By Dennis J. Ventry, Jr. 

In 2003, President Bush kicked off "Marriage Protection Week" by declaring that his 2001 and 2003 tax cuts had "eliminated the marriage penalty."[1] He lied. Bush’s own Treasury Department reported that 18 million couples suffered marriage tax penalties in 2004 totaling $19.1 billion.[2]

In fairness, the President’s tax cuts reduced aggregate marriage penalties by, among other things, doubling the standard deduction for married taxpayers vis-à-vis single taxpayers and doing the same for the 10- and 15-percent rate brackets. But the President’s tax policies did nothing to ameliorate marriage tax penalties associated with the other four tax brackets (i.e., the 25-, 28-, 33-, and 35-percent brackets). Moreover, increasing the standard deduction for married taxpayers bestowed marriage tax bonuses on all single-earner families, and moved two-earner husbands and wives approximating the traditional, single-earner norm from the marriage-penalty column to the marriage-bonus column. Similarly, broadening the parameters of the bottom brackets extended marriage tax bonuses to traditional and near-traditional families at the low end of the income spectrum. In the end, the Bush policies reinforced traditional conceptions of the family, and provided a net marriage tax bonus of $30 billion ($49 billion in bonuses less $19 billion in penalties).[3]

Candidates for the 2008 presidential election have already begun making marriage penalty relief a campaign issue. Unfortunately, none of the plans deviate from President Bush’s strategy of chipping away at marriage penalties by extending marriage bonuses.

The top three Republican candidates, Rudy Giuliani, Mitt Romney, and John McCain, all pledge to preserve the marriage penalty relief provisions of 2001 and 2003. In addition, Giuliani would extend relief to upper-income taxpayers by doubling the brackets for married persons, thereby turning marriage penalties into marriage bonuses for couples that say, "I do."[4]

The top three Democratic candidates have also made marriage penalty relief a campaign issue. Senator Hillary Clinton supports "permanently ending the marriage penalty," but as yet has not offered specific strategies.[5] Senator Barack Obama[6] and John Edwards[7] would lessen marriage penalties for low-income taxpayers by extending the qualifying income range of the Earned Income Tax Credit (EITC); currently, the act of marriage can result in huge tax penalties for two low-income taxpayers, pushing their combined marital income—though still modest—too far up the income scale to receive the credit. Both Obama and Edwards would also extend EITC payments to low-income workers without children (currently excluded from the program), thereby lessening potential marriage penalties for this cohort. And Obama’s new "Making Work Pay" tax credit ($500 for singles, $1,000 for married couples) would further mitigate marriage penalties on the working poor by exempting the first $8,100 of income from payroll taxes. 

None of the current plans, Republican or Democrat, offers marriage penalty relief reflective of the many faces of the modern American family. The Giuliani proposal eliminates tax penalties by extending tax bonuses (i.e., tax cuts) to upper-income married couples, a shrinking minority of all taxpaying families. And while the Obama and Edwards proposals address the tax concerns of non-traditional, two-earner families, a growing majority of all taxpayers, their respective plans to expand the EITC could have the perverse effect of endangering the program by opening it to charges of "welfare for the middle class."

Marriage penalty relief in 2008 should embrace the spectrum of the modern family. Married households represent less than half of all households. Relieving them of tax liability relative to the majority of taxpayers hardly seems fair. Given the many forms of modern families, two policy alternatives are clearly preferable to the candidates’ plans.

First, policymakers should expand the definition of family for tax purposes to include unmarried opposite- and same-sex couples, single parents, cohabiting unmarried family members, and perhaps even platonic roommates demonstrating economic interdependence. These families share the same kind of expenses, responsibilities, and liabilities as married families. There is no reason for the tax system to treat them differently. Under an expanded definition of the family unit, "marriage" penalties would become "family" penalties, and doubling tax brackets for families would benefit all multi-person households.

Second, we could abandon the family as a unit of taxation altogether and move to a system of individual filing. This approach would effectively eliminate all marriage tax penalties. As importantly—and unlike preserving the family as a unit of taxation—individual filing would eliminate the secondary-earner bias in the tax system that currently taxes the first dollar earned of the lesser-earning spouse (disproportionately women) at the higher rates associated with the last dollar earned of the primary-earning spouse.

Either approach—expanding our concept of "family" under the family tax unit or adopting as the norm the individual unit—would more effectively address the concerns of the modern American family in its various forms.

Dennis J. Ventry, Jr. is an Assistant Professor of Law at American University Washington College of Law in Washington, DC.

[1] Marriage Protection Week, 2003, By the President of the United States of America: A Proclamation.

[2] Robert Gillette, Janet Holtzblatt, Emily Y. Lin, "Marriage Penalties and Bonuses: A Longer-Term Perspective," Office of Tax Analysis, Department of Treasury, December 2004, at 1.

[3] Id.

[4] See Gerald Prante, "Rudy Giuliani Unveils Tax Plan," Tax Foundation Tax Policy Blog, August 27, 2007, available at http://www.taxfoundation.org/blog/show/22572.html.

[5] "Strengthening the Middle Class," http://www.hillaryclinton.com/issues/middleclass/.

[6] See "Tax Fairness for the Middle Class," September 18, 2007, available at http://my.barackobama.com/page/-/HQpress/Fact%20Sheet%20Tax%20Fairness%20Speech%20091707%20FINAL%20IH.pdf.

[7] See "Building One Economy with Tax Reform To Reward Work," available at http://johnedwards.com/issues/tax-reform/tax-policy-4pg.pdf.