Taxing Marriage: Microeconomic Behavioral Responses to the Marriage Penalty and Reforms for the 21st Century

George Mason University Mercatus Working Paper Series No. 12-24

17 Pages Posted: 19 Sep 2012

Date Written: September 17, 2012

Abstract

Politicians often stress that marriage is a key institution that promotes family values. However, many aspects of the federal tax code do not promote marriage and may in fact provide disincentives and penalize marriage. As an alternative to marriage, cohabitation is a common choice for low-income couples facing significant fiscal penalization from the joint income filing requirement, particularly when qualifying for the Earned Income Tax Credit (EITC). In part because of the additional tax liability associated with joint tax filing, many middle-income and upper-income people are forgoing marriage as well. As more women enter the labor force and female wages rise, the marriage penalty becomes increasingly important to horizontal tax equity concerns and for economic growth. Today, the United States is one of only seven Organisation for Economic Co-operation and Development (OECD) countries to employ joint taxation for married couples.

Keywords: Marriage penalty, Marriage bonus, Joint income filing, Single filing, Marriage neutrality

JEL Classification: D14, J12, K4

Suggested Citation

Fichtner, Jason J. and Feldman, Jacob M., Taxing Marriage: Microeconomic Behavioral Responses to the Marriage Penalty and Reforms for the 21st Century (September 17, 2012). George Mason University Mercatus Working Paper Series No. 12-24. Available at SSRN: https://ssrn.com/abstract=2147820 or http://dx.doi.org/10.2139/ssrn.2147820

Jason J. Fichtner (Contact Author)

Johns Hopkins University - SAIS ( email )

1717 Massachusetts Avenue NW
Washington DC, DC 20036
United States

HOME PAGE: http://https://sites.google.com/site/jasonjfichtner/

Jacob M. Feldman

Independent

No Address Available

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