DEFINING AND MEASURING

MARRIAGE PENALTIES AND BONUSES

by

Nicholas Bull* Janet Holtzblatt**

James R. Nunns*** 

U.S. Department of the Treasury

Robert Rebelein****

University of Cincinnati 

OTA Paper 82-Revised November 1999

OTA Papers is an occasional series of reports on the research, models, and datasets

developed to inform and improve Treasury’s tax policy analysis. The papers are

works in progress and subject to revision. Views and opinions expressed are those

of the authors and do not necessarily represent official Treasury positions or policy.

OTA Papers are distributed in order to document OTA analytic methods and data and

invite discussion and suggestions for revision and improvement. Comments are

welcome and should be directed to the authors.

* Financial Economist, Office of Tax Analysis. ** Deputy Director for Individual Taxation,

Office of Tax Analysis. *** Director for Individual Taxation, Office of Tax Analysis. 

**** Assistant Professor, Department of Economics, University of Cincinnati. E-mail addresses

are: nicholas.bull@do.treas.gov; janet.holtzblatt@do.treas.gov; james.nunns@do.treas.gov; and

rebeler@email.uc.edu . The authors received valuable comments on an earlier draft from Leonard

Burman, Michael Cooper, and Lowell Dworin. The authors especially thank Bob Gillette for his

guidance.
Defining and Measuring Marriage Penalties and Bonuses

Synopsis

It is easy to define marriage penalties and bonuses, but it can be very difficult to measure

them. One contribution of this paper is to consider in detail the implications of

alternative assumptions that can be made (and have been made in the literature) in

choosing a measure of marriage penalties and bonuses. A second contribution is to show

that, while the aggregate amount of marriage penalties net of bonuses is very sensitive to

measurement assumptions, the change in this aggregate amount resulting from a

proposed policy can be completely insensitive to these assumptions.

I. Introduction

A couple has a marriage penalty if they owe more income tax filing a joint return than the spouses

would pay if they were unmarried and each were taxable as a single or head of household filer. 

Conversely, a couple has a marriage bonus if they owe less income tax filing a joint return than the

spouses would pay if they were unmarried and each were taxable as a single or head of household

filer. Marriage penalties generally arise because the standard deduction and rate brackets for joint

filers are less than twice the corresponding amounts for single filers or head of household filers.

Marriage bonuses generally arise because joint filing effectively allows couples to average their

incomes, which can reduce the tax rate, and therefore the tax, on the income of the higher-earning

spouse. Marriage penalties and bonuses can also arise because of other tax provisions, such as

the Earned Income Tax Credit (EITC) and the taxation of Social Security benefits.

Policy debates and legislation dealing with marriage penalties have been driven primarily by

considerations of equity among married taxpayers and between married and unmarried taxpayers. 

Concerns have also been raised about the effect of marriage penalties and bonuses on marriage,

divorce, and work effort. This paper addresses methodological issues in defining and measuring

marriage penalties, issues which are essential to the analysis of the equity and efficiency effects of

marriage penalties. The paper does not, however, directly address these equity and efficiency

effects. 

Some History

A brief review of the historical development of the federal income tax is helpful for understanding

why marriage penalties and bonuses arise under the current income tax, as well as the policy

objectives that must be balanced in any proposal to address marriage penalties and bonuses in the

future. 

Prior to 1948, there was only one rate schedule in the federal income tax which applied to all

taxpayers: married taxpayers filing a joint return, married taxpayers filing separate returns, and

unmarried taxpayers. In most circumstances, this pre-1948 income tax structure gave rise to

neither marriage penalties nor bonuses, because spouses could choose to file separate returns and
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1

 Marriage bonuses could arise due to the differential between the personal exemption for

married and unmarried taxpayers in some years prior to 1948.

2

 Property from gifts and inheritances after the marriage and from certain other sources

could remain the separate property of one spouse.

3

 Among the other means were the use of family trusts, family corporations, and family

partnerships. Note that through gifts and other means, income could be shifted to children as well

as to spouses, further reducing income tax liability. See U.S. Department of the Treasury (1947). 

pay the same amount of tax they would have paid if they were unmarried.1 In some

circumstances, however, income was considered to be split or could be shifted between spouses,

giving couples a marriage bonus. One such circumstance arose in community property states,

which considered all earned income and all income from property accumulated in the marriage to

be split evenly between the spouses.2 In non-community property states, property income could

be shifted between spouses through direct gift of the property and by other means.3 Thus,

couples with the same combined incomes could pay quite different amounts of federal income tax

depending on how their income was split, whether they resided in a community property state,

how much of their income was earned rather than unearned (investment) income, and the extent

to which they used gifts and other devices to shift property income between spouses.

In response to these perceived inequities, Congress adopted, effective in 1948, a separate rate

structure for joint filers with rate brackets that were double the width of the rate brackets for

single filers. This rate structure effectively attributed half of the combined income of the couple

to each spouse and taxed each half at the single rates. With this “income splitting,” a couple filing

jointly paid twice as much tax as a single filer with half the couple’s combined income. There

were marriage bonuses, but no marriage penalties, under this rate structure since a couple would

pay no more tax (and in many circumstances less tax) filing jointly than the spouses would pay if

they each filed a separate return.

In 1951, Congress was concerned that some single individuals could have the same family

obligations as a couple, but could have higher income tax liabilities. To address this concern, the

Revenue Act of 1951 included a new filing status for heads of households with rate brackets that

were larger than the single rate brackets, but smaller than the joint rate brackets. Although the

addition of head of household status had no direct effect on the tax liabilities of joint filers, it

imposed marriage penalties on some couples with children and decreased marriage bonuses for

others. This result follows from the fact that after 1951, some couples with children would have

paid less if each spouse could have filed separately, with at least one spouse using head of

household status.

The favorable tax treatment accorded couples in 1948 and heads of households in 1951 was at the

relative expense of single taxpayers. In 1969, the large disparity between the income tax imposed

on some single filers and a joint or head of household filer with the same income led Congress to

broaden the single rate brackets, reducing the disparity to no more than 20 percent (effective in

1971). The new single rates, like the addition of head of household status in 1951, had no direct

effect on the tax liabilities of joint filers, but imposed marriage penalties on some couples (for the
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4

 Appendix A contains an algebraic derivation of these results.

5

 A major exception was the two-earner deduction which was enacted in 1981 and

repealed in 1986.

first time childless couples, who were unaffected by the 1951 legislation, faced penalties) and

decreased marriage bonuses for others. Again, this is because the tax imposed under the

alternative of separate filing by each spouse had been reduced.

Lessons from history

The preceding history can be summarized as follows: marriage bonuses arose in 1948 when joint

rate brackets were made double the width of single rate brackets, and these bonuses were

reduced, or marriage penalties were imposed, by legislation in 1951 and 1969 which made the

rate brackets for unmarried filers more than half the width of the joint rate brackets. This history

demonstrates the opposing features of the current income tax which determine whether, on

balance, a couple has a net marriage penalty or a net marriage bonus. 

One feature is the income splitting allowed couples since 1948. By itself (i.e., if there were only

one rate structure, as was true prior to 1948), income splitting can give rise to marriage bonuses,

but never marriage penalties. The second feature is that the 1951 and 1969 legislation made joint

rate brackets less than double the width of head of household and single rate brackets. Such a

relationship between joint and non-joint brackets (and other tax parameters) by itself (i.e., given

income splitting) can give rise to marriage penalties, but never to marriage bonuses. Whether a

couple has a marriage bonus, a marriage penalty, or neither depends on whether the bonus due to

income splitting exceeds, is exceeded by, or is equal to the penalty due to the relationship between

rate structures (and other tax parameters).4

The historical development of current-law marriage penalties and bonuses also illuminates the

policy objectives that must be weighed in future proposals. Pre-1948 law generally gave rise to

neither marriage penalties nor bonuses, but it resulted in differential tax burdens on couples with

identical incomes. Since 1948, couples with identical incomes have generally been taxed the

same,5 but the presence of marriage penalties and bonuses has meant that the income tax has not

been neutral with respect to marriage. These two objectives, taxing all couples with identical

incomes the same and neutrality with respect to marriage, must also be weighed against the desire

for a progressive rate structure under the income tax. Advancing any one of these objectives

necessarily requires making a sacrifice with respect to one or both of the other two objectives, and

produces marriage penalties, marriage bonuses, or both.

Overview of the paper

Part II of the paper, on the measurement of marriage penalties and bonuses, begins with a

discussion of the possible approaches to implementing a measure. The measures used in previous

studies are then presented, followed by a description of the measure used by the Office of Tax

Analysis (OTA) and the size, distribution, and other characteristics of marriage penalties and
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bonuses under current law using this measure. A final section discusses “singles penalties,”

describes a measure of these penalties, and presents results of applying this measure under current

law.

Part III examines the sensitivity of OTA’s measure of marriage penalties and bonuses to

alternative assumptions. We demonstrate that although alternative assumptions can greatly affect

the measured level of marriage penalties and bonuses, they often have no effect on measured

changes in the level due to policy proposals.

Part IV provides a description and analysis of a number of recent proposals for addressing

marriage penalties. Part V provides a short conclusion to the paper.

II. Measuring Marriage Penalties and Bonuses

Measuring marriage penalties and bonuses seems simple. The tax liability for a couple is

computed as if the couple were not married and each spouse could file a separate return. Their

tax liability as a married couple filing a joint return is then subtracted from the combined amount

of their separately computed tax liabilities. If this difference is negative, that is, if the couple owes

more income tax filing a joint return than the spouses would pay if they were unmarried and each

filed separate returns, the couple has a marriage penalty. If this difference is positive, the couple

has a marriage bonus.

Marriage penalties and bonuses could also be computed by “marrying” two single individuals. 

First, two single individuals’ tax liabilities are computed and combined. Then, the two

individuals’ tax liabilities are computed under the assumption that they could file a joint return as

a married couple. The marriage penalty or bonus is the difference between the two individuals’

tax liability if they had been allowed to file a joint return and their combined tax liability as single

filers.

Either approach simply requires subtracting one number from another. The difficulty lies in the

fact that one of the numbers is unknown. We do not know how married couples would act, and

therefore what their tax liabilities would be, if they were unmarried, or how single individuals

would behave, and therefore what their tax liabilities would be, if they were married (or, more

fundamentally, whom they would marry). 

The size of marriage penalties and bonuses depends on whether we start with married couples and

assume that they would divorce, or we start with single individuals and assume that they would

marry. Starting with married individuals requires making assumptions about how, if they were no

longer married, they would allocate income, expenses, children and other dependents, and living

arrangements. Starting with single individuals requires either making even more difficult

assumptions about who they would marry, or focusing only on those single individuals for whom

something may be known about their prospective spouses. 
-5-

Divorcing couples

Prior studies based on couples have used two approaches to reorganize the family unit and its

financial and living arrangements under the assumption that the couples are no longer married. A

“tax minimization” model assumes that if taxpayers could file as single, they would allocate their

income, exemptions, adjustments, deductions, and credits in a manner which minimizes their

combined tax liability. Under an “empirical” model, the assumptions regarding a married

couple’s division of income, living arrangements, and child custody, if they were single, are

derived from the actual experiences of couples who have recently married or divorced or who are

cohabitating.

Using a sample of married couples filing joint returns, Rosen (1987) estimated marriage penalties

and bonuses in 1988 under both pre- and post-Tax Reform Act of 1986 (TRA86) law. Rosen

assumed that child exemptions would be allocated “such that the joint tax liability is minimized.” 

Spouses who did not claim a child exemption were assumed to file as single, while those with one

or more child exemptions were assumed to file as heads of households. Itemized deductions were

allocated to the spouse with higher earnings. Rosen found that TRA86 reduced net marriage

penalties, on average, from $529 to $119 (1988 dollars). These net marriage penalties under

post-TRA law were the result of 40 percent of couples having an average marriage penalty of

$1,091 and 53 percent having an average bonus of $609. 

Feenberg and Rosen (1995) used a similar sample of joint filers to examine the impact of the

Omnibus Budget Reconciliation Act of 1993 (OBRA93) on the level and distribution of marriage

penalties and bonuses. As with Rosen’s earlier study, they adopted a strategy of joint tax

minimization, although some of the underlying allocation assumptions were changed from the

earlier study. Child exemptions were generally allocated to the higher income spouse; but if there

were two or more children, the lower-income spouse was assumed to claim one child exemption. 

Spouses with child exemptions were then given head of household filing status, and if eligible, the

EITC. Itemized deductions were allocated to the spouse with higher income, while unearned

income was assumed to be divided evenly between the two spouses. 

Feenberg and Rosen found that by increasing marginal tax rates for higher-income taxpayers and

expanding the EITC, OBRA93 transformed an average net marriage bonus of $143 into an

average net marriage penalty of $124 (1994 dollars). Under both pre- and post-OBRA93 law,

slightly over half of all couples filing jointly had a marriage penalty, while 38 percent had a

marriage bonus. However, OBRA93 increased the average marriage penalty (from $898 to

$1,244) for couples with penalties while reducing average marriage bonuses (from $1,577 to

$1,399) for those with bonuses. 

Alm and Whittington (1996) examined the change in marriage penalties and bonuses between

1967 and 1994. Using the Panel Survey of Income Dynamics (PSID), they tested two alternative

sets of allocation assumptions. The first set of assumptions was similar to the “tax minimization”

model used by Feenberg and Rosen. Children were allocated to the higher earner spouse, and the

custodial parent was assumed to file as head of household and for the EITC, if eligible. Unearned
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6

 Because the PSID does not contain information regarding itemized deductions, Alm and

Whittington had to assume that the spouses could only claim the standard deduction.

income was divided evenly between the spouses.6 The second set of assumptions was more

closely akin to an empirical model. Since most single-parent households are headed by a female,

Alm and Whittington suggested that the wife be assumed to claim the child exemptions, head of

household filing status, and the EITC. As under the first set of assumptions, unearned income

was split evenly between the two spouses. 

Between 1967 and 1994, Alm and Whittington found that marriage penalties, on average, initially

rose, then fell, and have recently begun to grow again. Changes in both tax laws and family

structure, particularly the increase in two-earner families, contributed to this pattern over time. 

They also found that their choice of allocation assumptions affected the existence and magnitude

of a marriage penalty and bonus. During the 1980s, the tax minimization approach resulted in an

average net marriage penalty of $300 (1994 dollars), while the empirical approach generated net

marriage bonuses. While both approaches produced similar trends over much of the period, the

differences between the two approaches narrowed dramatically in recent years. By 1994, both

approaches resulted in an average net marriage penalty of $375.

CBO (1997) measured marriage penalties and bonuses under 1996 law using a sample of married

couples who had filed joint returns. CBO rejected both the empirical and tax minimization

approaches, although some of their assumptions, particularly those dealing with the allocation of

child exemptions and filing status, are the same as those used by Feenberg and Rosen. In the

CBO study, unearned income was prorated on the basis of earned income instead of being evenly

split as in the earlier studies, and itemized deductions were divided between the spouses in

proportion to their total income. CBO also estimated marriage penalties and bonuses under the

assumption (used by Feenberg and Rosen) that itemized deductions were claimed by the spouse

with higher income.

Assuming that itemized deductions were split proportionately between the two spouses, 42

percent of couples had an average marriage penalty of $1,380, while roughly half of couples (51

percent) had an average marriage bonus of $1,300. If, instead, the higher income spouse was

assumed to claim all the itemized deductions, CBO found that 47 percent of couples had a

marriage penalty averaging $1,750 and 49 percent had an average bonus of $1,350. 

