{
  "id": "98-653",
  "type": "CRS Report",
  "typeId": "REPORTS",
  "number": "98-653",
  "active": false,
  "source": "EveryCRSReport.com",
  "versions": [
    {
      "source": "EveryCRSReport.com",
      "id": 105192,
      "date": "1998-09-29",
      "retrieved": "2016-05-24T20:51:28.310941",
      "title": "The Marriage Penalty and Other Family Tax Issues",
      "summary": "Proposals to reduce marriage tax penalties have received attention: an increase in the joint return\nstandard deduction is included in  H.R. 4579 , passed by the House on September 26. \nThe Administration has proposed an increase in the child care credit; a number of bills have been\nintroduced as well. Current law and proposed changes are addressed with respect to their effects on\nequity, efficiency, and administrative feasibility. \n  Using an ability-to-pay standard in determining at what incomes families of different sizes are\nequal, the current tax rules favor large families across most of the income scale, because of the more\ngenerous treatment of families with children under the earned income tax credit (EITC) and the\nrecently enacted child credits. Married couples with one earner also benefit because the imputed\nvalue of a spouse's services in the home is not taxed; working couples and heads of households with\nchildren also benefit from child care credits. Essentially, these features establish single individuals and\nchildless working couples as paying the highest tax rates, based on the ability-to-pay standard, for all\nbut the very highest income taxpayers.\n  Two distortions of particular concern to family taxation are the effects on marriage and the\nburden the tax system imposes on the earnings of married women, who are estimated to be the most\nsensitive in their labor participation decisions. \n  The size and extent of marriage penalties and bonuses depend on assumptions made about\nsplitting unearned income and deductions, and, particularly, about the allocation of children. If \nassignment is typical of what is more likely to occur when couples have children without marrying\nor if they divorce, with children assigned to the mother who has the lower earnings, 37% of couples\nhave penalties of $24 billion and 60% have bonuses of $73 billion, for a net bonus of $49 billion. If\nchildren are assigned in a way to minimize taxes, as assumed by the CBO in its base case for studying\ntax revisions, 43% of joint returns had penalties of $32 billion and 52% had bonuses of $43 billion,\nfor a net bonus of $10 billion.\n  Approaches to addressing the marriage penalty include optional separate filing, general\nreductions in tax rates for joint returns, and second earner deductions. The first approach targets\nbenefits to returns with penalties and to earnings of married women, although it might be complicated\nand will differentiate taxes among married couples with the same income. A second earner deduction\nhas similar characteristics, although it is less targeted to penalties; it is also flexible and relatively\nsimple. Reducing joint return tax rates will be simple and keep rates the same for all married couples,\nbut does not perform very well on equity and efficiency grounds. Most of these approaches favor\nhigher income taxpayers; however, there are some options, including those focusing on the EITC,\nthat would favor lower income taxpayers.\n  The desirability of larger child care credits, and of refundable credits, depends on one's\nphilosophy about family needs and equity. There is little justification on equity grounds for proposed\ncredits for at-home parents. In general, the current tax system appears to make highly generous\nadjustments for children.",
      "type": "CRS Report",
      "typeId": "REPORTS",
      "active": false,
      "formats": [
        {
          "format": "PDF",
          "encoding": null,
          "url": "http://www.crs.gov/Reports/pdf/98-653",
          "sha1": "ced033c2061ed8ac5660471f178bedb4721e96e6",
          "filename": "files/19980929_98-653_ced033c2061ed8ac5660471f178bedb4721e96e6.pdf",
          "images": null
        },
        {
          "format": "HTML",
          "filename": "files/19980929_98-653_ced033c2061ed8ac5660471f178bedb4721e96e6.html"
        }
      ],
      "topics": []
    }
  ],
  "topics": [
    "Economic Policy"
  ]
}