Forget the marriage penalty, it's singles who suffer at tax time; Dollars & Sense


SINGLE PEOPLE, unite. You have nothing to lose but the "singles penalty" in the federal income tax.

You've probably never heard of it. Everyone shouts about the "marriage penalty." But singles pay more than marrieds do on the same income.

Congress' $792 billion tax-cut proposal would make the disparity worse.

Under the famous marriage penalty, two working people might pay more in taxes as a couple than they would as two singles. But that applies only to a portion of married taxpayers.

The rest pay less as a couple than they would as two singles. They get a bonus for walking down the aisle. Alas, there's no bonus for the never-marrieds, divorced, widowers and widows.

Here's how singles and marrieds compare:

One-earner couples get a bonus. For example, take a man with a taxable income of $50,000. As a single, he'd have paid $10,712 in federal tax last year. If he married and his wife didn't work, he'd have paid $8,502, a tax cut of 21 percent. Not bad, just for saying "I do."

Two-earner couples get a bonus when one of them earns 70 percent or more of the family income. For example, take two people with taxable incomes of $35,000 and $15,000. On their two single incomes, their tax would total $8,766. As a couple reporting $50,000 jointly, they'd pay $8,502. That saves them $264.

The marriage penalty hits two-earner couples whose incomes are similar. They pay more as a couple than they would as two singles. Take two people with taxable incomes of $30,000 and $20,000. As singles, their tax would total $7,508. As a $50,000 couple, they'd pay $8,502, which is $994 more.

Why does that happen? Tax brackets are to blame. As a single person, the lower earner is taxed in the 15 percent bracket. But when those earnings are piled on top of a spouse's income, they're moved into the higher 28 percent bracket. So taxes rise.

Singles generally pay taxes at a higher rate. On a $50,000 taxable income, their tax comes to $10,712, which is $2,210 more than married couples have to pay.

The tax bill proposed by Congress helps married couples in two ways.

For a couple using the standard deduction, the deduction would rise to twice the amount that a single person gets. Today, it's 67 percent more.

For all couples, part of their income would be taxed at a slightly lower rate. To understand this tax cut, you need to know how federal income taxes work.

Imagine that your taxable income is divided into layers, like those on a layer cake. The lowest layer of your income (up to $21,175 for marrieds last year) is taxed at 15 percent. The next layer (up to $51,150) is taxed at 28 percent, and so on up to the highest layer, which is taxed at 39.6 percent.

Congress would cut the tax on the lowest layer to 14 percent. It would also let couples pay that low rate on a larger slice of their income. Singles would get a similar but smaller break.

The result is that the marriage penalty would be smaller and the marriage bonus larger, especially in the lower brackets.

Singles would pay a little less but would be worse off relative to couples.

Jane Bryant Quinn is one of the nation's best known syndicated personal finance columnists.

Washington Post Writers Group

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