 

Marrying singles

Starting with a sample of single individuals requires either making assumptions about who they

would marry or focusing only on those individuals for whom something may be known about their

prospective spouses. Two recent studies have used the latter approach. Feenberg and Rosen

(1995) used a National Longitudinal Survey (NLS) of mothers and children to identify cohabiting

couples. Tax liabilities for the two cohabiting adults were first computed as single individuals and

then under the assumption that they would marry and file a joint return. Using the PSID, Alm and

Whittington (1997) created a sample of couples who married for the first or second time during

the years under investigation and computed marriage penalties and bonuses based on each

spouse’s income in the year prior to marriage. 
-7-

Using the sample of cohabiting adults, Feenberg and Rosen found smaller average net marriage

penalties ($229 in 1994) than they found using the same data to analyze marriage penalties for a

sample of married couples ($556). Marriage penalties derived for both groups from their NLSbased samples were generally much larger than those derived from their PSID sample of married

couples. Using the sample of newly-married couples, Alm and Whittington found that marriage

increases couples’ joint tax liability on average by $183 (1983-84 dollars); in 1994 dollars, this

estimate is not greatly different than their estimates of marriage penalties for the 1980s using a

sample of married couples and a tax minimization approach, but is much larger than what they

obtained using the empirical approach. 

While both studies take a reasonable approach to solving the missing spouse problem, neither may

yield results which can be generalized to the population as a whole. Cohabiting couples who

choose not to marry may be different than those who do marry, while single people on the verge

of marriage may also differ from those who have been married for a longer period of time.

Dickert-Conlin and Houser (1998) took a different approach by identifying potential spouses for a

sample of unmarried poor and near-poor women. Using the Survey of Income and Program

Participation (SIPP), they calculate how 1990 tax liability and transfer benefits would change for a

sample of unmarried women between the ages of 18 and 44 with children if they were married and

living with a spouse. They use a selection method to predict the earnings of their potential

husbands and simulate their transfers and taxes as unmarried persons and as a married couple. For

the median poor woman, they find that transfer payments would fall by 18 percent of a couple’s

combined unmarried income if she marries, while tax liabilities would decline by 6 percent, and net

income would fall by 12 percent. If they marry, near-poor women face smaller declines in transfer

payments as a fraction of income than the poor, but most would incur an increase (rather than

decline) in their tax liability.

The approach taken by Dickert-Conlin and Houser is promising because it could be generalized to

a broader population than cohabiting couples or individuals on the verge of marriage. But, their

analysis is computationally complicated and may not be easily adapted to moderate and higherincome individuals whose income is likely to include unearned income as well as earned income.

What measure has the most desirable characteristics?

To estimate marriage penalties and bonuses, OTA uses the Individual Tax Model (ITM). The

current ITM is based on the Statistics of Income (SOI) sample of tax returns for Tax Year 1995

extrapolated to cover the 10-year budget estimating period. The SOI is a cross-sectional file. As

a consequence, the ITM does not contain any information regarding the marital history of

taxpayers. Without such information, it is not possible to estimate marriage penalties and bonuses

using the single filers in the ITM. OTA therefore follows the more conventional approach of

using the married couples in the ITM to measure marriage penalties and bonuses. 

OTA also considered and rejected the two approaches most commonly used in the literature to

allocate income, exemptions, deductions, and credits between the spouses: the “empirical” model

and the “tax minimization” model. Our review of the literature found only one study that based

any allocation assumptions on empirical evidence. As noted above, Alm and Whittington had
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examined the impact of assigning the child exemptions to the wife, since most single-parent

households are headed by females. We did not find any study that used a more comprehensive

empirical approach, in which income and expenses are also allocated in a manner that more

closely approximates divorce settlements. 

We conclude that there are two reasons why it would be problematic to measure marriage

penalties and bonuses using empirical data about the effects of actual life-events -- such as

marriage, divorce, or cohabitation -- on individuals’ tax liabilities, even if the empirical data were

better. First, many married couples will never divorce, or won’t in their current circumstances,

and many single individuals would act differently if and when they did marry. Second, both

married couples and single individuals may perceive themselves to be burdened (or benefitted) by

the income tax because of its treatment of marriage, even though these taxpayers would not

recognize the results of the typical divorce to be applicable to themselves.

Most prior studies adopted a tax minimization strategy, at least with respect to some of their

allocation assumptions. A complete tax minimization model would be computationally quite

complex because of the simultaneity of many variables. For example, tax liability depends, among

other things, on adjusted gross income and tax credits; but eligibility for many tax credits, such as

the child credit and the EITC, depends on adjusted gross income. Most studies avoid much of

this computational complexity by defining a set of allocation rules that appear to be consistent

with tax minimization behavior. But these allocation rules may, in fact, be inconsistent with tax

minimization. 

To illustrate, Feenberg and Rosen assumed that both spouses could claim at least one child

exemption and head of household filing status; that the higher income spouse claimed all itemized

deductions; and that unearned income was evenly split between the two spouses. These

assumptions, however, will not always yield the minimal tax liability. For example, taxes would

be minimized for a couple with two children, little if any unearned income, and a non-working

spouse if the higher income spouse retained both child exemptions. Since the non-working

spouse has no taxable income, one of the children’s exemptions is effectively wasted by assuming

that each spouse claims a child. Even if both spouses have taxable income, their combined tax

liability may be minimized if the higher income spouse retains both child exemptions under some

assumptions. As another example, if the higher income spouse is in the 28 percent rate bracket

while the lower income spouse is in the 15 percent rate bracket regardless of how the child

exemptions are allocated, their combined tax liability is minimized if the higher income spouse

retains both exemptions.

This approach may also be inconsistent with either compliant or rational behavior by the couple. 

Under current law, only one taxpayer can be a head of household if the couple lives together. 

Thus, allowing both spouses to claim head of household filing status implies either that the couple

separates or cheats. If there are separate households, then the housing budget should be split

between the spouses. But Feenberg and Rosen allocated all of the itemized deductions, including

the home mortgage deduction, to the higher income spouse. While it may be possible under

some divorce agreements for one spouse to absorb the housing costs for both households, one

might then expect some offsetting assumptions about the allocation of income.
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7

 There may be some costs associated with the derivation of this non-marriage contractual

arrangement, and an ideal measure would net these costs. This criticism, however, also applies

to the first two approaches. In this regard, the resource pooling model is no better or worse than

the empirical or tax minimization approaches.

 

If couples were tax minimizers in their personal relationships, tax planning would enter into

marriage and divorce decisions. The evidence is mixed. Sjoquist and Walker (1995) do not find a

statistically significant relationship between marriage decisions and marriage penalties. Alm and

Whittington (1993, 1995a, 1995b) find statistically significant but small effects of marriage

penalties, reducing the likelihood of marriage for women. Alm and Whittington (1997) also find a

significant but small effect of marriage penalties on the timing of marriage.

Instead of the “empirical” or “tax minimization” models, a variety of considerations lead us to the

“resource pooling” model to measure marriage penalties and bonuses. This approach is

empirically tractable and produces results that are consistent both internally and with the way that

families and policymakers may think about the issue.

Resource pooling approach

The resource pooling model tries to isolate the effects of a marriage on tax liabilities by assuming

that married couples could -- through implicit and explicit contractual arrangements -- duplicate

the same pooling of assets and expenses that occurs within their marriages without actually being

married.7 Both spouses are assumed to contribute to the family’s expenses, based on their ability

to pay. For this model, ability to pay is generally measured by each spouse’s share of gross

income. In addition, taxpayers are assumed to act honestly and understand the tax laws (or at

least as well as they currently understand and comply with the tax laws).

Living arrangements: Under the resource pooling model, different assumptions can be made 

regarding the living arrangements of the couple if they were not married. For example, one could

estimate the effect of marriage on tax liability, assuming that the couple would live together even

if they were not married. This is the pure penalty (or bonus) associated with the decision to

marry. Alternatively, one could estimate the effect of marriage on tax liability assuming that the

couple would not live together if they were not married. This approach measures the penalty (or

bonus) associated with two decisions: the decision to marry and the decision to share a residence 

(Holtzblatt, 1996).

The choice of living arrangements most directly affects taxpayers’ ability to claim head of

household filing status. As noted above, current law allows only one taxpayer (if otherwise

eligible) to claim head of household filing status for the household. This means that at most one

taxpayer would be allowed to claim head of household filing status if the couple continues to

share a residence and pool resources. But if it were assumed the couple no longer shared a

residence, neither, one or both spouses might qualify as a head of household.
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8

 When the eligibility rules for the EITC were simplified in the Omnibus Budget

Reconciliation Act of 1990, support and household maintenance tests were replaced, in part, by

an income test: when more than one taxpayer lives with the same EITC qualifying child, only the

taxpayer with the higher modified adjusted gross income may claim the credit. 

To qualify as head of household, the taxpayer must provide over half the costs of maintaining the

home shared with the taxpayer’s children or dependents. While tax return data do not contain

much information regarding expenditures on the household or family, it seems reasonable to

assume that the individual with the highest income is responsible for most of the costs of

maintaining the home and is thus able to claim head of household filing status. Further, we 

assume that this individual is also most likely to provide over half the support for the couple’s

dependents and can thus claim the exemptions.8 

Using income as a proxy for expenditures on the household or family leads to unambiguous and

straightforward assumptions regarding the determination of head of household filing status and

the allocation of dependents within the one-residence scenario. The spouse with the higher

income is assumed to claim head of household filing status (if otherwise eligible) and all

dependents, while the spouse with the lower income claims single filing status. 

It is less clear which spouse would be able to claim head of household filing status and the

dependent exemptions if the alternative of separate residences is assumed. Taxpayers can claim

head of household filing status only if they reside with their children or certain dependents. While

custodial parents are entitled to claim the dependent exemptions for their children (assuming that

both parents, in combination, provide over half the support of the children), they may waive the

exemptions to the noncustodial parent, yet still claim head of household filing status. 

Assumptions also have to be made regarding who is the custodial parent. Is it the higher earner,

because he or she is able to provide most of the support of the children? Or, is the custodial

parent the lower-earner spouse, since the opportunity costs of home production are less for this

spouse? 

Table 1 shows how the allocation of child exemptions, filing status, and certain credits vary based

on assumptions regarding living arrangements. In OTA’s measure, it is assumed that the couple

would still live together if not married (i.e., joint residency). This assumption gives a pure

measure of how much the marriage license really costs or benefits the couple, without needing to

account for the additional costs of maintaining two homes. Further, this approach leads to less

ambiguity regarding the choice of assumptions about living arrangements.

Division of earned income: OTA’s measure, like most measures of marriage penalties and

bonuses, assumes that returns to human capital are retained by the earner. While some studies

have shown that the labor supply of wives is particularly sensitive to marginal tax rates, these

second-order effects are generally not accounted for in measures of marriage penalties and

bonuses. As a practical matter, it is also usually relatively simple to allocate earnings to the
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9

 Tax return information could be used to directly allocate certain other forms of unearned

income to each spouse. However, even pensions may be considered a marital asset that should

be divided when the marriage ends.

appropriate worker. 

OTA uses information from Forms W-2s and the Schedules SE to allocate wages and selfemployment income to the appropriate earner. Other studies use information reported by the

individual earner to survey interviewers. OTA is also able to use information reports (SSA1099s) from the Social Security Administration to attribute social security retirement and

disability insurance benefits to the appropriate beneficiary. Other studies generally do not have

sufficient information to attribute benefits directly to the recipient and must allocate these benefits

in the same manner as other forms of unearned income. The definition and allocation of earned

income are shown in Table 2.

Division of unearned income: The division of unearned income, such as dividends, interest, and

capital gains, presents more challenging issues since it is generally not clear which spouse owns

the underlying assets.9 We considered two alternatives. Under the first, assets are assumed to be

accumulated by each spouse from their own earnings, and each spouse is assumed to retain the

property rights to these accumulated assets. Unearned income under this alternative is divided in

proportion to earned income. Under the second alternative, both spouses would retain an equal

right to the couple’s combined assets if they were not married, and unearned income is divided

equally between the two spouses.

It is not obvious which of these two alternatives is more appropriate for estimating marriage

penalties and bonuses. The second alternative may be consistent with how assets would be

allocated between spouses if they have accumulated most, if not all, of their assets together over

the course of their marriage. The first may be consistent for newly married couples, or for

couples who have had less equal roles in their marriage, or in which one spouse has inherited

sizable wealth. OTA’s measure is based on the first alternative, which divides unearned income in

proportion to each spouse’s share of earned income.

As shown in Table 3, the assumption regarding the ownership of assets affects the division of

unearned income, as well as some related items (the adjustment for alimony income, the deduction

for investment interest and gambling losses). The assumption regarding the ownership of assets

may also affect the division of other itemized deductions or adjustments. OTA assumes that most

expenses included in itemized deductions or adjustments are allocated according to ability to pay,

and that for this purpose gross income is the appropriate proxy for ability to pay. Changes in the

definition of gross income therefore affect the allocation of these deductions and adjustments.

Some deductions and adjustments can only be incurred if the taxpayer has wage or self-employed

income. As shown in Table 3, these include deductions for Keogh contributions, self-employment

taxes, self-employment health insurance, and moving expenses. Allocation of these items
-12-

depends, to some extent, on earned income and is invariant to the assumptions regarding the

division of unearned income. 

Other tax parameters: A small number of items are not dependent on the underlying assumptions

regarding living arrangements or the division of income. These are the standard deduction for the

disabled and elderly and the elderly and disabled tax credit. The top panel of 

Table 4 shows the distribution of these items. Alternative minimum tax credit items and

preferences are allocated in the same way as they are in the regular tax.

Summary of OTA’s measure

OTA’s measure is based on the resource pooling model, which tries to isolate the effects of

marriage on tax liabilities by assuming that married couples could -- through implicit and explicit

contractual arrangements -- duplicate the same pooling of assets and expenses that occurs within

their marriages without actually being married. It is assumed that in the absence of marriage,

couples would retain the same income, exemptions, eligible expenses for credits and above-theline and itemized deductions, and other tax characteristics that they have as a married couple. It is

also assumed that the couple would continue to maintain a joint residence. The spouse with the

higher income is assumed to claim head of household filing status (if otherwise eligible) and all

dependents, and the spouse with the lower income to claim single filing status. Credits and

deductions associated with dependents (such as the $500 child credit) therefore will generally be

available only to the higher income spouse. All returns to human capital, including wages, selfemployment income, Social Security benefits, unemployment benefits, and miscellaneous forms of

earned income, are assumed to be retained by the earner. Finally, all unearned income (dividends,

interest, capital gains, etc.) and associated expenses are assumed to arise from assets accumulated

from each spouse’s own earnings, and are generally allocated in proportion to earned income.

Marriage penalties and bonuses by OTA’s measure

In 1999, of the 51.4 million joint returns filed, 24.8 million (48 percent) will have a marriage

penalty, 21.0 million (41 percent) will have a marriage bonus, and the remaining 5.6 million (11

percent), many of whom have no tax liability, will have neither a penalty or bonus (see Table 5). 

