Sunday, January 19, 2003


One aspect of President Bush's "stimulus" plan that has been overlooked in the furor over the dividend plan, is the treatment of the "marriage penalty". This is unfortunate, because the marriage penalty, and how to address it, was a right wing issue during the Clinton Presidency; President Clinton vetoed Congressional action addressing the marriage penalty in 2000... The argument is that the current system unfairly penalizes 2 income married couples by taxing them filing together at a higher rate than if they filed separately - however, the way the GOP wants to fix it will instead unfairly benefit those married families with only one wage earner - yet more "special rights" for one group of people at the expense of others - particular those who are prevented by law from getting married in the first place.

Anyway - good background article in today's NYT about the conservative social policies behing this aspect of the marriage penalty part of the tax bill.:

Marriage Penalty, Except When It Isn't


IF politicians of almost every stripe agree so readily about an issue, it is usually worth a closer look.

Such is the case with an important but barely debated component of President Bush's $674 billion tax-cut plan: relief from the "marriage penalty."

It is hard to find an idea with more mom-and-apple-pie appeal. Who wants to be against marriage? Who wants to be for higher taxes? Who would defend a tax burden that seems both unfair and capricious, a result of anomalies in the law?

As any two-income married couple knows, the marriage penalty kicks in when the husband and wife combine their incomes on a joint tax return and suddenly find themselves in a much higher bracket. A couple who together earn $80,000 owe hundreds more than two singles who each earn $40,000.

Small wonder that Democrats, who have attacked Mr. Bush's overall plan as reckless and overwhelmingly tilted toward the rich, have said virtually nothing about plans to alleviate this problem.

But for all the complaints about the marriage penalty, the current tax code is in many ways heavily biased in favor of married couples, especially those with children. Tens of millions of families actually receive big marriage bonuses, which would become even bigger under Mr. Bush's plan.

Consider the tax loads of three different households, each with an annual taxable income of $60,000. In an analysis prepared last week by Deloitte & Touche, the accounting firm, a single person with no children would owe $7,943 under current law and receive a tax cut of $345 under Mr. Bush's plan.

By contrast, a married couple who have two children and file jointly would pay $3,300 under current law and $2,400 under the Bush plan. Did someone say marriage penalty?

Defenders point out that the married couple have more mouths to feed, more clothes to buy and more house to pay for. But consider the third household: a single mother with one child. She would have to shoulder child-care expenses that a married couple with a stay-at-home parent would not. Yet she would owe $1,800 more than the married couple under current law, and her tax cut would be about half that of the married couple.

The big winners under current law and the Bush plan are the Ozzie and Harriets — married couples with only one breadwinner and two or more children.

Two-income married couples are in some respects the biggest victims of the marriage penalty, and their problems do not disappear under the Bush plan. Single people pay the highest taxes of all, under current law and the Bush plan, though a single person earning $60,000 may still end up paying less than a husband and wife who together earn the same amount.

There are technical reasons behind all this, but they seem to stem from a surprisingly intense political battle waged by influential conservative groups determined to encourage stay-at-home moms.

"The people who are treated the best are families with stay-at-home spouses, who, not surprisingly, are an important constituency for Republicans," said Edward J. McCaffery, a law professor at the University of Southern California and the author of "Taxing Women" (University of Chicago Press).

As far as two-income couples are concerned, "the more equal they are as earners, the higher the penalty will be," Mr. McCaffery added.

NE big reason for the bigger tax burden may be the role played over the years by Phyllis Schlafly, the indefatigable foe of feminism and of anything in the tax code that encourages women to leave their children for outside work.

Ms. Schlafly has pushed for child tax credits, which are given for each child in the family and would be increased to $1,000 from $600, and opposed tax breaks for the costs of child care, which are not being expanded.

She has fought for years to ensure that marriage-penalty relief flows to families with stay-at-home moms as well as two-income households. Mr. Bush's plan would raise the standard deduction for any married couple. When he proposed a special 10 percent tax break for two-income families in his 2001 tax bill, Ms. Schlafly raised a storm and helped kill the idea.

"Giving a tax cut only to two-earner couples would send the radical feminist message that the government sees no value in a homemaker's work at home," Ms. Schlafly wrote at the time, urging her supporters to write and call important Republicans on the House Ways and Means Committee.

The upshot is good news for the Harriet Nelsons of the country, unless, of course, Harriet decides to be a lawyer and make some money herself.