Marriage penalty

[gwendally]

I just ran numbers again on the marriage penalty.

Scenario:

TP makes $30,000 at a wage job.
SP makes $15,000 at a wage job.

They have two children together who are under 17.

Comments

[anonymous]

I am the 1%! We were shocked and sort of appalled by how many unfathomable but extremely favorable tax credits we got this year. Stay at home mom with four kids, working for two months then unemployed dad. If I can suppress my exasperation that my procrastinating beloved didn't file until this month, and assuming it really does happen, our tax refund will pay the property taxes this year.

But SAHMs are a dying breed, I know. And I am hardly saying that SAHMs with a bucketload of children living under the poverty line are GOOD for America.

[gwendally]

You would have done nearly as well if you were unmarried. He would have claimed HoH and you would be listed as a dependent on his tax return so he would still have gotten your exemption.

The marriage BENEFIT only falls to people where one of them makes less than about $4K, i.e., is a SAHM.

[anonymous]

Also, you were totally right -- New Year's Eve baby FTW!

[gwendally]

I have never heard a birth story that made me happier than Wolfie's made me. It brought tears of joy to my eyes. And, yes, partly because of that $1000 tax credit. Hey! Joy is joy!

[crazyburro]

The cynic in me says that's because a subset of the population doesn't seem to think one of the spouses should work. I hear that repeatedly - school, where on two separate occasions in elementary school teachers made statements to that effect, one in front of the class with parents present, the occasional politician who, in a moment of indiscretion talk about how families with two working parents are abusing their kids, or a co-worker who complained that I couldn't travel on a particular day because of my spouse's work schedule (and asked why my spouse works).

[gwendally]

I don't think it's that nefarious. I think it was unintended consequences. There's a presumption that a single parent has to cover more expenses than a single non-parent, so single parents get various benefits as Head of Households. Combine the benefits for a single person and the benefits from a Head of Household and you usually get a better deal because of the presumption that they are two households.

Congress envisioned households being married couples, single parent households, or single people. They never imagined that everyone would just live together without marriage when the tax code structure was set up.

Marriage rates have been dropping ever since.

were that the case

[crazyburro]

it would have been fixed in the last 40 years.

Or not... it does bring in extra revenue, which is probably the reason the majority of congress prefers to keep it at this point.

This part of the code was set up in the late 1960s. From what I remember of the justifications I've read its so that a married couple has their income spread over two people, to some degree, and isn't penalized for not having one person working. Anyway, people did live together "in sin" then, too.

[coercedbynutmeg]

How much of that refund is due to EIC? In other words, if you just abolished the EIC, how would the scenario change? The married couple makes too much for EIC, but the unmarried couple doesn't.

[gwendally]

Most is due to EITC

[coercedbynutmeg]

I don't get it. I thought the median household income in the US was around $49K. How is 40% of the population getting EIC? I thought it was supposed to be for the "working poor," not everyone earning below the median US income while having kids. That damned thing needs to go.

[gwendally]

Our country is bankrupt. It is mathematically eliminated. Unless we have unimaginable growth in the post-peak-oil world there is no way we can grow ourselves out of our debts, which now have a present value equal to the present value of all our future cash flows. Perhaps we'll see off assets (like mining rights to the Grand Canyon) but the MAIN plan is to spend until people stop loaning us money then default

[darthzeth]

Random unrelated question: There were ~140 million tax returns submitted last year. More than one person can be represented on a return (married filing jointly and dependents.) How many individuals does that cover? Or conversely, how many people are not represented on a tax return. I can't seem to find that statistic. I thought maybe you knew where to find info like that.

I ask mostly because I want to understand better the statistics I see about "top x% of earners", which usually actually means the top x% of tax returns, which includes the married folk. So I know that 1% of the population is ~3.1 million people, and 1% of tax returns is ~1.4 million returns. But I don't know how many PEOPLE those tax returns represent.

[firynze]

And this makes me wonder, yet again, if there's a penalty for married-and-childless. The more I think on it, the less inclined I am to ever get married.