Aggregate marriage penalties in 1999 will be $28.3 billion and aggregate marriage bonuses will be

$26.7 billion, resulting in an aggregate net penalty of $1.6 billion. Average marriage penalties for

couples with penalties will be $1,141 in 1999, and average marriage bonuses for couples with

bonuses will be $1,274. The average net penalty for all couples will be $31.

As noted above, marriage penalties typically arise when the incomes of the two spouses are more

nearly equal, which means that two-earner couples are likely to have marriage penalties whereas 

one- and no-earner couples will not have penalties. In 1999, of the 39.0 million two-earner

couples, 24.8 million (64 percent) will have marriage penalties while less than half that number,

11.1 million (28 percent), will have marriage bonuses (the remaining 3.1 million (8 percent) will

have neither). In contrast, of the 12.4 million one- or no-earner couples, none will have marriage
-13-

penalties while 9.9 million (80 percent) will have marriage bonuses (the remaining 2.5 million (20

percent) will have neither).

Because two-earner couples tend to have higher incomes, and because the rate brackets for joint

and unmarried filers are closer together at higher incomes, marriage penalties predominate at

higher incomes, whereas marriage bonuses are more prevalent at lower incomes. For example, 27

percent of couples with AGIs below $30,000 in 1999 will have marriage penalties and 42 percent

will have marriage bonuses (the remaining 31 percent will have neither). Of couples with incomes

over $100,000 in 1999, 61 percent will have marriage penalties and 38 percent will have marriage

bonuses (less than 1 percent will have neither). 

Aggregate marriage penalties and bonuses are also concentrated at higher income levels. Less

than 15 percent of all couples will have AGIs over $100,000 in 1999, but they will have 42

percent of aggregate marriage penalties, and 30 percent of aggregate marriage bonuses. In

contrast, more than 27 percent of all couples will have AGIs under $30,000 in 1999, but they will

have only 8 percent of aggregate marriage penalties and 11 percent of aggregate marriage

bonuses.

OTA’s measure of singles penalties

Marriage penalties were increased and bonuses reduced in the 1969 legislation by the broadening

of the rate brackets for single taxpayers. Congress took this action in response to the great

disparity at the time between the income tax imposed on some single filers and a joint or head of

household filer with the same income. The 1969 legislation reduced but did not eliminate this

disparity, which arises from the smaller standard deduction, lower rate brackets, lower income

ceilings for most phaseouts, and related differentials between the tax parameters for single filers

and the parameters for joint filers. Similar (but generally smaller) disparities exist between the

parameters for head of household filers and the parameters for joint filers. The “singles penalties”

imposed by these disparities are the necessary counterparts to marriage penalties. Thus, singles

penalties have been, and will remain, an important element of any legislative consideration of

proposals to address marriage penalties.

OTA’s measure of marriage penalties and bonuses attempts to isolate the effect of marriage per se

on the amount of income tax paid by couples. The counterpart measure of singles penalties must

isolate the effect of not being married, per se, on the income tax liabilities of unmarried

individuals. Measuring singles penalties is therefore relatively straightforward: a singles penalty is

the difference in tax liability of an unmarried (single or head of household) filer under current law,

and their tax liability if they could use the joint standard deduction, joint rate schedule, and other

joint tax parameters. Note that this measure avoids making any assumptions about the

characteristics of a hypothetical spouse, and does not give the single filer an additional exemption

for such a hypothetical spouse. However, this measure gives the maximum penalty possible for a

single individual relative to actual marriage, because an actual spouse could have earnings or

other income that would reduce the penalty.
-14-

Applying this definition to the 60.3 million (non-dependent) single and head of household filers

expected in 1999 indicates that 40.5 million unmarried filers will have an aggregate of $30.2

billion of singles penalties. The average singles penalty for those with penalties will be $746, and

the average for all (non-dependent) unmarried filers will be $501. As indicated in Section IV, a

number of current proposals for addressing marriage penalties would significantly increase singles

penalties.

III. Sensitivity of OTA’s Measure to Alternative Assumptions

Sensitivity of measures when applied to current-law penalties and bonuses

To determine the sensitivity of OTA’s measure to alternative assumptions, we first examined the

effects of three alternative assumptions on the level of marriage penalties and bonuses under

current law. Each of these alternatives varies only one of the key assumptions followed in OTA’s

measure.

Separate residences: In this alternative, in the absence of marriage each spouse is assumed to

maintain a separate residence and the lower-earner spouse is assumed to maintain custody of the

children (as well as their exemptions and child-related credits). This alternative results in an

aggregate $28.9 billion net marriage bonus in 1999, in contrast to the aggregate $1.6 billion net

marriage penalty under OTA’s measure (see Table 6). The large difference in net results arises

because head of household status, exemptions, and child-related credits generally provide less tax

benefit to the lower-earner spouse than to the higher-earner spouse (who is often in a higher tax

bracket and has greater tax liability to absorb credits). Thus, this alternative ascribes higher taxes

to the couple filing separately, and consequently lower marriage penalties and higher marriage

bonuses, than does OTA’s measure.

Under the separate residence assumption, 23.5 million (46 percent) of all couples filing jointly in

1999 would have a marriage penalty, 25.2 million (49 percent) a marriage bonus, and the

remaining 2.7 million (5 percent), many of whom still have no tax liability, would have neither a

penalty nor a bonus. Aggregate marriage penalties would be $29.5 billion and aggregate marriage

bonuses $58.3 billion. Average marriage penalties for couples with penalties would be $1,252,

and average marriage bonuses for couples with bonuses $2,315. The average net bonus for all

couples would be $561. 

Unearned income evenly divided: If unearned income is assumed to be divided evenly if the

couple were not married, there would be $16.7 billion of aggregate net marriage penalties in

1999. The reason for this large increase in the aggregate penalty is that splitting unearned

income evenly tends to equalize spouse’s incomes, thereby increasing marriage penalties and

decreasing marriage bonuses relative to allocating unearned income in proportion to earned

income.
-15-

10 Appendix A contains an algebraic derivation of these results.

Under this alternative, 28.8 million (56 percent) of all couples filing jointly would have a marriage

penalty, 16.9 million (33 percent) a marriage bonus, and 5.8 million (11 percent) neither in 1999. 

Aggregate marriage penalties would be $36.1 billion and aggregate marriage bonuses $19.4

billion. Average marriage penalties for couples with penalties would be $1,254, and average

marriage bonuses for couples with bonuses $1,148. The average net penalty for all couples would

be $324.

No head of household status: If neither spouse were allowed to claim head of household status if

the couple were not married, there would be $15.8 billion of aggregate marriage bonuses net of

penalties in 1999, a result similar to the result for the alternative with separate residences. 

Without the ability to file as a head of household, for many couples one of the spouses would

have higher taxes filing separately than under OTA’s measure.

Under this alternative, 22.2 million (43 percent) of returns would have a marriage penalty, 23.8

million (46 percent) a marriage bonus, and 5.4 million (11 percent) neither in 1999. Aggregate

marriage penalties would be $20.8 billion and aggregate marriage bonuses $36.6 billion. Average

marriage penalties for couples with penalties would be $936, and average marriage bonuses for

couples with bonuses $1,537. The average net bonus for all couples would be $307.

Insensitivity of measures when applied to changes in law

The change in the level of marriage penalties and bonuses due to a change in tax policy is the

difference between each couple’s penalty (or bonus) under current law and their penalty (or

bonus) under the proposed law. Each couple’s penalty (or bonus) under current law is the

difference between the combined amount of their tax liability computed under current law if they

each filed separately and their tax liability computed under current law filing a joint return. Each

couple’s penalty (or bonus) under proposed law is the difference between the combined amount

of their tax liability computed under proposed law if they each filed separately and their tax

liability computed under proposed law filing a joint return. Thus, the change in the level of

marriage penalties and bonuses is the difference between two differences, which would appear to

be sensitive to alternative measurement assumptions.

However, many proposed changes in law affect tax liabilities on joint returns, but leave tax

liabilities on separate (single and head of household) returns unchanged. For such proposals, the

difference between the two differences reduces to simply the difference between each couple’s

joint return tax liability computed under current law and their joint return tax liability computed

under proposed law. But, all of the alternative assumptions for measuring marriage penalties and

bonuses affect the computation of separate tax liabilities, not joint return tax liabilities. Therefore,

for proposals that do not alter tax liabilities on separate returns, the change in the level of

marriage penalties and bonuses is completely insensitive to alternative measurement

assumptions.10
-16-

All of the proposals analyzed in Section IV, below, would only change the taxation of couples,

and not of single or head of household filers. So, these proposals change marriage penalties and

bonuses by the same aggregate net amount under any of the alternative measurement assumptions. 

However, as discussed in Section IV, the alternative assumptions affect how this net amount is

split between reductions in penalties and increases in bonuses. 

IV. Analysis of Recent Proposals to Address Marriage Penalties

1. Additional deduction for couples with incomes below $50,000

This proposal, included in an amendment to the tobacco bill, was adopted by the Senate on June

10, 1998. The proposal would give an additional deduction to married couples filing a joint

return who have combined incomes below $50,000. The deduction would be equal to the

difference between the sum of the standard deductions for a single filer and a head of household

filer, and the standard deduction for a joint filer (this difference is $3,450 in 1999). It would be

available to all such couples, whether or not they itemized deductions (i.e., the deduction would

be “above-the-line”). The deduction would also reduce income for purposes of the phaseout of

the EITC, so couples with incomes in the phaseout range of the EITC would get a larger credit. 

The $50,000 income limit would be indexed for inflation after 2007. The deduction would be

phased in over 10 years. When fully phased in, the additional deduction (at the 1999 level of

$3,450) would have a tax value of $517.50. 

Example. Using the fully phased in value of the additional deduction at 1999 levels, for a couple

with two children and $30,000 of wage income, taxes would decline by $1,244. The decline is

larger than $517.50 because this couple would receive a larger EITC. For couples with income

above approximately $35,000 (and not above $50,000), the tax cut would normally be $517.50.

Effects. The effects of this proposal (and of other proposals discussed below) are summarized in

Tables 7 and 8. Detailed information on the effects of the proposal are shown in Table 9. Fully

phased in, at 1999 income levels, this proposal would reduce income tax liabilities of couples by

$7.9 billion. Of this amount, only 35 percent would actually reduce marriage penalties (with the

remainder increasing marriage bonuses), because the proposal benefits eligible couples, whether

or not the couple has a marriage penalty. All of the benefits of the proposal go to couples with

AGIs below $50,000, with over 60 percent going to couples with AGIs under $30,000. The

proposal would increase singles penalties by $17.1 billion (56 percent) per year (at 1999 income

levels) because the income tax differential between unmarried taxpayers with incomes below

$50,000 and couples with the same income would be even greater than under current law. In

addition, the proposal creates a “cliff,” since couples with $50,000 of income would get a tax cut

of $517.50 (when the proposal was fully phased in), but a couple with only $1 more of income

would get no tax cut at all. Such cliffs create disincentives to work and incentives to underreport

income for couples with incomes above the cliff.
-17-

11 The proposal as drafted would also increase the standard deduction for married couples

filing separate returns. The effect of this change is not included in the cost figures for this

proposal or the next proposal (proposal 3).

12 The bill does not quite achieve these results because of drafting errors in the inflation

adjustments for tax parameters.

2. Make the joint standard deduction double the single amount ( included in H.R. 4579)

This proposal would increase the standard deduction for joint filers to double the amount for

single filers under current law. H.R. 4579, which was passed by the House on September 26,

1998, would also increase the additional standard deduction for elderly and blind joint filers to the

current-law levels for single filers, but this provision is not included in the analysis presented here

for comparability with proposal 3, below.

Example. The standard deduction for joint filers would increase under the proposal by $1,400 in

1999, from $7,200 to $8,600. For a couple in the 15 percent bracket, this increase in the standard

deduction would reduce taxes by 15% x $1,400 = $210.

Effects. This proposal would reduce income tax liabilities for couples filing joint returns by $5.3

billion11 at 1999 income levels, of which a little over half (54 percent) would reduce marriage

penalties. Most of the benefit would go to couples with AGIs between $30,000 and $100,000;

less than 6 percent would go to couples with AGIs over $100,000. The proposal would increase

singles penalties by $6.5 billion (21 percent). The proposal would also reduce the number of

couples who itemize deductions by 2.7 million. Detailed information on the effects of the

proposal are shown in Table 10.

3. Make the joint standard deduction and rate brackets double the single amounts (H. R. 3734)

H. R. 3734 would increase the standard deduction for joint filers to double the amount for single

filers under current law, and widen the rate brackets for joint filers to double the width of the

brackets for single filers under current law.12

Example. For the highest-income couples, those with taxable incomes in excess of about

$570,000 (the beginning of the 39.6 percent bracket in 1999 under the proposal) the tax cut

would be over $17,000.

Effects. The addition of increases in the joint rate brackets makes this proposal considerably more

expensive than the preceding proposal, reducing income tax liabilities of couples filing jointly

$30.4 billion at 1999 income levels. The rate bracket increase also results in less than half (48

percent) of the cost reducing marriage penalties, and over half (52 percent) of the benefit going to

couples with AGIs over $100,000. The proposal would increase singles penalties by $11.7 billion
-18-

(39 percent). The proposal would also reduce the number of couples who itemize deductions by

2.7 million. Detailed information on the effects of the proposal are shown in Table 11.

4. Reinstate the two-earner deduction (H.R. 2593)

This proposal would reinstate the second earner deduction that existed between 1982 and 1986. 

The deduction is 10 percent of the first $30,000 of the earnings of the spouse with lower earnings.

Example. A two-earner couple, each with $25,000 of earnings and no other income, would have a

two-earner deduction under the proposal of $2,500. The deduction would reduce their taxes by

$375. (This couple’s marriage penalty under current law is $210.)

Effects. This proposal would reduce couples’ income tax liabilities by $11.9 billion at 1999

income levels, of which over 78 percent would reduce marriage penalties. Most of the benefit

would go to couples with AGIs between $30,000 and $100,000, but nearly 32 percent would go

to couples with AGIs over $100,000. This proposal would violate the principle in current law

that couples with identical total incomes pay identical total taxes, since only two-earner couples

would receive the two-earner deduction. The proposal would also increase filing burdens by

requiring an additional worksheet or form for the computation of the two-earner deduction. 

Detailed information on the effects of the proposal are shown in Table 12.

5. Single filer option (H.R. 2456)

Under this proposal, a married couple could continue to compute their tax using the standard

deduction and rate schedule for joint filers, or could elect to compute each spouse’s tax separately

using the standard deduction and rate schedule for single filers. The proposal would combine

separate filing on one tax return form and lessen some of the inherent complexity of separate filing

by arbitrarily prorating deductions and by retaining a joint computation of the EITC and other

credits. Each spouse would report their own earnings in computing their separate tax, but could

reallocate their unearned income by shifting assets. Dependent exemptions would be allocated in

proportion to each spouse’s share of their total income (AGI).

Example. Consider two couples, A and B, each with $50,000 of total earnings (and no other

income). If Couple A has two earners, each with $25,000 of earnings, and Couple B has one

earner with $50,000 of earnings, they will pay identical taxes under current law. Under optional

single filing, however, Couple A would pay $210 less tax in 1999 than under current law

(assuming they use the standard deduction and have no children), whereas Couple B would pay

the same tax as under current law (i.e., $210 more than Couple A).

