
The Bush tax cuts of 2001 and 2003 partially relaxed these limits, as the smartmoney link above explains.
Here are my discussion questions:
1. Do you believe the marriage tax penalty is really about balancing the interests of singles who are penalized by not being married with the couples who do benefit from being married?
2. Do you believe the system is fair overall, or would it be more equal if the married limits were simply set to 2x the limits of single filers?
3. For those of you who are married, did the tax implications of being legally married factor into your decision to get legally married? Do you think the way the system is setup now either encourages or discourages marriage?
I am single so I would be curious to know what the married ATPN members think about this.
Look at the current 2012 tax brackets:
http://www.forbes.com/sites/moneybuilder/2011/09/30/2012-federal-income-tax-brackets-irs-tax-rates/
For the 10 and 15% tax brackets, the limit for married filing jointly is exactly twice that of the single rate. For the 25%, 28%, 33%, and 35% brackets the limits for married filing jointly are 1.7x, 1.2x, 1x, and 1x the limits for the single rate, respectively.
Additionally, the standard deduction for a married couple is currently double that of the single rate. According to this link, it used to be only 1.7x the single amount (prior to the 2001/2003 Bush tax cuts):
http://www.smartmoney.com/taxes/income/how-the-expiring-bush-tax-cuts-affect-you/
The above link also outlines several other ways in which married couples could be penalized vs. singles with respect to taxes.
Why was the tax policy setup like this in the first place? I did some searching and came across this link:
http://www.ncpa.org/pub/ba445
It claims that prior to 1948, married couples filed separate tax returns. In 1948, Congress passed a law that originally set the married filing jointly tax bracket limits at 2x the limits for singles. This was later amended in 1969 to make the married filiing jointly limits and standard deductions 1.6x the limits for singles.
In effect, they were apparently trying to strike a balance between couples who saw a tax benefit by getting married and singles who saw a tax penalty by not being married. The article above outlines two hypothetical situations that illustrate this point.
The Bush tax cuts of 2001 and 2003 partially relaxed these limits, as the smartmoney link above explains.
Here are my discussion questions:
1. Do you believe the marriage tax penalty is really about balancing the interests of singles who are penalized by not being married with the couples who do benefit from being married?
2. Do you believe the system is fair overall, or would it be more equal if the married limits were simply set to 2x the limits of single filers?
3. For those of you who are married, did the tax implications of being legally married factor into your decision to get legally married? Do you think the way the system is setup now either encourages or discourages marriage?
I am single so I would be curious to know what the married ATPN members think about this.
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