My column Tuesday looked at the ways that our tax code and safety net discourage low-income married moms from working and low-income single parents from getting married. Collectively, these policies are often called “marriage penalties.”
Several months ago the Hamilton Project at Brookings released an in-depth report that estimated how large those disincentives are. The report, by Melissa S. Kearney and Lesley J. Turner, found that once you account for higher tax rates, lost means-tested benefits (like food stamps), and additional child-care costs, secondary earners typically take home less than half of what they “earn.”
The chart up top shows estimates of these “marriage penalties” for several hypothetical four-person families. For example, take a family in which the father has a full-time, minimum wage job, and the stay-at-home mother is contemplating rejoining the labor force. If she got a full-time job like her husband’s, her family’s disposable income would increase by only 38 cents for every dollar she thought she was earning.
At least when it comes to federal taxes, couples whose members have similar incomes are most likely to receive a marriage penalty. But in some rare cases — typically, couples in which one person earns a lot and the other doesn’t work at all — families might actually receive a federal income tax “bonus” upon getting married. That’s because of the way the tax brackets shift for married vs. single filers. For example, you hit the top marginal rate as a single person when your taxable income is over $406,750, but you won’t hit the top rate as a married couple filing jointly until your joint income reaches $457,600.
So to give a highly simplified scenario, let’s say a successful surgeon (or financier or lawyer or whatever) earning $415,000 annually is engaged to a starving artist who has $0 in earnings. Assuming they have no itemized deductions or dependent children, upon marriage they’ll get a “marriage bonus” of about $10,000 in lower federal income taxes. These Cinderella-story couples are less common today than in years past, of course, given women’s greater labor force participation and the related rise of assortative mating.