Effects. This proposal would reduce couples’ income tax liabilities by $21.6 billion at 1999

income levels, of which over 65 percent would reduce marriage penalties. Nearly half (47

percent) of the benefit would go to couples with AGIs over $100,000. This proposal would

violate the principle in current law that couples with identical total incomes pay identical total

taxes, since couples with the same total income could pay quite different taxes under optional
-19-

single filing, depending on how their earnings were split. Optional single filing would also

substantially increase the income tax filing burdens of married couples. Many, if not most,

couples would have to make three, rather than one, federal tax computations (joint, his, and hers)

in order to determine which results in the least tax liability. Interaction with state income taxes

could further increase the filing burden. Detailed information on the effects of the proposal are

shown in Table 13.

 

6. Income splitting (S.1285)

Under income splitting, half of a couple's income, including their earnings, would be attributed to

each spouse. Couples could elect to compute each spouse’s tax separately (each reporting half of

the couple’s combined income) using the standard deduction and rate schedule for single filers.

Example. Consider two couples, A and B, each with $50,000 of total earnings (and no other

income). Couple A has two earners, each with $25,000 of earnings, and Couple B has one earner

with $50,000 of earnings. Both Couple A and Couple B would receive a tax cut of $210 under

income splitting (assuming both use the standard deduction and have no children), even though

Couple B already has a large marriage bonus (of $3,083.50) under current law.

Effects. This proposal would reduce couples’ income tax liabilities by $35.6 billion at 1999

income levels, with less than half (46 percent) of this amount reducing marriage penalties. Nearly

half (49 percent) of the benefit would go to couples with AGIs over $100,000. The proposal

would increase singles penalties by $13.1 billion (43 percent). Income splitting would also add

some computational complexity to income tax filing, since married couples’ incomes would have

to be split and separate tax computations (or tax table lookups) done for each spouse. Detailed

information on the effects of the proposal are shown in Table 14.

Effect of alternative measures when applied to changes in law

As discussed in Section III, the change in level of aggregate marriage penalties net of bonuses is

the same, regardless of the measurement assumptions, for each of the proposals considered above. 

But the measurement assumptions result in a different allocation of this net change between the

reduction in marriage penalties and the increase in marriage bonuses. For example, by OTA’s

measure the income splitting proposal (proposal 6, above) would reduce marriage penalties by

$16.4 billion and increase marriage bonuses by $19.2 billion, for a total change of $35.6 billion. If

the alternative assumption of separate residences were used, the proposal would appear to reduce

marriage penalties by $1.1 billion less, or by $15.3 billion, and increase marriage bonuses by $1.1

billion more, or by $20.3 billion (see Tables 7 and 18). The differences are much larger under the

alternative assumption that unearned income is evenly divided; marriage penalties would appear to

be reduced by $5.3 billion more, or by $21.7 billion, and marriage bonuses increased by $5.3

billion less, or by $13.8 billion (see Table 19). Under the assumption that there is no head of

household status, marriage penalties would be reduced by $2.4 billion less, or by $14.0 billion,

and marriage bonuses increased by $2.4 billion more, or by $21.6 billion (see Table 20). 
-20-

Comparable results for the standard deduction proposal (proposal 2) are shown in Tables 7 and

15-17.

IV. Conclusions

Marriage penalties generally arise because the standard deduction and rate brackets for joint filers

are less than twice the corresponding amounts for single filers or head of household filers. 

Marriage bonuses generally arise because joint filing allows couples to average their incomes,

which can reduce the tax rate on the income of the higher-earning spouse. Whether a couple has

a marriage bonus, a marriage penalty, or neither depends on which of these two effects dominates.

It is easy to define marriage penalties and bonuses, but it can be very difficult to measure them. 

We consider three different approaches to allocating income, dependents, and filing status

between spouses, assuming they could file as unmarried individuals. We consider and reject

empirical and tax minimization approaches; the former because they may not be consistent with

how families and policymakers think about the issue, and the latter because they may be based on

arbitrary and unrealistic assumptions. Instead, we follow a resource pooling approach that

assumes that a married couple would live together and duplicate the same pooling of assets and

expenses that occurs within their marriage without actually being married.

Using this approach, we find that 48 percent of joint filers will have a marriage penalty, 41 percent

will have a marriage bonus, and the remaining 11 percent, many of whom have no tax liability,

will have neither a penalty or bonus in 1999. Aggregate marriage penalties will be $28.3 billion,

and aggregate marriage bonuses will be $26.7 billion, resulting in an aggregate net penalty of $1.6

billion.

These results are very sensitive to the choice of assumptions regarding the allocation of income,

dependents, and filing status between the spouses. For example, the OTA measure allocates

unearned income according to each spouse’s share of earned income. If instead unearned income

was split equally, the estimate of net marriage penalties would increase ten-fold, to $16.7 billion. 

However, the choice of assumptions generally makes no difference in evaluating the net effects of

proposed policy changes that only change the tax liabilities of married couples -- that is, the

measured change in the level of aggregate amount of marriage penalties, net of bonuses. For

example, increasing the joint standard deduction to double the single amount would reduce

aggregate net penalties by $5.3 billion, regardless of which set of assumptions is used.
-21-

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Eighty-Fifth Annual Conference on Taxation. 200-205. Columbus, Ohio: National Tax

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Economics. 27 No. 1 (January, 1995a): 25-31.

Alm, James, and Leslie A. Whittington. “Does the Income Tax Affect Marital Decisions?”

National Tax Journal. 48 No.4 (December, 1995b): 565-72.

Alm, James, and Leslie A. Whittington. “The Rise and Fall and Rise....Of the Marriage Tax.” 

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Alm, James, and Leslie A. Whittington. “Income Taxes and the Timing of Marital Decisions.” 

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14, 1998.

Dickert-Conlin, Stacy, and Scott Houser. “Taxes and Transfers: A New Look at the Marriage

Penalty.” National Tax Journal. 51 No. 2 (June, 1998): 175-217.

Holtzblatt, Janet. “Comments on ‘Taxes and Transfers: Their Effects on the Decision to End a

Marriage,’” in Proceedings of the Eighty-Ninth Annual Conference on Taxation. 306-307. 

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(December, 1987): 567-75.

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Marriage.” National Tax Journal 48 No. 4 (December, 1995): 547-58.

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June, 1947.
-22-

1The tax functions can be thought of as including not only the rate structure, but other tax

parameters and rules such as exemptions, standard or itemized deductions, phaseins and

phaseouts, and credits except the EITC, which is nonlinear in income. “Income” likewise can be

interpreted as all the tax characteristics (number of dependents, itemizable deductions, eligibility

for credits, etc.) of the taxpayer.

Appendix A

Income splitting, rate structures, and marriage penalties and bonuses

The history of marriage penalties, summarized in the text, leads quite naturally to the following

analytical description of marriage penalties and bonuses. 

Let:

Ts(I) be the tax on income of I under the single rate structure;1

Tj(I) be the tax on income of I under the joint rate structure; and

I1 and I2 be the income of individuals 1 and 2, respectively.

A couple’s marriage penalty (or bonus) is defined as the difference between the couples’ tax

liability filing jointly and the spouses’ liability if they each filed separately. Using the above

notation, the symbolic definition of marriage penalties and bonuses is:

(1) [Ts(I1) + Ts(I2)] - Tj(I1 + I2)

The effect of the 1948 legislation was to impose on couples filing jointly twice as much tax as a

single filer with half the couple’s combined income, a tax of:

(2) 2* Ts( 1⁄2*[I1 + I2])

Further, income splitting meant that a couple never paid more income tax filing jointly than they

would pay if they each filed a separate (single) return, hence:

(3) Ts(I1) + Ts(I2) $ 2* Ts( 1⁄2*[I1 + I2])

In words, equation (3) says that the income splitting allowed joint filers since 1948 can, by itself

(i.e., under a single rate structure), give rise to marriage bonuses, but never marriage penalties.

The effect of the 1951 and 1969 legislation was to impose on couples filing jointly more than

twice as much tax as an unmarried filer with half the couple’s combined income:
-23-

(4) Tj(I1 + I2) $ 2* Ts( 1⁄2*[I1 + I2])

Note that while the symbols used in equation (4) are only for a single filer, it and the equations

which follow would be valid using a head of household filer(s) as well. In words, equation (4)

says that making the width of joint rate brackets less than double the width of single (or, head of

household) rate brackets can, by itself (i.e., assuming income splitting), give rise to marriage

penalties, but never marriage bonuses.

Equations (3) and (4) can be restated in the following forms:

(3') [Ts(I1) + Ts(I2) - 2* Ts( 1⁄2*[I1 + I2])] $0

and

(4') -[Tj(I1 + I2) - 2* Ts( 1⁄2*[I1 + I2])] #0

Adding the lefthand side of equations (3') and (4') gives:

(5) [Ts(I1) + Ts(I2)] - Tj(I1 + I2)

which is the same as (1), the marriage penalty or bonus. Whether the couple has a penalty, a

bonus, or neither (i.e., whether (5) is less than, greater than, or equal to zero) depends on whether

equation (4'), the penalty due to joint rate brackets being less than double single (or head of

household) rate brackets, exceeds, is exceeded by, or is equal to equation (3'), the bonus due to

income splitting.

Insensitivity of marriage penalty measures when applied to changes in law

Marriage penalties and bonuses under current law are defined by (1). Correspondingly, under a

proposed change in law marriage penalties and bonuses would be defined by:

(1') [T'

s

(I1) + T'

s

(I2)] - T'

j

(I1 + I2)

The change in marriage penalties and bonuses from current law due to the proposal is obtained by

subtracting (1) from (1'), giving:

(6) {[T'

s

(I1) + T'

s

(I2)] - T'

j

(I1 + I2)} - {[Ts(I1) + Ts(I2)] - Tj(I1 + I2)}

 

which can be rearranged to:

(6') {Tj(I1 + I2) - T'

j

(I1 + I2)} - {[Ts(I1) + Ts(I2)] - [T'

s

(I1) + T'

s

(I2)]}

For proposals which leave the tax treatment of single and head of household filers unchanged,
-24-

T'

s

(.) = Ts(.), so the right-hand term in equation (6') is zero and equation (6') reduces to:

(7) Tj(I1 + I2) - T'

j

(I1 + I2)

Equation (7) is simply the (negative) of the change in tax liability for joint filers. But, alternative

assumptions used to measure marriage penalties affect only the computation of spouses’ tax

liabilities as unmarried (single or head of household) filers. So, for example, if equation (7) is

positive (i.e., if tax liabilities for couples decline due to the proposal), net marriage penalties are

reduced by the proposal under any set of measurement assumptions.
Table 1

Allocation Rules Under Resource Pooling Model:

Effect of Alternative Assumptions Regarding Living Arrangements

Tax Provision Joint Residency Separate Residences

Filing Status Both must file as single if no

dependents or children.

Taxpayer may claim head of

household filing status if

provides over half the costs

of maintaining home in which

taxpayer resides with children

or dependents.

Since spouses reside together

with children or other

dependents, assume that

spouse with higher earned

income claims head of

household status. The other

spouse files as single.

Same.

Same.

If there are children or other

dependents, assume custodial

parent claims head of

household filing status. The

other spouse files as single.

(See discussion below.)

Dependent Exemptions,

$500 Child Credits,

Medical Itemized Deductions

Dependents are allocated to

the custodial parent, who has

the right to waive exemption

to non-custodial parent.

Since both parents have

custody, assume taxpayer

with higher earned income

provides over half the

support of children and

claims the dependents.

Same.

Custodial parent could be

assumed to be either: 

a) higher-earner who

provides most support;

b) lower-earner with lower

opportunity costs for home

production.

Child and Dependent Care

Tax Credit

To claim credit, taxpayer

must work, reside with

children, and maintain home.

Assume claimed by parent

who claims head of

household status if he or she

works. 

Same.

Assumed claimed by custodial

parent if he or she works.
Tax Provision Joint Residency Separate Residences

HOPE and Lifetime Learning

Credits

May be claimed for self,

spouse, or dependents.

Same as child dependents if

child dependents are between

the ages of 17 and 24.

Otherwise, allocate to lower

earning spouse.

If creditable amounts exceed

amount for number of child

dependents, split evenly

between the children and the

lower earning spouse. 

Same.

Same.

 Same.

Same.

EITC If there are children: 

eligibility based on which

taxpayer has higher AGI. 

Taxpayer with lower AGI is

not eligible for any EITC.

If there are no children, both

may be eligible for EITC for

those without children.

If there are children: 

eligibility for EITC for those

with children based on

custody assumptions. The

noncustodial, nonresident

parent can be eligible for the

EITC for those without

children.

Same.

Kiddie Tax and Related Issues Same as child exemptions.

If no child exemptions, but

report taxable children’s

income, allocate to higher

earner spouse.

Same.
Table 2

Allocation Rules Under Resource Pooling Model:

Earned Income

Earned Income Allocation Rules

Wages and Salaries (including Nontaxable

Earned Income for EITC purposes)

Allocate to spouse who earns based on W-2

information.

Income from Sole Proprietorships, SBCs, and

Active Partnerships

Use Schedule SE to determine each spouse’s

share of self-employment income. Taxpayers

who have Schedule C income, but do not

attach a Schedule SE, are assumed to be

statutory employees (e.g., wage and salary),

and Schedule C income is allocated to lower

earner spouse (or split in proportion to

unearned income if neither have earnings).

Social Security Benefits Allocate to spouse who receives benefits

based on SSA-1099.

Unemployment Compensation, Foreign

Earned Income Exclusion, and Foreign

Housing

Split according to each spouse’s share of

earned income.

Fellowships Allocate to spouse with lower earnings.
Table 3

Allocation Rules Under Resource Pooling Model:

Effect of Alternative Assumptions Regarding Division of Unearned Income

Tax Provision Proportional Split Evenly Divided

Unearned Income (Income

other than earned income

described in Table 2 and state

and local income tax refunds). 

Includes dividends, interest,

capital gains, rents, roylaties,

pensions, annuities, IRA

distributions, gambling

winnings, alimony, and other

unearned income. 

Prorate on share of earned

income. If no earned income,

split evenly between spouses.

Passive Schedule E income is

the residual of selfemployment earnings, net of

income from Schedules C, F,

and E.

Split evenly between spouses.

Same.

State and Local Income Tax

Refunds 

Allocate in proportion to the

total of all other gross

income before state and local

income tax refunds (and

excluding social security).

Same. (But actual amount

will differ depending on the

allocation of unearned

income.)

Adjustments

IRA Deductions Allocate in proportion to

spouse’s share of total gross

income (including state and

local refunds, but excluding

social security), but subject

to constraint that deduction

cannot exceed spouse’s

wages and salaries or the

maximum contribution. Also,

do not allocate to spouse if

spouse participates in 401(k)

plan (as shown on W-2).

Same. (But actual amount

will differ depending on the

allocation of unearned

income.)

Keogh Deduction Allocate in proportion to 

spouse’s share of total gross

income, if both selfemployed. Otherwise,

allocate to self-employed.

Same. (But actual amount

will differ depending on the

allocation of unearned

income.)
Tax Provision Proportional Split Evenly Divided

SECA Deduction Allocate to spouse with

SECA liabilities.

Same.

Self-employed Health

Insurance Deduction

Prorate on share of selfemployment income. If no

self-employment income,

prorate on share of earned

income (because of exception

for wages from S corp in

which taxpayer is more-than2% shareholder).

Same.

Moving Expenses Prorate on share of earned

income.

Same.

