|
|
 |
|
 |
 |
| MARRIAGE PENALTY TAX | |
 July 18, 2000  |
|
|
The Senate has approved a bill to end the "Marriage Penalty Tax." After this background report, two experts discuss whether the bill should become law.
|
|
KWAME HOLMAN: Fresh from winning passage of a repeal of
the estate tax last week, Senate Republicans today set their sights
on SEN. ORRIN HATCH: Let's suppose we have three families, all neighbors,
living in the same street in Ogden, Utah. These families are nearly
identical in that they each have three children and household incomes
of $80,000 a year. The only differences in these three families were
in the marital status of the parents, and who earns the income. In the
first family, the Allen family, the parents are married; and both work
|
|||||||||||||||||||
| Increasing the standard deduction | ||||||||||||||||||||
|
KWAME HOLMAN: To address the discrepancy, the Republican plan would increase the standard deduction for married couples to twice the deduction of a single taxpayer, double the amount married couples may earn before they're taxed at the 15 percent and 28 percent rates, and increase the earned income tax credit for low-income workers. That would eliminate the marriage penalty paid by couples like Senator Hatch's Allen family. But Republicans want to go further to grant relief to one-wage-earner families like the Browns, who already enjoy a so-called marriage bonus. SEN. ORRIN HATCH: It is true that the Browns do not suffer a marriage penalty, but why should they pay higher taxes simply because their family income is earned by one spouse and not two? However there are also about 108,000 couples in Utah who are like the Browns and would be left behind by marriage tax relief like we passed in 1999. KWAME HOLMAN: But Democrats railed against the Republicans' ten-year, $248 billion plan, arguing it costs too much, yet only eliminates part of the marriage penalty arising from a complicated tax code. Minority Leader Tom Daschle used his own example of a couple who earns $70,000 a year. SEN. TOM DASCHLE: Here's what the Republicans do. The |
 |
|||||||||||||||||||
| The Democratic alternative | ||||||||||||||||||||
|
KWAME HOLMAN: Senate Democrats have their own plan, which would give couples the choice of filing joint or single tax returns, whichever gave them the most tax relief.
KWAME HOLMAN: But at $54 billion over ten years, the Democratic plan falls short, according to Bill Roth, chairman of the Finance Committee.
KWAME HOLMAN: But outnumbered as they are, Democrats failed to win passage of their plan last night, clearing the way for this afternoon's vote on the Republican plan. KWAME HOLMAN: In the end, a handful of Democrats voted with Republicans, allowing them to move closer to getting a marriage penalty bill to President Clinton quickly, well before they convene their national convention. President Clinton has said he will veto the legislation unless Republicans agree to a Medicare prescription drug benefit, an offer Republicans have declined. |
 |
|||||||||||||||||||
 |
        |
|
| Support the kind of journalism done by the NewsHour...Become a member of your local PBS station. | ||
| ||
| PBS Online Privacy Policy Copyright ©1996- MacNeil/Lehrer Productions. All Rights Reserved. | ||
| ||
eliminating
another popular target in the tax code, the so-called the marriage penalty.
The marriage penalty results from a quirk in income tax law that forces
some 25 million married couples to pay more in taxes than they would
if they filed as singles. Utah Republican Orrin Hatch explained how,
using three mythical families. 
outside the home, and each of them earns $40,000 for a total of $80,000.
The second family, the Brown family, they are also married, but only
the husband works outside the home, earning $80,000 per year. The third
family, the Campbell-Clark family, are unmarried parents, and each of
them earns $40,000 a year for a total of $80,000. As you can see from
this chart, under current law, the Allen and the Brown families each
pay $9,222 in income tax each year. The Campbell-Clark family, however,
because they can file as single taxpayers because they're not married,
pay only a combined $7,885. Therefore the Allens suffer a marriage penalty
of about $1,300 each year, even though the circumstances are basically
the same. 
Republicans
will provide, under their relief -- I mean under their bill -- 39 percent
of the relief. That's all you get. That's all you get. I mean, here
they are spending $248 billion, and they can't even do it right. They
can't fix all 65 provisions. They fix three, and so you leave the balance
under the Republican bill for another day, apparently. Madam president,
we don't believe that that ought to be the way you fix the marriage
penalty. We think you ought to fix the marriage penalty if you say you're
going to fix it, and we provide 100 percent relief: $1,125 in relief
for that couple making $70,000 a year. 
SEN.
RICHARD BRYAN: The Democratic alternative provides simplicity. Taxpayers
would be allowed a choice, not a difficult concept for us in America:
If you benefit under the tax code, by filing as a single person, if
you are married, that is your option, and you can do so -- no ifs, ands,
or buts. And conversely, if you benefit as a married person by filing
a joint return, that is your choice as well. That simple. Whatever fits
your individual need. It is tailored, it is specific, and it is simple.
BILL
ROTH: Today's amendment imposes arbitrary limits on the marriage penalty
relief and begins to phase out the benefits at $100,000 of income, and
then completely shuts them off at $150,000 per couple. I don't see how
we can justify solving the marriage tax penalty for some, but letting
it remain for others at an arbitrary income level. This does not have
to be, and should not be, an issue of the rich versus the poor.