• Background: Big tax on couples with equal incomes, big gain for couples with disparate incomes
• Country Comparison: Most European countries eliminated gender bias in tax code in 1980s
• Recent Legislation: Cut in 2001 Bush tax cuts, into effect in 2009, sunsets in 2010

Background

• The taxes incurred by married couples, often referred to as the "marriage penalty" or "tax on marriage," is a tax provision that levies higher rates on some couples where spouses are making approximately the same taxable income and have filed a joint tax return. When the spouses' incomes are disparate, the two incomes result in a tax bonus. The larger the disparity in incomes, the larger the bonus. In contrast, singles pay significantly lower taxes on their individual incomes, less than half as much.
• A married couple's taxes are calculated by averaging their combined income. A progressive tax is applied to the combined income that is higher than the rate applied to a single person's income. Averaging the two incomes will reduce the tax rate at which two disparate incomes are levied, while increasing the rate for couples with similar incomes, even if the net income is the same for both couples.
• The tax policy was designed to reward the "bread-winner" family structure in which the male worked and the stay-at-home female earned little or no income. The couple would be penalized by the tax code when adding a second wage earner, thus discouraging women from working.

• Despite the "marriage penalty" imposed on some couples, married people in the United States are eligible for many benefits that single people cannot receive. (Examples: Social Security retirement and survivor benefits, greater access to college financial aid, inheritance and estate rights (Source: MSN))
  

  Country Comparison

• Gender biases have been built into in tax systems in such a way that offers tax incentives or disincentives that control the behaviors of secondary wage earners. Income tax laws have been designed to effect marriage, work patterns, child bearing, and other behavior in Western European countries, however most abolished these laws during the 1980s. Sweden, for example, introduced a method of taxation that taxed spouse's earning separately, leading to a surge of women in the country's labor force (Source: The World Bank).

Recent Legislation

• President Clinton threatened to veto legislation in the late 1990's that would eliminate the tax.
• In 2001, President Bush eliminated the marriage penalty in a sweeping set of tax reforms with the Economic Growth and Tax Relief Reconciliation Act. It does not go into affect until 2009.
• In 2010, the Pres. Bush's tax legislation will sunset.