Other Adjustments (Alimony

paid, interest penalties)

Allocate in proportion to

earned income. If no earned

income, split evenly.

Split evenly.

Itemized Deductions

Investment Interest and

Gambling Losses 

Allocate in proportion to

earned income. If no earned

income, split evenly.

Split evenly.

Other Deductions Allocate in proportion to

separate gross incomes (use

proxy that excludes social

security benefits).

Same. (But actual amount

will differ depending on the

allocation of unearned

income.)
Table 4

Miscellaneous Allocation Rules

Tax Provision Allocation Rules

Standard Deduction for Blind If two are claimed, split.

Otherwise, allocate to lower-earner spouse.

Elderly Standard Deduction If two are claimed, split.

Otherwise, allocate to older spouse.

Elderly and Disabled Credit If both 65 or older, calculate eligibility for each spouse. 

If both under 65 and both disabled, calculate eligibility

for each spouse (and split disability income). If both

under 65 and only one disabled, assume lower-income

spouse is disabled (and give this spouse the disability

income). If one spouse 65 and older and other spouse

disabled, calculate eligibility for each spouse (and give

disability income to younger spouse). If one spouse 65

and older and other spouse able, calculate eligibility

only for older spouse.

Other Credits Allocate in proportion to spouse’s share of total gross

income.

AMT Items

AGI, Deductions, Credits Allocate in same manner as for regular tax.

AMT Carryforward Credits Allocate in proportion to separate AMTI.

Other “Preference” Items Split equally between spouses.
Table 5

Marriage Penalties and Bonuses under Current Law by Number of Earners Using Standard Assumptions

(1999 law and income levels)

A d justed Gross All Couples No Ea rner and One Earner Couples Two Earner Couples

Income Class W ho under Current Law Have: W ho under Current Law Have: W ho under Current Law Have:

(000) Penalties Bonuses N e ithe r T o ta l Penalties Bonuses N e ithe r T o ta l Penalties Bonuses N e ithe r T o ta l

---------- N umber of R e turns (000) ----------

Loss 25 18 439 482 0 4 256 260 25 14 184 223

 0 - 15 387 1,741 3,082 5,210 0 484 1,604 2,088 386 1,256 1,480 3,122

15 - 30 3,397 4,177 868 8,442 0 2,142 610 2,752 3,394 2,034 261 5,689

30 - 40 2,846 2,478 94 5,418 0 1,514 33 1,547 2,845 964 63 3,872

40 - 50 3,218 2,248 150 5,616 0 1,179 10 1,189 3,217 1,069 141 4,427

50 - 60 2,560 2,324 361 5,245 0 992 5 997 2,561 1,332 356 4,249

60 - 75 3,477 2,846 545 6,868 0 1,030 2 1,032 3,477 1,815 542 5,834

 75 - 100 4,325 2,292 49 6,666 0 965 2 967 4,325 1,327 46 5,698

100 - 200 3,787 2,035 3 5,824 0 1,001 0 1,001 3,787 1,033 3 4,823

200 & over 811 836 26 1,673 0 561 25 586 811 275 2 1,088

T o ta l 24,834 20,994 5,617 51,445 0 9,875 2,546 12,421 24,826 11,119 3,079 39,024

---------- Amount of Penalty (-) or Bonus (+) ($ millions) ----------

Loss -15 37 0 21 0 18 0 18 -15 19 0 4

 0 - 15 -117 727 0 611 0 263 0 263 -117 465 0 348

15 - 30 -2,061 2,204 0 142 0 1,356 0 1,356 -2,062 848 0 -1,214

30 - 40 -2,253 1,641 0 -612 0 1,183 0 1,183 -2,253 457 0 -1,796

40 - 50 -1,859 2,139 0 279 0 1,376 0 1,376 -1,859 762 0 -1,097

50 - 60 -1,370 3,020 0 1,650 0 1,876 0 1,876 -1,370 1,144 0 -226

60 - 75 -2,776 4,373 0 1,597 0 2,518 0 2,518 -2,776 1,855 0 -921

 75 - 100 -5,987 4,492 0 -1,494 0 2,856 0 2,856 -5,987 1,636 0 -4,351

100 - 200 -7,293 5,251 0 -2,042 0 3,435 0 3,435 -7,293 1,816 0 -5,477

200 & over -4,613 2,866 0 -1,747 0 2,173 0 2,173 -4,612 692 0 -3,920

T o ta l -28,344 26,749 0 -1,594 0 17,053 0 17,053 -28,341 9,696 0 -18,645
Table 5 - Continued

Marriage Penalties and Bonuses under Current Law by Number of Earners Using Standard Assumptions

(1999 law and income levels)

A d justed Gross All Couples No Ea rner and One Earner Couples Two Earner Couples

Income Class W ho under Current Law Have: W ho under Current Law Have: W ho under Current Law Have:

(000) Penalties Bonuses N e ithe r T o ta l Penalties Bonuses N e ithe r T o ta l Penalties Bonuses N e ithe r T o ta l

---------- Percentage Distribution of Returns (%) ----------

Loss 0.1 0.1 7.8 0.9 N/A 0.0 10.1 2.1 0.1 0.1 6.0 0.6

 0 - 15 1.6 8.3 54.9 10.1 N/A 4.9 63.0 16.8 1.6 11.3 48.1 8.0

15 - 30 13.7 19.9 15.5 16.4 N/A 21.7 24.0 22.2 13.7 18.3 8.5 14.6

30 - 40 11.5 11.8 1.7 10.5 N/A 15.3 1.3 12.5 11.5 8.7 2.0 9.9

40 - 50 13.0 10.7 2.7 10.9 N/A 11.9 0.4 9.6 13.0 9.6 4.6 11.3

50 - 60 10.3 11.1 6.4 10.2 N/A 10.0 0.2 8.0 10.3 12.0 11.6 10.9

60 - 75 14.0 13.6 9.7 13.4 N/A 10.4 0.1 8.3 14.0 16.3 17.6 14.9

 75 - 100 17.4 10.9 0.9 13.0 N/A 9.8 0.1 7.8 17.4 11.9 1.5 14.6

100 - 200 15.2 9.7 0.1 11.3 N/A 10.1 0.0 8.1 15.3 9.3 0.1 12.4

200 & over 3.3 4.0 0.5 3.3 N/A 5.7 1.0 4.7 3.3 2.5 0.1 2.8

T o ta l 100.0 100.0 100.0 100.0 N/A 100.0 100.0 100.0 100.0 100.0 100.0 100.0

---------- Average Amount o f Penalty (-) or Bonus (+) ($) ----------

Loss -600 2,056 0 44 N/A 4,500 0 69 -600 1,357 0 18

 0 - 15 -302 418 0 117 N/A 543 0 126 -303 370 0 111

15 - 30 -607 528 0 17 N/A 633 0 493 -608 417 0 -213

30 - 40 -792 662 0 -113 N/A 781 0 765 -792 474 0 -464

40 - 50 -578 952 0 50 N/A 1,167 0 1,157 -578 713 0 -248

50 - 60 -535 1,299 0 315 N/A 1,891 0 1,882 -535 859 0 -53

60 - 75 -798 1,537 0 233 N/A 2,445 0 2,440 -798 1,022 0 -158

 75 - 100 -1,384 1,960 0 -224 N/A 2,960 0 2,953 -1,384 1,233 0 -764

100 - 200 -1,926 2,580 0 -351 N/A 3,432 0 3,432 -1,926 1,758 0 -1,136

200 & over -5,688 3,428 0 -1,044 N/A 3,873 0 3,708 -5,687 2,516 0 -3,603

T o ta l -1,141 1,274 0 -31 N/A 1,727 0 1,373 -1,142 872 0 -478

NOTE: D e tail may not add to to ta ls due to rounding.
Table 6

Marriage Penalties and Bonuses under Current Law Using Alternative Assumptions

(1999 law and income levels)

Alternative 1: Alternative 2: Alternative 3:

Sepa ra te Res idences Unearned Income Evenly Divided No Head o f Household Status

Adjusted Gross (All other assumptions are Standard) (All other assumptions are Standard) (All other assumptions are Standard)

Income Class All Couples Who under Current Law Have: All Couples Who under Current Law Have: All Couples Who under Current Law Have:

(000) Penalties Bonuses Neither T o tal Penalties Bonuses Neither T o tal Penalties Bonuses Neither T o tal

---------- Number of R e turns (000) ----------

Loss 30 58 394 482 26 37 418 482 25 18 439 482

 0 - 15 229 3,369 1,613 5,210 609 1,216 3,384 5,210 383 1,832 2,995 5,210

15 - 30 2,595 5,678 170 8,442 4,498 3,232 713 8,442 3,306 4,355 782 8,442

30 - 40 2,687 2,695 36 5,418 3,291 2,039 88 5,418 2,727 2,604 87 5,418

40 - 50 3,142 2,388 86 5,616 3,519 1,919 179 5,616 3,055 2,413 148 5,616

50 - 60 2,609 2,476 160 5,245 2,831 2,039 375 5,245 2,132 2,702 411 5,245

60 - 75 3,602 3,059 207 6,868 3,767 2,535 566 6,868 2,668 3,691 509 6,868

 75 - 100 4,108 2,529 30 6,666 4,677 1,929 60 6,666 3,739 2,887 40 6,666

100 - 200 3,725 2,096 3 5,824 4,300 1,521 3 5,824 3,439 2,382 4 5,824

200 & over 799 850 23 1,673 1,246 418 9 1,673 734 916 23 1,673

T o tal 23,525 25,198 2,722 51,445 28,764 16,887 5,794 51,445 22,209 23,799 5,437 51,445

---------- Amount of Penalty (-) or Bonus (+) ($ millions) ----------

Loss -29 88 0 59 -27 54 0 26 -15 37 0 21

 0 - 15 -73 5,296 0 5,223 -212 584 0 372 -116 747 0 630

15 - 30 -1,503 9,049 0 7,547 -2,528 1,711 0 -818 -1,935 2,511 0 576

30 - 40 -2,899 4,284 0 1,385 -2,581 1,244 0 -1,337 -2,009 1,864 0 -145

40 - 50 -3,749 5,230 0 1,481 -2,153 1,650 0 -502 -1,509 2,754 0 1,245

50 - 60 -2,781 6,248 0 3,467 -1,745 2,360 0 616 -978 4,214 0 3,236

60 - 75 -2,944 8,197 0 5,252 -3,505 3,484 0 -21 -1,917 6,335 0 4,419

 75 - 100 -4,468 7,518 0 3,050 -6,675 3,351 0 -3,325 -3,827 6,245 0 2,418

100 - 200 -6,456 8,327 0 1,871 -8,380 3,369 0 -5,011 -4,737 7,602 0 2,865

200 & over -4,561 4,092 0 -469 -8,253 1,573 0 -6,680 -3,744 4,262 0 519

T o tal -29,462 58,328 0 28,866 -36,060 19,381 0 -16,679 -20,787 36,571 0 15,784
Table 6 - Continued

Marriage Penalties and Bonuses under Current Law Using Alternative Assumptions

(1999 law and income levels)

Alternative 1: Alternative 2: Alternative 3:

Sepa ra te Residences Unearned Income Evenly Divided No Head o f Household Status

Adjusted Gross (All other assumptions are Standa rd ) (All other assumptions are Standa rd ) (All other assumptions are Standa rd )

Income Class All Couples Who under Current Law Have: All Couples Who under Current Law Have: All Couples Who under Current Law Have:

(000) Penalties Bonuses Neithe r T o ta l Penalties Bonuses Neithe r T o ta l Penalties Bonuses Neithe r T o ta l

---------- Pe rcentage Distribution of Returns (%) ----------

Loss 0.1 0.2 14.5 0.9 0.1 0.2 7.2 0.9 0.1 0.1 8.1 0.9

 0 - 15 1.0 13.4 59.3 10.1 2.1 7.2 58.4 10.1 1.7 7.7 55.1 10.1

15 - 30 11.0 22.5 6.2 16.4 15.6 19.1 12.3 16.4 14.9 18.3 14.4 16.4

30 - 40 11.4 10.7 1.3 10.5 11.4 12.1 1.5 10.5 12.3 10.9 1.6 10.5

40 - 50 13.4 9.5 3.2 10.9 12.2 11.4 3.1 10.9 13.8 10.1 2.7 10.9

50 - 60 11.1 9.8 5.9 10.2 9.8 12.1 6.5 10.2 9.6 11.4 7.6 10.2

60 - 75 15.3 12.1 7.6 13.4 13.1 15.0 9.8 13.4 12.0 15.5 9.4 13.4

 75 - 100 17.5 10.0 1.1 13.0 16.3 11.4 1.0 13.0 16.8 12.1 0.7 13.0

100 - 200 15.8 8.3 0.1 11.3 14.9 9.0 0.1 11.3 15.5 10.0 0.1 11.3

200 & over 3.4 3.4 0.8 3.3 4.3 2.5 0.2 3.3 3.3 3.8 0.4 3.3

T o ta l 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

---------- Average Amount of Penalty (-) or Bonus (+) ($) ----------

Loss -967 1,517 0 122 -1,038 1,459 0 54 -600 2,056 0 44

 0 - 15 -319 1,572 0 1,002 -348 480 0 71 -303 408 0 121

15 - 30 -579 1,594 0 894 -562 529 0 -97 -585 577 0 68

30 - 40 -1,079 1,590 0 256 -784 610 0 -247 -737 716 0 -27

40 - 50 -1,193 2,190 0 264 -612 860 0 -89 -494 1,141 0 222

50 - 60 -1,066 2,523 0 661 -616 1,157 0 117 -459 1,560 0 617

60 - 75 -817 2,680 0 765 -930 1,374 0 -3 -719 1,716 0 643

 75 - 100 -1,088 2,973 0 458 -1,427 1,737 0 -499 -1,024 2,163 0 363

100 - 200 -1,733 3,973 0 321 -1,949 2,215 0 -860 -1,377 3,191 0 492

200 & over -5,708 4,814 0 -280 -6,624 3,763 0 -3,993 -5,101 4,653 0 310

T o ta l -1,252 2,315 0 561 -1,254 1,148 0 -324 -936 1,537 0 307

NOTE: D e tail may not add to to ta ls due to rounding.
Table 7

Summary of the Impacts of Recent Proposals to Address Marriage Penalties

(1999 law and income levels)

Would Would

Couples Singles

Change from Current Law in Penalties and Bonuses with Pay

Penalties and Bonuses Reduction Percent of Total to the Same the Same

Under the Proposal Reduction Increase T o tal in Penalties Couples with AGIs: Incomes "Singles

Penalties Bonuses in Penalties in Bonuses Change as Percent Under Over Pay the Penalty" as

Proposed Law ($ millions) ($ millions) o f T o tal $30,000 $100,000 Same Tax? Currently?

