Re: Marriage Penalty- Child Tax Credit Bill Passes- Where's Max to Analyze?
On Fri, 30 Mar 2001 06:20:44 -0500, Nathan Newman wrote: >As a number of conservatives have noted, we are reaching the point where a >majority of families will be paying no income taxes at all. This is >actually quite positive, since any appeals to cut all taxes "X percent" will >have no even propaganda appeal to such families, since X% of zero is still >zero. I have to respectfully disagree with Nathan on one point. In my view, there is a distinct danger in the prospect of a majority of American families not paying income taxes. Although I'd be hard pressed to be more specific, I think it's conceivable that those Americans who do not pay income taxes will be increasingly considered as having an insignificant stake in the affairs of the federal government, and the federal government an insignificant stake in them. On the whole, the marriage tax reduction is a good thing. It will encourage a lot of couples to get married and stay married. The result will have a positive effect on social coherence, a quality today in rare quantity, and eventually on public spirit. The other marital reform that many neocons want, however, is the end of no-fault divorce. This would again trap numerous women in abusive relationships. That might help social coherence, but at inestimable cost. Just as there ought be little cost in forming a social association to be anticipated, so ought there be little cost in dissolving associations to be afeard. Andrew Hagen [EMAIL PROTECTED]
Marriage Penalty- Child Tax Credit Bill Passes- Where's Max to Analyze?
Well, The House passed the Marriage Penalty-Child Tax Credit portion of Bush's tax plan. However, they made one major modification which was to allow parents who pay no income taxes to qualify for the child tax credit up to the point they pay social security taxes. It also applied some of the marriage penalty rhetoric to decreasing the burden on poor families who marry and lose EITC benefits I don't know how this interacts with the overall EITC and whether it resembles at all some of the proposals Max has made for merging the EITC into the child tax credit, but it is a significant improvement over Bush's proposals. It's actually the one part of the tax plan that, while not ideal, has some positive aspects. It will take a large number of families off the tax roles completely, thereby further weakening future support for "tax cut" politics. As a number of conservatives have noted, we are reaching the point where a majority of families will be paying no income taxes at all. This is actually quite positive, since any appeals to cut all taxes "X percent" will have no even propaganda appeal to such families, since X% of zero is still zero. Strategically, there is a good case to let this part of the tax plan pass as the most favorable to promoting progressive politics in the future. It is actually better in some ways than the $300 rebate plan, which might help poorer families more in the short-term, but would not shift the political terrain against future tax cut politics quite as much. -- Nathan Newman March 30, 2001 House Passes 2 More Pieces of Bush's Tax Cut By DAVID E. ROSENBAUM ASHINGTON, March 29 - Forging ahead despite uncertain prospects in the Senate, the House of Representatives today approved two more elements of President Bush's tax-cut plan and took the first tentative step toward eventual repeal of the estate tax. By a vote of 282 to 144, the House passed a bill that would lower income taxes for married couples and double the tax credit available to families with children. The measure is somewhat more favorable than the Mr. Bush's proposal to low-income families and less beneficial to the wealthy. The bill, which would give all couples who pay income taxes a break, has these four parts: . It would raise the standard deduction, starting next year, to make it twice that for single people. This year, the standard deduction for couples is $7,600 and that for single people is $4,500. . For couples who itemize deductions, the bill would gradually raise the amount of income covered by the 15 percent tax bracket so that it is twice that for single people. . For low-income working couples, the bill would raise the amount of income on which they would be entitled to the earned-income tax credit. . It would adjust the alternative minimum tax, a special tax on those with unusually large deductions, to ensure that married couples would not be treated less favorably than individuals. The House's plan would be more generous than Mr. Bush's proposal for low-income couples and those couples with only one wage earner. The other part of the bill the House approved would double the tax credit for families with children to $1,000 a child, from $500; it would also make $100 of that increase retroactive and applicable to 2001 income taxes. Workers with one or two children who do not owe enough in income taxes to be entitled to the full credit would be allowed a rebate up to the amount they paid in Social Security and Medicare taxes. Currently, only taxpayers with three or more children are entitled to that refund. Families with incomes up to $130,000 are now entitled to the child tax credit, and the bill retains that income limit. Mr. Bush proposed raising it to $200,000 a family and did not suggest expanding the refund.
on the Marriage Penalty
>HalfthePlanet.com News Flash August 10, 2000 The Marriage Penalty: What You Need to Know By Barbara Waxman Fiduccia Exclusive to HalfthePlanet.com Are you a person with a disability and about to get married? Before waltzing down the aisle, keep this in mind If you have Supplemental Security Insurance (SSI), Supplemental Security Disability Insurance (SSDI) or SSDI as a childhood disability beneficiary (CDB) and get married, the Social Security Administration (SSA) could reduce or eliminate your benefits. Like parents giving away their only daughter, SSA believes that, once you are married, they are no longer responsible for your financial well being. Losing Support in Sickness and in Health People with disabilities who have relied on SSI, SSDI and SSDI CDB, must now choose between the lesser of two evils to maintain vital benefits live secretly with a partner -- or divorce. I know because I faced the marriage penalty myself. I am a working woman with a severe disability who relies on Medicaid and personal assistance services. Before getting married, I was on SSAs 1619(b) work incentives program to keep these services. My then fiancé, who is now my husband, is also disabled, but was not an SSA beneficiary. Before we got married, we discussed the possibility that our marriage would mean termination of my benefits. Here is what couples face * If you receive SSI and marry someone who also receives SSI, your individual benefits will automatically revert to the SSI couple's rate of $769 per month. As a couple, your resource allowance will also shrink from $2,000 per person to $3,000 per couple. * If you marry someone who does not receive SSI, part of his or her resources may be deemed as yours. This may reduce your allowance or make you ineligible for SSI entirely. < for the rest, see: http://www.halftheplanet.com/000808/departments/health/article3.html Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~jdevine
Phony figures, Marriage Penalty Hype & EITC
The Biggest Marriage Tax Is the Hardest One to Solve
Though not as often discussed, the biggest "marriage penalty" of all
clearly stems from the "earned-income tax credit." This tax rebate for
lower income working families is computed and phased down exactly the same
for single parents as for married couples with children. For example, two
cohabiting single parents each making $15,000 can get as much as $2,870
apiece in tax rebates. But if they marry, their tax rebates are eliminated.
