The Negative Effect of the Marriage Penalty Tax on American Society
Academy of Accounting and Financial Studies Journal, Vol. 13, No. 1, pp. 103-125, 2009
26 Pages Posted: 7 Dec 2010 Last revised: 16 Dec 2010
This study is an extension of prior research that quantifies the magnitude of the marriage penalty tax (MPT) and measures the distributional effects on the U.S. population in general. We use the Internal Revenue Service’s Statistics of Income (SOI) data and the Census Bureau’s year Current Population Survey (CPS) database. Estimates of the MPT are computed based on the effects of the most recent tax act to all taxpayers according to class of income. The study examines distribution of the MPT and projects effects of current tax law affecting MPT, the Jobs and Growth Tax Relief Reconciliation Act of 2003. Enactment of this tax law was partly motivated by President Bush’s assessment that the tax code frequently taxes couples more after marriage and the MPT contradicts not only basic values but any reasonable sense of fairness. However, even after the passage of the act, results of this study indicate that while the marriage penalty tax is reduced, it continues to negatively impact American society. This, in turn, may have important implications for the social welfare of the nation. To make matters worse, current reductions in MPT will ‘sunset’ or expire after 2010, unless Congress votes to extend provisions of JGTRRA (aka Bush Tax Cuts).
Keywords: MPT, Income Tax, Marriage Penalty Tax, Bush Tax Cuts
JEL Classification: E62, H2, H24, K34, M41
Suggested Citation: Suggested Citation