---------- Impacts Using Standard Assumptions ----------

No -- 

 1. Additional Deduction for Couples with Incomes Below $50,000* -25,603 31,908 2,741 5,159 7,899 34.7% 61.6% None Yes Greater

Penalties

No -- 

 2. Make Joint Standard Deduction Double Single -25,494 29,181 2,850 2,432 5,281 54.0% 22.5% 5.7% Yes Greater

Penalties

No -- 

 3. Make Joint Standard Deduction and Rate Brackets Double Single -13,762 42,609 14,582 15,860 30,440 47.9% 3.9% 52.0% Yes Greater

Penalties

 4. Reinstate the Two-Earner Deduction -19,011 29,319 9,333 2,570 11,902 78.4% 2.1% 31.9% N o Yes

 5. Single Filer Option -14,256 34,228 14,088 7,479 21,566 65.3% 4.2% 47.0% N o Yes

No -- 

 6. Income Splitting -11,935 45,901 16,409 19,152 35,559 46.1% 4.0% 48.9% Yes Greater

Penalties

---------- Impacts Using Alternative 1 Assumptions (Separate Residence) ----------

No -- 

 2. Make Joint Standard Deduction Double Single -26,756 60,901 2,706 2,573 5,281 51.2% 22.5% 5.7% Yes Greater

Penalties

No -- 

 6. Income Splitting -14,188 78,611 15,274 20,283 35,559 43.0% 4.0% 48.9% Yes Greater

Penalties

---------- Impacts Using Alternative 2 Assumptions (Unearned Income Evenly Divided) ----------

No -- 

 2. Make Joint Standard Deduction Double Single -32,658 21,258 3,402 1,877 5,281 64.4% 22.5% 5.7% Yes Greater

Penalties

No -- 

 6. Income Splitting -14,322 33,200 21,738 13,819 35,559 61.1% 4.0% 48.9% Yes Greater

Penalties

---------- Impacts Using Alternative 3 Assumptions (No Head of Household Status) ----------

No -- 

 2. Make Joint Standard Deduction Double Single -18,232 39,295 2,555 2,724 5,281 48.4% 22.5% 5.7% Yes Greater

Penalties

No -- 

 6. Income Splitting -6,798 58,138 13,989 21,567 35,559 39.3% 4.0% 48.9% Yes Greater

Penalties

NOTE: D e tail may not add to totals due to rounding.

* Effects are shown for the the proposal when fully phased in, but at 1999 income levels. 
Table 8

Summary of Marriage Penalties and Bonuses under Current Law and Under Recent Proposals Using Standard Assumptions

(1999 law and income levels)

A ll Couples W ho Have : Change in Sta tus or Amount from Current Law:

Current or Proposed Law Pena ltie s Bonuses N e ithe r T o ta l Pena ltie s Bonuses N e ithe r T o ta l

---------- Numbe r o f R e turns (000) ----------

Current Law 24,834 20,994 5,617 51,445

P roposa ls:

1. Addi tional Deduc tion fo r Couples with Incomes Below $50,000* 20,825 25,753 4,868 51,445 -4,009 4,759 -749 0

2. Make Join t S tanda rd Deduc tion Doub le S ingle 21,983 22,408 7,054 51,445 -2,851 1,414 1,437 0

3. Make Join t S tanda rd Deduc tion and Ra te Bracke ts Doub le S ingle 17,317 28,029 6,099 51,445 -7,517 7,035 482 0

4. R e instate the Two-Earner Deduction 20,247 26,495 4,703 51,445 -4,587 5,501 -914 0

5. S ingle Filer Option 16,754 25,374 9,318 51,445 -8,080 4,380 3,701 0

6. Income Spl itting 15,041 27,269 9,136 51,445 -9,793 6,275 3,519 0

---------- Amoun t o f Pena lty (-) or Bonus (+) ($ millions) ----------

Current Law -28,344 26,749 0 -1,594

P roposa ls:

1. Addi tional Deduc tion fo r Couples with Incomes Below $50,000* -25,603 31,908 0 6,305 2,741 5,159 0 7,899

2. Make Join t S tanda rd Deduc tion Doub le S ingle -25,494 29,181 0 3,687 2,850 2,432 0 5,281

3. Make Join t S tanda rd Deduc tion and Ra te Bracke ts Doub le S ingle -13,762 42,609 0 28,846 14,582 15,860 0 30,440

4. R e instate the Two-Earner Deduction -19,011 29,319 0 10,308 9,333 2,570 0 11,902

5. S ingle Filer Option -14,256 34,228 0 19,972 14,088 7,479 0 21,566

6. Income Spl itting -11,935 45,901 0 33,965 16,409 19,152 0 35,559

---------- P e rcen t o f All Joint Returns ( % ) ----------

Current Law 48.3 40.8 10.9 100.0

P roposa ls:

1. Addi tional Deduc tion fo r Couples with Incomes Below $50,000* 40.5 50.1 9.5 100.0 -7.8 9.3 -1.5 0.0

2. Make Join t S tanda rd Deduc tion Doub le S ingle 42.7 43.6 13.7 100.0 -5.5 2.7 2.8 0.0

3. Make Join t S tanda rd Deduc tion and Ra te Bracke ts Doub le S ingle 33.7 54.5 11.9 100.0 -14.6 13.7 0.9 0.0

4. R e instate the Two-Earner Deduction 39.4 51.5 9.1 100.0 -8.9 10.7 -1.8 0.0

5. S ingle Filer Option 32.6 49.3 18.1 100.0 -15.7 8.5 7.2 0.0

6. Income Spl itting 29.2 53.0 17.8 100.0 -19.0 12.2 6.8 0.0

---------- Ave rage Amoun t o f Penal ty (-) o r Bonus (+) ($) ----------

Current Law -1,141 1,274 0 -31

P roposa ls:

1. Addi tional Deduc tion fo r Couples with Incomes Below $50,000* -1,229 1,239 0 123 -88 -35 0 154

2. Make Join t S tanda rd Deduc tion Doub le S ingle -1,160 1,302 0 7 2 -18 2 8 0 103

3. Make Join t S tanda rd Deduc tion and Ra te Bracke ts Doub le S ingle -795 1,520 0 561 347 246 0 592

4. R e instate the Two-Earner Deduction -939 1,107 0 200 202 -168 0 231

5. S ingle Filer Option -851 1,349 0 388 290 7 5 0 419

6. Income Spl itting -793 1,683 0 660 348 409 0 691

NOTE : D e tail may no t add to to ta ls due to rounding .
Table 9

Additional Deduction for Couples with Incomes Below $50,000*

(1999 law and income levels)

Couples Affected by the Proposal

(Status under Current Law to Status under the Proposal)

Adjusted Gross Penalty Penalty Penalty Bonus Neither T o tal Changes from Current Law All Couples

Income Class to Lower to to to Higher to T o tal in Couples With and Amounts of: Who under the Proposal Have:

(000) Penalty Bonus Neither Bonus Bonus Affected Penalties Bonuses Neither T o tal Penalties Bonuses Neither T o tal

---------- Number of Returns (000) ----------

Loss 7 5 1 2 11 26 -6 16 -10 0 19 34 429 482

 0 - 15 115 120 100 667 439 1,441 -220 559 -340 0 167 2,300 2,742 5,210

15 - 30 1,042 2,202 103 3,891 553 7,791 -2,305 2,756 -450 0 1,092 6,933 418 8,442

30 - 40 1,484 1,254 82 2,394 53 5,267 -1,336 1,307 29 0 1,510 3,785 123 5,418

40 - 50 86 113 29 141 11 381 -142 122 20 0 3,076 2,370 170 5,616

50 - 60 0 0 0 0 0 0 0 0 0 0 2,560 2,324 361 5,245

60 - 75 0 0 0 0 0 0 0 -1 1 0 3,477 2,845 546 6,868

 75 - 100 0 0 0 0 0 0 0 0 0 0 4,325 2,292 49 6,666

100 - 200 0 0 0 0 0 0 0 0 0 0 3,787 2,035 3 5,824

200 & over 0 0 0 0 0 0 0 0 0 0 811 836 26 1,673

T o tal 2,732 3,694 316 7,096 1,067 14,905 -4,009 4,759 -749 0 20,825 25,753 4,868 51,445

---------- Changes in Penalties and Bonuses** ($ millions) ---------- - Amount of Penalty (-) or Bonus (+) ($ millions) -

Loss 4 2 *** 1 4 12 5 6 0 12 -10 43 0 33

 0 - 15 28 36 20 106 107 296 66 232 0 296 -51 959 0 907

15 - 30 764 1,237 38 2,163 356 4,559 1,404 3,154 0 4,559 -657 5,358 0 4,701

30 - 40 815 674 41 1,277 26 2,832 1,168 1,664 0 2,832 -1,085 3,305 0 2,220

40 - 50 44 59 15 73 6 198 89 107 0 198 -1,770 2,246 0 477

50 - 60 0 0 0 0 0 0 1 -1 0 0 -1,369 3,019 0 1,650

60 - 75 0 0 0 0 0 0 0 -1 0 0 -2,776 4,372 0 1,597

 75 - 100 0 0 0 0 0 0 2 -1 0 0 -5,985 4,491 0 -1,494

100 - 200 0 0 0 0 0 1 2 -1 0 1 -7,291 5,250 0 -2,041

200 & over 0 0 0 0 0 2 4 -2 0 2 -4,609 2,864 0 -1,745

T o tal 1,655 2,008 114 3,619 500 7,899 2,741 5,159 0 7,899 -25,603 31,908 0 6,305

NOTE: D e ta il may not add to totals due to rounding.

* Effects are shown for the the proposal when fully phased in, but at 1999 income levels. 

** All changes are reductions in penalties or increases in bonuses, so are shown as positive.

*** Less than $500,000.
Table 10

Make the Joint Standard Deduction Double the Single Amount under Current Law

(1999 law and income levels)

Couples Affected by the Proposal

(Status under Current Law to Status under the Proposal)

Adjusted Gross Penalty Penalty Penalty Bonus Neithe r T o ta l Changes from Current Law All Couples

Income Class to Lower to to to Higher to T o ta l in Couples With and Amounts of: W ho under the Proposal Have:

(000) Penalty Bonus Neithe r Bonus Bonus Affec te d Penalties Bonuses Neithe r T o ta l Penalties Bonuses Neithe r T o ta l

---------- Number of R e turns (000) ----------

Loss 0 0 0 0 0 0 0 0 0 0 25 18 439 482

 0 - 15 27 25 10 308 0 370 -35 25 10 0 352 1,766 3,092 5,210

15 - 30 1,560 552 258 3,203 31 5,604 -810 584 227 0 2,587 4,761 1,095 8,442

30 - 40 1,713 206 458 1,863 13 4,253 -664 219 444 0 2,182 2,697 538 5,418

40 - 50 1,689 161 561 1,434 10 3,854 -722 169 554 0 2,496 2,417 704 5,616

50 - 60 1,326 123 206 1,277 7 2,940 -328 130 199 0 2,232 2,454 560 5,245

60 - 75 1,457 210 4 937 6 2,614 -214 215 -1 0 3,263 3,061 544 6,868

 75 - 100 962 57 3 457 0 1,480 -60 57 3 0 4,265 2,349 52 6,666

100 - 200 422 14 1 239 0 676 -15 13 1 0 3,772 2,048 4 5,824

200 & over 62 2 0 54 0 118 -2 1 0 0 809 837 26 1,673

T o ta l 9,218 1,350 1,501 9,773 67 21,908 -2,851 1,414 1,437 0 21,983 22,408 7,054 51,445

---------- Changes in Penalties and Bonuses* ($ millions) ---------- - Amount of Penalty (-) or Bonus (+) ($ millions) -

Loss 0 0 0 0 0 0 0 0 0 0 -15 37 0 21

 0 - 15 4 4 1 38 0 45 6 40 0 45 -111 767 0 656

15 - 30 317 116 53 652 6 1,144 431 712 0 1,144 -1,630 2,916 0 1,286

30 - 40 355 44 99 389 2 889 477 412 0 889 -1,776 2,053 0 277

40 - 50 342 34 121 294 2 794 478 315 0 794 -1,381 2,454 0 1,073

50 - 60 285 33 47 299 1 665 349 315 0 665 -1,021 3,335 0 2,315

60 - 75 511 81 2 318 2 914 556 358 0 914 -2,220 4,731 0 2,511

 75 - 100 345 22 1 162 0 530 361 170 0 530 -5,626 4,662 0 -964

100 - 200 155 6 ** 84 0 247 161 86 0 247 -7,132 5,337 0 -1,795

200 & over 26 1 0 25 0 54 31 23 0 54 -4,582 2,889 0 -1,693

T o ta l 2,342 337 324 2,261 14 5,281 2,850 2,432 0 5,281 -25,494 29,181 0 3,687

NOTE: D e tail may not add to totals due to rounding.

* All changes are reductions in penalties or increases in bonuses, so are shown as positive.

** Less than $500,000.
Table 11

Make the Joint Standard Deduction and Rate brackets Double the Single Amount under Current Law

(1999 law and income levels)

Couples Affected by the Proposal

(Status under Current Law to Status under the Proposal)

Adjusted Gross Penalty Penalty Penalty Bonus Neithe r T o ta l Changes from Current Law All Couples

Income Class to Lower to to to Higher to T o ta l in Couples With and Amounts of: W ho under the Proposal Have:

(000) Penalty Bonus Neithe r Bonus Bonus Affec te d Penalties Bonuses Neithe r T o ta l Penalties Bonuses Neithe r T o ta l

---------- Number of R e turns (000) ----------

Loss 0 0 0 4 0 4 0 0 0 0 25 18 439 482

 0 - 15 61 28 8 1,087 0 1,185 -36 28 7 0 351 1,769 3,089 5,210

15 - 30 1,820 756 56 3,294 30 5,957 -813 787 26 0 2,584 4,964 894 8,442

30 - 40 1,911 643 22 1,889 15 4,481 -665 658 6 0 2,181 3,136 100 5,418

40 - 50 2,133 705 18 1,463 11 4,330 -723 714 9 0 2,495 2,962 159 5,616

50 - 60 1,807 395 8 1,441 9 3,660 -403 403 0 0 2,157 2,727 361 5,245

60 - 75 1,684 1,305 279 2,014 15 5,296 -1,583 1,316 268 0 1,894 4,162 813 6,868

 75 - 100 2,318 1,671 150 2,070 8 6,216 -1,820 1,679 142 0 2,505 3,971 191 6,666

100 - 200 2,414 1,172 25 1,892 1 5,504 -1,198 1,172 25 0 2,589 3,207 28 5,824

200 & over 421 275 ** 746 1 1,443 -275 276 -1 0 536 1,112 25 1,673

T o ta l 14,568 6,951 566 15,900 89 38,075 -7,517 7,035 482 0 17,317 28,029 6,099 51,445

---------- Changes in Penalties and Bonuses* ($ millions) ---------- - Amount of Penalty (-) or Bonus (+) ($ millions) -

Loss 0 0 0 0 0 0 0 0 0 0 -15 37 0 21

 0 - 15 4 4 ** 45 0 52 6 47 0 52 -111 774 0 663

15 - 30 322 160 10 642 6 1,139 436 703 0 1,139 -1,625 2,907 0 1,281

30 - 40 357 142 4 380 2 886 479 406 0 886 -1,774 2,047 0 274

40 - 50 346 156 3 289 2 797 482 314 0 797 -1,377 2,453 0 1,076

50 - 60 270 123 2 332 1 728 372 355 0 728 -998 3,375 0 2,378

60 - 75 1,044 1,458 117 1,565 9 4,192 1,951 2,241 0 4,192 -825 6,614 0 5,789

 75 - 100 2,526 1,971 109 2,198 6 6,809 3,961 2,849 0 6,809 -2,026 7,341 0 5,315

100 - 200 2,911 1,524 31 2,359 1 6,828 4,033 2,795 0 6,828 -3,260 8,046 0 4,786

200 & over 1,710 2,370 2 4,922 4 9,010 2,862 6,148 0 9,010 -1,751 9,014 0 7,263

T o ta l 9,490 7,906 278 12,733 31 30,440 14,582 15,860 0 30,440 -13,762 42,609 0 28,846

NOTE: D e tail may not add to totals due to rounding.

