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MARRIAGE IS BECOMING A BIT MORE TAXING
How much did America's 1993 tax law, which raised taxes on high-wage earners and boosted credits for working families, affect married couples? For most couples, not very much. But for some, a lot, report Daniel R. Feenberg and Harvey S. Rosen in a National Bureau of Economic Research study.
As in the past, many married couples with roughly equal individual incomes pay more taxes than they would if they were unmarried. And many married couples with unequal incomes receive a "subsidy" via a reduced tax bite. But while the old law was modestly promarriage in the sense that married couples on average received a small tax break, the new law is modestly antimarriage. The study projects that 52% of couples will pay an average marriage tax of $1,244 this year, compared with 38% receiving an average subsidy of $1,399.
Married couples with incomes above $200,000 a year will be hit hard, however. Under the old law, 66% would have paid an average marriage tax of $3,667, while 34% would have received a healthy average subsidy of $18,241. Instead, 86% will pony up an average $9,990 this year, and 12% will receive an average subsidy of $9,197.
Ironically, for some poorer working couples, who receive tax credits in the form of cash, splitting up could really pay off. The study estimates that a couple with each spouse earning $10,000 apiece and two kids could boost their income by $3,700 by divorcing and setting up separate households.GENE KORETZ