ON TAXING MARRIAGES

THE financial Internal incentives Revenue enticing Service those offers at financial ince tives cing those at opposite ends of the income scale to marry while simultaneously encouraging married partners with similar incomes to divorce. To illustrate, a single individual earning $40,000 who married anyone with zero income in 1981 saved $2,767 in taxes, an 1RS marriage dowry equaling 23 percent of the before marriage income tax. On the other hand, if each member of a marriage partnership earned $20,000 in 1981, they could have reduced their combined tax bill by $1,666 through divorce. The examples on Tables 1 and 2 show how the 1RS dowry and marriage tax depend on income. Emil M. Sunley [1981, page 8] estimates that 17 million couples suffered from the marriage penalty in 1981, paying an aggregate of $9.4 billion; an estimated 26 million couples enjoyed a marriage subsidy, aggregating $22.5 billion.1 Attempts at removing the marriage tax have met with only limited success; in particular, the 1981 tax act provides only partial relief by allowing two-income married couples to deduct 5 percent of the lesser of $30,000 or the income of the spouse with the lower earnings.2 This paper demonstrates as a matter of logical necessity that the achievement of a marriage neutral tax structure must await the adoption of a negative income tax unless the legislature is prepared either to abandon the progressive income tax or to violate the principle of horizontal equity in marriage.