* All changes are reductions in penalties or increases in bonuses, so are shown as positive.

** Fewer than 500 returns or less than $500,000.
Table 12

Reinstate the Two-Earner Deduction

(1999 law and income levels)

Couples Affected by the Proposal

(Status under Current Law to Status under the Proposal)

Adjusted Gross Penalty Penalty Penalty Bonus Neithe r T o ta l Changes from Current Law All Couples

Income Class to Lower to to to Higher to T o ta l in Couples With and Amounts of: W ho under the Proposal Have:

(000) Penalty Bonus Neithe r Bonus Bonus Affec te d Penalties Bonuses Neithe r T o ta l Penalties Bonuses Neithe r T o ta l

---------- Number of R e turns (000) ----------

Loss 0 0 0 0 0 1 0 0 0 0 25 18 439 482

 0 - 15 91 6 3 69 0 169 -9 6 3 0 378 1,747 3,085 5,210

15 - 30 1,625 62 26 600 27 2,339 -88 89 -1 0 3,309 4,266 867 8,442

30 - 40 1,933 269 76 610 36 2,924 -345 306 39 0 2,501 2,784 133 5,418

40 - 50 2,041 779 36 798 133 3,788 -816 910 -95 0 2,402 3,158 55 5,616

50 - 60 1,358 837 15 1,092 349 3,651 -852 1,186 -334 0 1,708 3,510 27 5,245

60 - 75 1,693 1,349 26 1,569 537 5,174 -1,375 1,885 -510 0 2,102 4,731 35 6,868

 75 - 100 3,181 768 20 1,180 43 5,192 -788 811 -22 0 3,537 3,103 27 6,666

100 - 200 3,160 278 8 864 2 4,311 -286 279 7 0 3,501 2,314 10 5,824

200 & over 656 28 1 229 1 916 -28 29 -1 0 783 865 25 1,673

T o ta l 15,738 4,376 212 7,011 1,128 28,465 -4,587 5,501 -914 0 20,247 26,495 4,703 51,445

---------- Changes in Penalties and Bonuses* ($ millions) ---------- - Amount of Penalty (-) or Bonus (+) ($ millions) -

Loss 0 0 0 0 0 0 0 0 0 0 -15 37 0 21

 0 - 15 5 ** ** 3 0 8 6 3 0 8 -111 730 0 619

15 - 30 196 8 3 26 3 236 203 32 0 236 -1,858 2,236 0 378

30 - 40 298 58 15 35 7 414 359 55 0 414 -1,894 1,696 0 -198

40 - 50 411 202 7 65 33 718 551 166 0 718 -1,308 2,305 0 997

50 - 60 334 309 3 185 114 944 511 434 0 944 -859 3,454 0 2,594

60 - 75 1,010 781 11 399 205 2,405 1,454 952 0 2,405 -1,322 5,325 0 4,002

 75 - 100 2,508 521 8 321 19 3,377 2,825 553 0 3,377 -3,162 5,045 0 1,883

100 - 200 2,654 190 5 227 1 3,077 2,770 307 0 3,077 -4,523 5,558 0 1,035

200 & over 638 22 ** 59 1 722 654 67 0 722 -3,959 2,933 0 -1,025

T o ta l 8,053 2,092 52 1,319 382 11,902 9,333 2,570 0 11,902 -19,011 29,319 0 10,308

NOTE: D e tail may not add to totals due to rounding.

* All changes are reductions in penalties or increases in bonuses, so are shown as positive.

** Less than $500,000.
Table 13

Single Filer Option

(1999 law and income levels)

Couples Affected by the Proposal

(Status under Current Law to Status under the Proposal)

Adjusted Gross Penalty Penalty Penalty Bonus Neithe r T o ta l Changes from Current Law All Couples

Income Class to Lower to to to Higher to T o ta l in Couples With and Amounts of: W ho under the Proposal Have:

(000) Penalty Bonus Neithe r Bonus Bonus Affec te d Penalties Bonuses Neithe r T o ta l Penalties Bonuses Neithe r T o ta l

---------- Number of R e turns (000) ----------

Loss 0 0 0 0 0 0 0 0 0 0 25 18 439 482

 0 - 15 19 17 6 154 0 196 -23 17 5 0 364 1,758 3,087 5,210

15 - 30 842 608 602 1264 15 3,331 -1,211 624 587 0 2,186 4,801 1,455 8,442

30 - 40 1,341 383 648 675 6 3,053 -1,031 390 641 0 1,815 2,868 735 5,418

40 - 50 1,604 424 703 515 8 3,253 -1,127 429 698 0 2,091 2,677 848 5,616

50 - 60 1,002 429 372 380 4 2,187 -800 432 368 0 1,760 2,756 729 5,245

60 - 75 1,164 901 376 453 16 2,911 -1,276 916 361 0 2,201 3,762 906 6,868

 75 - 100 2,210 795 492 477 4 3,979 -1,287 799 488 0 3,038 3,091 537 6,666

100 - 200 2,149 546 535 550 0 3,780 -1,082 545 536 0 2,705 2,580 539 5,824

200 & over 360 226 17 346 ** 949 -243 226 17 0 568 1,062 43 1,673

T o ta l 10,691 4,329 3,751 4814 53 23,638 -8,080 4,380 3,701 0 16,754 25,374 9,318 51,445

---------- Changes in Penalties and Bonuses* ($ millions) ---------- - Amount of Penalty (-) or Bonus (+) ($ millions) -

Loss 0 0 0 0 0 0 0 0 0 0 -15 37 0 21

 0 - 15 2 4 ** 15 0 22 6 17 0 22 -111 744 0 633

15 - 30 180 197 196 301 3 878 483 394 0 878 -1,578 2,598 0 1,020

30 - 40 328 282 227 253 2 1,091 744 348 0 1,091 -1,509 1,989 0 479

40 - 50 388 463 189 200 1 1,241 879 361 0 1,241 -980 2,500 0 1,520

50 - 60 282 616 137 250 1 1,286 808 478 0 1,286 -562 3,498 0 2,936

60 - 75 682 1,349 237 438 8 2,713 1,637 1,076 0 2,713 -1,139 5,449 0 4,310

 75 - 100 1,961 1,187 543 502 1 4,194 3,211 984 0 4,194 -2,776 5,476 0 2,700

100 - 200 2,328 801 661 658 0 4,451 3,567 883 0 4,451 -3,726 6,134 0 2,409

200 & over 1,575 1,794 142 2,176 1 5,692 2,754 2,937 0 5,692 -1,859 5,803 0 3,945

T o ta l 7,725 6,696 2,331 4,794 18 21,566 14,088 7,479 0 21,566 -14,256 34,228 0 19,972

NOTE: D e tail may not add to totals due to rounding.

* All changes are reductions in penalties or increases in bonuses, so are shown as positive.

** Fewer than 500 returns or less than $500,000.
Table 14

Income Splitting

(1999 law and income levels)

Couples Affected by the Proposal

(Status under Current Law to Status under the Proposal)

Adjusted Gross Penalty Penalty Penalty Bonus Neithe r T o ta l Changes from Current Law All Couples

Income Class to Lower to to to Higher to T o ta l in Couples With and Amounts of: W ho under the Proposal Have:

(000) Penalty Bonus Neithe r Bonus Bonus Affec te d Penalties Bonuses Neithe r T o ta l Penalties Bonuses Neithe r T o ta l

---------- Number of R e turns (000) ----------

Loss 0 0 0 0 0 0 0 0 0 0 25 18 439 482

 0 - 15 29 20 9 301 0 359 -29 20 9 0 358 1,761 3,091 5,210

15 - 30 1,044 704 619 3,202 25 5,595 -1,323 729 594 0 2,074 4,906 1,462 8,442

30 - 40 1,368 489 625 1,907 13 4,402 -1,114 503 611 0 1,732 2,981 705 5,418

40 - 50 1,422 488 612 1,506 15 4,043 -1,100 500 599 0 2,118 2,748 749 5,616

50 - 60 1,057 475 313 1,401 9 3,255 -788 484 305 0 1,772 2,808 666 5,245

60 - 75 1,208 1,461 376 1,955 29 5,029 -1,837 1,488 348 0 1,640 4,334 893 6,868

 75 - 100 2,240 1,301 543 1,990 8 6,082 -1,844 1,309 535 0 2,481 3,601 584 6,666

100 - 200 2,185 898 502 1,830 1 5,416 -1,400 898 501 0 2,387 2,933 504 5,824

200 & over 290 341 17 714 1 1,363 -357 342 16 0 454 1,178 42 1,673

T o ta l 10,844 6,176 3,617 14,806 101 35,544 -9,793 6,275 3,519 0 15,041 27,269 9,136 51,445

---------- Changes in Penalties and Bonuses* ($ millions) ---------- - Amount of Penalty (-) or Bonus (+) ($ millions) -

Loss 0 0 0 0 0 0 0 0 0 0 -15 37 0 21

 0 - 15 4 6 ** 36 0 45 8 38 0 45 -109 765 0 656

15 - 30 228 222 199 721 7 1,378 546 831 0 1,378 -1,515 3,035 0 1,520

30 - 40 336 316 222 565 4 1,445 760 684 0 1,445 -1,493 2,325 0 833

40 - 50 338 512 175 450 4 1,477 831 646 0 1,477 -1,028 2,785 0 1,756

50 - 60 318 661 124 606 2 1,712 847 865 0 1,712 -523 3,885 0 3,362

60 - 75 938 2,161 231 1,794 15 5,138 2,216 2,922 0 5,138 -560 7,295 0 6,735

 75 - 100 2,415 1,825 592 2,143 5 6,982 3,989 2,993 0 6,982 -1,998 7,485 0 5,488

100 - 200 2,644 1,398 621 2,416 2 7,081 4,123 2,958 0 7,081 -3,170 8,209 0 5,039

200 & over 1,376 3,153 152 5,617 4 10,303 3,089 7,214 0 10,303 -1,524 10,080 0 8,556

T o ta l 8,596 10,252 2,318 14,348 43 35,559 16,409 19,152 0 35,559 -11,935 45,901 0 33,965

NOTE: D e tail may not add to totals due to rounding.

* All changes are reductions in penalties or increases in bonuses, so are shown as positive.

** Less than $500,000.
Table 15

Make the Joint Standard Deduction Double the Single Amount under Current Law

Under Alternative Assumption 1: Separate Residences (All other assumptions are Standard)

(1999 law and income levels)

Couples Affected by the Proposal

(Sta tus under Current Law to Status under the Proposal)

Adjusted Gross Penalty Penalty Penalty Bonus Neither T o tal Changes from Current Law All Couples

Income Class to Lower to to to Higher to T o tal in Couples With and Amounts of: W ho under the Proposal Have:

(000) Penalty Bonus Neither Bonus Bonus Affected Penalties Bonuses Neither T o tal Penalties Bonuses Neither T o tal

---------- Number of Returns (000) ----------

Loss 0 0 0 0 0 0 0 0 0 0 30 58 394 482

 0 - 15 27 25 10 308 0 370 -35 24 10 0 194 3,393 1,623 5,210

15 - 30 1,357 508 238 3,479 22 5,604 -746 529 216 0 1,849 6,207 386 8,442

30 - 40 1,665 117 455 2,011 5 4,253 -573 122 451 0 2,114 2,817 487 5,418

40 - 50 1,644 105 551 1,549 4 3,854 -657 110 547 0 2,485 2,498 633 5,616

50 - 60 1,245 110 205 1,375 4 2,940 -316 115 201 0 2,293 2,591 361 5,245

60 - 75 1,369 237 14 988 6 2,614 -251 243 8 0 3,351 3,302 215 6,868

 75 - 100 947 64 3 466 0 1,480 -67 64 3 0 4,041 2,593 33 6,666

100 - 200 403 19 1 253 0 676 -20 19 1 0 3,705 2,115 4 5,824

200 & over 61 1 0 56 0 118 -1 2 0 0 798 852 23 1,673

T o tal 8,716 1,187 1,479 10,486 41 21,908 -2,666 1,229 1,437 0 20,859 26,427 4,159 51,445

---------- Changes in Penalties and Bonuses* ($ millions) ---------- - Amount of Penalty (-) or Bonus (+) ($ millions) -

Loss 0 0 0 0 0 0 0 0 0 0 -29 88 0 59

 0 - 15 3 4 1 38 0 46 6 40 0 46 -67 5,336 0 5,269

15 - 30 278 106 51 704 4 1,143 386 759 0 1,143 -1,117 9,808 0 8,690

30 - 40 345 24 99 420 1 889 457 432 0 889 -2,442 4,716 0 2,274

40 - 50 332 23 119 319 1 794 462 332 0 794 -3,287 5,562 0 2,275

50 - 60 268 29 47 320 1 664 329 336 0 664 -2,452 6,584 0 4,131

60 - 75 480 90 5 336 2 914 535 379 0 914 -2,409 8,576 0 6,166

 75 - 100 340 24 1 166 0 531 355 176 0 531 -4,113 7,694 0 3,581

100 - 200 148 7 ** 90 0 246 153 93 0 246 -6,303 8,420 0 2,117

200 & over 25 ** 0 26 0 52 26 26 0 52 -4,535 4,118 0 -417

T o tal 2,218 310 322 2,419 9 5,279 2,706 2,573 0 5,279 -26,756 60,901 0 34,145

NOTE: D e tail may not add to to tals due to rounding.

* All changes are reductions in penalties or increases in bonuses, so are shown as positive.

** Less than $500,000.
Table 16

Make the Joint Standard Deduction Double the Single Amount under Current Law

Under Alternative Assumption 2: Unearned Income Evenly Divided (All other assumptions are Standard)

(1999 law and income levels)

Couples Affected by the Proposal

(Status under Current Law to Status under the Proposal)

Adjusted Gross Penalty Penalty Penalty Bonus Neither T o tal Changes from Current Law All Couples

Income Class to Lower to to to Higher to T o tal in Couples With and Amounts of: Who under the Proposal Have:

(000) Penalty Bonus Neither Bonus Bonus Affected Penalties Bonuses Neither T o tal Penalties Bonuses Neither T o tal

---------- Number of Returns (000) ----------

Loss 0 0 0 0 0 0 0 0 0 0 26 37 418 482

 0 - 15 42 35 117 172 4 370 -152 39 114 0 457 1,255 3,498 5,210

15 - 30 2,532 300 465 2,294 13 5,604 -765 313 452 0 3,733 3,545 1,165 8,442

30 - 40 1,994 205 546 1,499 9 4,253 -751 214 537 0 2,540 2,253 625 5,418

40 - 50 1,822 170 630 1,225 8 3,854 -800 178 621 0 2,719 2,097 800 5,616

50 - 60 1,515 112 215 1,089 9 2,940 -327 121 207 0 2,504 2,160 582 5,245

60 - 75 1,645 166 4 789 9 2,614 -170 175 -5 0 3,597 2,710 561 6,868

 75 - 100 1,097 55 8 317 2 1,480 -62 58 5 0 4,615 1,987 65 6,666

100 - 200 530 13 1 132 0 676 -13 13 1 0 4,287 1,534 4 5,824

200 & over 96 2 0 20 0 118 -2 2 -1 0 1,244 420 8 1,673

T o tal 11,275 1,058 1,986 7,536 54 21,908 -3,043 1,111 1,932 0 25,721 17,998 7,726 51,445

---------- Changes in Penalties and Bonuses* ($ millions) ---------- - Amount of Penalty (-) or Bonus (+) ($ millions) -

Loss 0 0 0 0 0 0 0 0 0 0 -27 54 0 26

 0 - 15 6 6 10 23 ** 45 20 25 0 45 -192 609 0 417

15 - 30 520 63 93 467 3 1,144 645 498 0 1,144 -1,883 2,209 0 326

30 - 40 413 44 117 313 2 889 552 336 0 889 -2,029 1,580 0 -448

40 - 50 370 35 135 251 2 794 523 272 0 794 -1,630 1,922 0 292

50 - 60 328 29 48 257 2 664 393 272 0 664 -1,352 2,632 0 1,280

60 - 75 582 64 2 264 4 914 619 296 0 914 -2,886 3,780 0 893

 75 - 100 395 20 3 112 1 531 409 121 0 531 -6,266 3,472 0 -2,794

100 - 200 196 5 ** 44 0 246 199 47 0 246 -8,181 3,416 0 -4,765

200 & over 42 ** 0 10 0 52 42 11 0 52 -8,211 1,584 0 -6,628

T o tal 2,850 267 408 1,742 12 5,279 3,402 1,877 0 5,279 -32,658 21,258 0 -11,400

NOTE: D e ta il may not add to totals due to rounding.

