From: dgb2@bunny.gte.com (Dan Borkowski)
Newsgroups: misc.consumers
Subject: Married/Single Tax Calculations (was Re: Married/Single/Taxes)
Date: 22 Jul 92 16:26:34 GMT
Organization: GTEL

In article <1992Jul21.225210.21876@cco.caltech.edu> roder@cco.caltech.edu 
(Brenda J. Roder) writes:
> > From a previous posting about middle class $$$...
> >I would be VERY happy if someone would disprove the contention that 
> >married couples are worse off tax-wise than singles, but that's how
> >I read it.
> 
> One thing to remember in your thinking about married couples is that the 
> hit is worst if both partners make approximately equal amounts of money.
> For marriages where one partner is making a significant fraction of the
> money,
> there can be a win since even though the marginal rates do not change at
> half the singles, they are lower.  I don't know the numbers to be able to
> tell where the break even point is.  Also, presumably the tax laws are
> old enough that the supposed norm was a one income family not two.

This is correct; although the chances of actually *winning* are slim.  
When my wife and I (both working) married, we calculated the tax hit, and 
it turned out to be significant.  Since then, I've been very interested in 
the marriage tax penalty (as we call it).

Here are last year's (1991) tax tables.
Single:          $0     - $20350    15%
                 $20351 - $49300    28%
                 $49301 +           31%
                 Standard deduction = $3400

Married (filing jointly): $0     - $34000   15%
                          $34001 - $82150   28%
                          $82151 +          31%
                          Standard deduction = $5700

Standard exemption in either case is $2150 per person.

Using the tables above and standard deductions and exemptions, here are 
several cases:
(numbers rounded to nearest whole dollar)

Single person
income:          20000   40000   60000
tax:              2168    7001   12755

Married couple
income:          20000   40000   60000   80000   100000   120000
tax:              1500    4500    9580   15180    21016    27216

The tax consequences of being married vary with the income distribution.
Note:  these observations apply specifically to the income values listed 
above; they can be generalized, but different tax consequences will occur 
for specific income combinations (especially near the tax-rate income 
boundaries).

Only the single-income distributions provide a benefit for being married:
           20k      40k     60k
benefit:   668     2501    3175 

The remaining distribution combinations all carry some penalty for being 
married:
          2*20k   20k+40k   2*40k   20k+60k   40k+60k    2*60k
penalty:   165      412     1179      258      1260      1706

These penalties are not chump change.  For two professionals making $40k
each, the marriage tax penalty is almost 8% of their total tax bill.

This analysis does not include other factors such as the phase-out of 
deductions for any return with taxable income over about 100k 
(single,married, doesn't matter) which could make the marriage tax penalty 
even higher.  It also does not include impact on state taxes.  Here in MA, 
the marginal rate is the same for all income levels as well as 
married/single status.  However, there is a rental deduction which is 
capped at about $2500 per *family*.  Around here, with average rent about 
$650, two singles living together could each get the $2500 deduction, but 
a married couple could only get one $2500 deduction.  At 5% tax rate, that 
amounts to another $125 in penalties.

For all the politicians' talk about marriage, family values, and related 
bull-ony, they certainly aren't providing any tax incentives to get 
married.

Dan Borkowski
GTE Laboratories
Internet:  dgb2@gte.com
The opinions expressed belong to me, not my employer.