* All changes are reductions in penalties or increases in bonuses, so are shown as positive.

** Less than $500,000.
Table 17

Make the Joint Standard Deduction Double the Single Amount under Current Law

Under Alternative Assumption 3: No Head of Household Status (All other assumptions are Standard)

(1999 law and income levels)

Couples Affe c ted by the Proposal

(Sta tus under Current Law to Status under the Proposal)

Adjusted Gross Penalty Penalty Penalty Bonus Neither T o tal Changes from Current Law All Couples

Income Class to Lower to to to H igher to T o tal in Couples With and Amounts o f: W ho under the Proposal Have:

(000) Penalty Bonus Neither Bonus Bonus Affected Penalties Bonuses Neither T o tal Penalties Bonuses Neither T o tal

---------- Number of Returns (000) ----------

Loss 0 0 0 0 0 0 0 0 0 0 25 18 439 482

 0 - 15 27 25 10 308 0 370 -35 25 10 0 348 1,857 3,005 5,210

15 - 30 1,462 556 285 3,270 31 5,604 -842 587 255 0 2,464 4,942 1,037 8,442

30 - 40 1,560 177 521 1,984 12 4,253 -698 189 509 0 2,029 2,793 596 5,418

40 - 50 1,160 154 943 1,590 8 3,854 -1,096 161 935 0 1,959 2,574 1,083 5,616

50 - 60 609 182 612 1,528 8 2,940 -794 190 603 0 1,338 2,892 1,014 5,245

60 - 75 1,048 261 67 1,232 6 2,614 -328 266 62 0 2,340 3,957 571 6,868

 75 - 100 859 74 0 546 0 1,480 -74 75 0 0 3,665 2,962 40 6,666

100 - 200 385 19 1 271 0 676 -20 19 1 0 3,419 2,401 5 5,824

200 & over 57 2 0 58 0 118 -2 3 -1 0 732 919 22 1,673

T o tal 7,167 1,450 2,440 10,787 64 21,908 -3,890 1,515 2,376 0 18,319 25,314 7,813 51,445

---------- Changes in Penalties and Bonuses* ($ millions) ---------- - Amount o f Penalty (-) or Bonus (+) ($ millions) -

Loss 0 0 0 0 0 0 0 0 0 0 -15 37 0 21

 0 - 15 3 4 1 38 0 46 5 39 0 46 -111 786 0 676

15 - 30 297 117 60 664 6 1,143 418 725 0 1,143 -1,517 3,236 0 1,719

30 - 40 321 38 113 415 2 889 454 435 0 889 -1,555 2,299 0 744

40 - 50 229 33 204 327 2 794 450 345 0 794 -1,059 3,099 0 2,039

50 - 60 130 45 136 352 2 665 288 377 0 665 -690 4,591 0 3,901

60 - 75 377 99 18 418 2 913 447 468 0 913 -1,470 6,803 0 5,332

 75 - 100 308 29 0 194 0 531 323 208 0 531 -3,504 6,453 0 2,949

100 - 200 141 8 1 96 0 246 146 100 0 246 -4,591 7,702 0 3,111

200 & over 23 1 0 27 0 52 24 28 0 52 -3,720 4,290 0 571

T o tal 1,829 372 532 2,532 13 5,278 2,555 2,724 0 5,278 -18,232 39,295 0 21,062

NOTE: D e tail may not add to totals due to rounding.

* All changes are reductions in penalties or increases in bonuses, so are shown as positive.
Table 18

Income Splitting

Under Alternative Assumption 1: Separate Residences (All other assumptions are Standard)

(1999 law and income levels)

Couples Affected by the Proposal

(Status under Current Law to Status under the Proposal)

Adjusted Gross Penalty Penalty Penalty Bonus Neither T o tal Changes from Current Law All Couples

Income Class to Lower to to to Higher to T o tal in Couples With and Amounts of: W ho under the Proposal Have:

(000) Penalty Bonus Neither Bonus Bonus Affected Penalties Bonuses Neither T o tal Penalties Bonuses Neither T o tal

---------- Number of Returns (000) ----------

Loss 0 0 0 0 0 0 0 0 0 0 30 58 394 482

 0 - 15 29 20 9 301 0 359 -29 20 9 0 200 3,389 1,622 5,210

15 - 30 845 660 600 3,470 20 5,595 -1,261 680 580 0 1,334 6,358 750 8,442

30 - 40 1,325 388 622 2,062 5 4,402 -1,010 392 618 0 1,677 3,087 654 5,418

40 - 50 1,393 416 599 1,631 4 4,043 -1,015 421 595 0 2,127 2,809 681 5,616

50 - 60 1,007 440 298 1,505 5 3,255 -738 445 293 0 1,871 2,921 453 5,245

60 - 75 905 1,860 165 2,085 14 5,029 -2,025 1,874 151 0 1,577 4,933 358 6,868

 75 - 100 1,408 2,034 451 2,176 13 6,082 -2,485 2,047 438 0 1,623 4,576 468 6,666

100 - 200 1,849 1,164 503 1,899 ** 5,416 -1,667 1,165 503 0 2,058 3,261 506 5,824

200 & over 268 346 17 731 1 1,363 -363 348 16 0 436 1,198 39 1,673

T o tal 9,030 7,328 3,264 15,860 62 35,544 -10,593 7,391 3,201 0 12,932 32,589 5,923 51,445

---------- Changes in Penalties and Bonuses* ($ millions) ---------- - Amount of Penalty (-) or Bonus (+) ($ millions) -

Loss 0 0 0 0 0 0 0 0 0 0 -29 88 0 59

 0 - 15 3 6 ** 36 0 46 8 38 0 46 -65 5,334 0 5,269

15 - 30 184 211 197 781 5 1,377 495 883 0 1,377 -1,008 9,932 0 8,924

30 - 40 323 284 222 614 2 1,444 733 711 0 1,444 -2,166 4,995 0 2,829

40 - 50 329 479 171 497 1 1,477 803 674 0 1,477 -2,946 5,904 0 2,958

50 - 60 302 632 118 658 1 1,711 798 913 0 1,711 -1,983 7,161 0 5,178

60 - 75 554 2,548 145 1,877 15 5,139 2,009 3,129 0 5,139 -935 11,326 0 10,391

 75 - 100 1,508 2,647 533 2,283 10 6,982 3,507 3,475 0 6,982 -961 10,993 0 10,032

100 - 200 2,218 1,722 623 2,515 1 7,080 3,905 3,175 0 7,080 -2,551 11,502 0 8,951

200 & over 1,317 3,094 155 5,728 7 10,301 3,017 7,284 0 10,301 -1,544 11,376 0 9,832

T o tal 6,740 11,623 2,164 14,988 41 35,557 15,274 20,283 0 35,557 -14,188 78,611 0 64,423

NOTE: D e tail may not add to totals due to rounding.

* All changes are reductions in penalties o r increases in bonuses, so are shown as positive.

** Fewer than 500 returns.
Table 19

Income Splitting

Under Alternative Assumption 2: Unearned Income Evenly Divided (All other assumptions are Standard)

(1999 law and income levels)

Couples Affected by the Proposal

(Status under Current Law to Status under the Proposal)

Adjusted Gross Penalty Penalty Penalty Bonus Neither T o tal Changes from Current Law All Couples

Income Class to Lower to to to Higher to T o tal in Couples With and Amounts of: Who under the Proposal Have:

(000) Penalty Bonus Neither Bonus Bonus Affected Penalties Bonuses Neither T o tal Penalties Bonuses Neither T o tal

---------- Number of Returns (000) ----------

Loss 0 0 0 0 0 0 0 0 0 0 26 37 418 482

 0 - 15 44 8 135 168 4 359 -143 12 131 0 466 1,228 3,515 5,210

15 - 30 1236 349 1,688 2,309 13 5,595 -2,037 362 1,675 0 2,461 3,594 2,388 8,442

30 - 40 1500 366 1,003 1,524 9 4,402 -1,370 375 995 0 1,921 2,414 1,083 5,418

40 - 50 1528 437 806 1,257 16 4,043 -1,243 453 790 0 2,276 2,372 969 5,616

50 - 60 1206 451 404 1,185 9 3,255 -855 460 395 0 1,976 2,499 770 5,245

60 - 75 1392 1,426 477 1,693 41 5,029 -1,904 1,467 436 0 1,863 4,002 1,002 6,868

 75 - 100 2436 1,339 639 1,653 15 6,082 -1,978 1,354 624 0 2,699 3,283 684 6,666

100 - 200 2374 971 692 1,378 1 5,416 -1,662 972 691 0 2,638 2,493 694 5,824

200 & over 469 473 52 368 1 1,363 -525 475 50 0 721 893 59 1,673

T o tal 12,185 5,821 5,896 11,535 107 35,544 -11,717 5,928 5,789 0 17,047 22,815 11,583 51,445

---------- Changes in Penalties and Bonuses* ($ millions) ---------- - Amount of Penalty (-) or Bonus (+) ($ millions) -

Loss 0 0 0 0 0 0 0 0 0 0 -27 54 0 26

 0 - 15 6 2 15 22 ** 46 22 23 0 46 -190 607 0 418

15 - 30 264 106 506 498 3 1,378 827 550 0 1,378 -1,701 2,261 0 560

30 - 40 407 204 453 378 3 1,444 987 457 0 1,444 -1,594 1,701 0 107

40 - 50 424 404 330 314 5 1,477 1,055 423 0 1,477 -1,098 2,073 0 975

50 - 60 465 609 230 407 2 1,711 1,148 564 0 1,711 -597 2,924 0 2,327

60 - 75 1,236 1,984 455 1,437 27 5,139 2,845 2,294 0 5,139 -660 5,778 0 5,118

 75 - 100 2,753 1,811 720 1,680 18 6,982 4,478 2,503 0 6,982 -2,197 5,854 0 3,657

100 - 200 2,883 1,533 893 1,769 1 7,080 4,734 2,346 0 7,080 -3,646 5,715 0 2,069

200 & over 2,793 4,590 536 2,375 6 10,301 5,642 4,659 0 10,301 -2,611 6,232 0 3,621

T o tal 11,230 11,241 4,139 8,881 65 35,557 21,738 13,819 0 35,557 -14,322 33,200 0 18,878

NOTE: D e ta il may not add to totals due to rounding.

* All changes are reductions in penalties or increases in bonuses, so are shown as positive.

** Less than $500,000.
Table 20

Income Splitting

Under Alternative Assumption 3: No Head of Household Status (All other assumptions are Standard)

(1999 law and income levels)

Couples Affe c ted by the Proposal

(Sta tus under Current Law to Status under the Proposal)

Adjusted Gross Penalty Penalty Penalty Bonus Neither T o tal Changes from Current Law All Couples

Income Class to Lower to to to H igher to T o tal in Couples With and Amounts o f: W ho under the Proposal Have:

(000) Penalty Bonus Neither Bonus Bonus Affected Penalties Bonuses Neither T o tal Penalties Bonuses Neither T o tal

---------- Number of Returns (000) ----------

Loss 0 0 0 0 0 0 0 0 0 0 25 18 439 482

 0 - 15 29 20 9 301 0 359 -29 20 9 0 354 1,852 3,004 5,210

15 - 30 938 715 651 3,266 25 5,595 -1,367 740 626 0 1,939 5,095 1,408 8,442

30 - 40 1,214 461 689 2,026 12 4,402 -1,150 472 677 0 1,577 3,076 764 5,418

40 - 50 908 476 988 1,661 11 4,043 -1,464 487 977 0 1,591 2,900 1,125 5,616

50 - 60 341 544 707 1,654 9 3,255 -1,251 553 699 0 881 3,255 1,110 5,245

60 - 75 323 1,647 498 2,536 25 5,029 -2,145 1,672 474 0 523 5,363 983 6,868

 75 - 100 866 1,738 922 2,547 9 6,082 -2,660 1,747 914 0 1,079 4,634 954 6,666

100 - 200 1,200 1,153 885 2,177 1 5,416 -2,037 1,154 883 0 1,402 3,536 887 5,824

200 & over 185 365 25 788 ** 1,363 -390 366 24 0 344 1,282 47 1,673

T o tal 6,003 7,120 5,374 16,956 92 35,544 -12,494 7,212 5,282 0 9,715 31,011 10,719 51,445

---------- Changes in Penalties and Bonuses* ($ millions) ---------- - Amount o f Penalty (-) or Bonus (+) ($ millions) -

Loss 0 0 0 0 0 0 0 0 0 0 -15 37 0 21

 0 - 15 3 6 ** 36 0 46 7 37 0 46 -109 784 0 676

15 - 30 202 228 208 733 7 1,377 531 846 0 1,377 -1,404 3,357 0 1,953

30 - 40 298 309 237 597 4 1,444 736 708 0 1,444 -1,273 2,572 0 1,299

40 - 50 226 503 256 489 3 1,478 799 679 0 1,478 -710 3,433 0 2,723

50 - 60 155 676 209 670 2 1,711 774 938 0 1,711 -204 5,152 0 4,947

60 - 75 243 2,331 329 2,221 13 5,138 1,714 3,424 0 5,138 -203 9,759 0 9,557

 75 - 100 878 2,315 1,082 2,699 8 6,982 3,236 3,746 0 6,982 -591 9,991 0 9,400

100 - 200 1,327 1,809 1,085 2,857 1 7,080 3,572 3,507 0 7,080 -1,165 11,109 0 9,945

200 & over 740 3,187 251 6,119 4 10,301 2,620 7,682 0 10,301 -1,124 11,944 0 10,820

T o tal 4,073 11,362 3,657 16,421 43 35,557 13,989 21,567 0 35,557 -6,798 58,138 0 51,341

NOTE: D e tail may not add to totals due to rounding.

* All changes are reductions in penalties or increases in bonuses, so are shown as positive.

** Fewer than 500 returns or less than $500,000.