As a result, in the worst cases, two-earner couples with four children and
a joint income of between $20,000 and $35,000 can face marriage penalties
exceeding $5,000. Other EITC marriage penalties are less gigantic, but they
can hit some two-job married couples who have children and are making up to
$50,000 with thousands of dollars in added taxes just for being married.
Eliminating EITC marriage penalties could be prohibitively costly--$20
billion to $25 billion a year--unless offset by some pretty hefty tax hikes
on a lot of the modest income single parents the program is mainly intended
to help, and it would probably make the EITC program even harder to
administer. It's worth noting, however, that congressional Republicans who
want to spend even larger sums--with no offset--to reduce marriage
penalties on the highest income married people haven't entertained the idea
of targeting marriage penalty relief at couples in the middle of the income
scale.
http://slate.msn.com/Features/MarriagePenalty/MarriagePenalty.asp#Note1
What "Marriage Penalty"?
Phony figures in the tax debate.
As they talk about tax simplification, both the Republican Congress
and the Democratic president have been enthusiastic about creating
disparities among taxpayers of similar incomes--especially when it comes to
treating investment income more favorably than wages. But now many in
Congress are making a great cause of one particular differential: the one
between married and unmarried couples. So strong is the pressure to do
something about the so-called "marriage penalty" that the stalled tobacco
bill gained momentum in the Senate this week from the inclusion of a
provision to give an income tax break to low and moderate income married
couples.
For most couples (those making up to about $60,000 a year), the main
"marriage penalty" comes from the fact that the standard deduction for a
married couple is less than the standard deduction for two unmarried
individuals--$1,400 less for childless couples and $3,400 less for couples
with children. If two roommates earn $20,000 each, this difference means
they will pay $210 more in taxes if they are married than if they are not.
(Click here if you're interested in
another marriage penalty on the working poor that no one seems upset about.)
Higher income couples typically itemize, so they are not affected by the
standard deduction. But they face rate schedules that are different for
singles and marrieds. If two partners earn $40,000 each, a decision to get
married could, on its face, cost them more than $1,000.
But these kinds of calculations vastly overstate the marriage
penalty. Totally eliminating the penalty would cost something like $42
billion a year. If Congress wants to reduce or eliminate this penalty, it
must either do without the revenue or make up the difference in some other
way. Since married couples pay about three-quarters of all income taxes,
almost all ways of making up the revenue will place most of the burden
right back on married couples.
Illustration by Mark Alan Stamaty
For instance, that $42 billion could be covered by a 6 percent or 7 percent
surtax on everyone. But then the $42 billion gross tax cut for marrieds
would net out as only about a $13 billion cut for them--accompanied by a
$13 billion tax increase on unmarried taxpayers. That works out to only
about a $120 tax cut for the typical married couple (and a $67 tax increase
on the typical single). So, unless you're prepared to load the entire tax
increase on singles--not likely--you should take all those "marriage
penalty" figures floating around the media and divide them by at least four
(see chart).
In other words, it's not logical to measure the marriage penalty by
comparing what married couples pay now with what they'd pay if overall
federal taxes were a lot lower. Saying that taxes would be lower if taxes
were lower is true, but not edifying. The correct comparison is with a
revised tax system that raises as much as current law.
(Of course, there's the option of not making up the revenue and just
passing a big tax cut for married couples. But that necessarily entails
reducing government services from what they'd otherwise be, and the losses
from that would probably be borne by marrieds and singles in roughly
similar proportions to the benefits they'd get from the ta
RE: Re: marriage penalty
The penalty is not getting married per se, but marrying and setting work arrangements such that joint income exceeds the income of the beneficiary family(s). The phase-out for a family (married or no) with children starts at $12,500 and ends between $26K and $30K. So insofar as your combined income spills over $12,500, you start to lose benefits, and if over $30K, you become ineligible. So to retain all your benefits you need a house-spouse who works (or whateva) at home. mbs I'd be interested to know the income brackets that are getting nailed. I know that if you're low income and collecting the earned income tax credit getting married is a penalty -- which is the irony since they supposedly want to encourage the heathen poor to shack up legally. kelley
RE: marriage penalty
I wrote this about it two yrs ago. http://www.prospect.org/columns/sawicky/sa980723.html JD: what do pen-l's tax wonks think of the alleged "marriage penalty" of the US tax system? (Forget the GOP plan. It won't go anywhere.) >>>>>>>> The 'bonus' can be misconstrued. Those whose taxes fall by marrying can reduce them again by getting a divorce and splitting their income. (i.e. alimony is taxed to the recipient, not the donor) You can eliminate the 'penalty' and have any distribution of taxes you like, and any revenue level you like. The simplest way is to just have the standard deduction and brackets for couples be twice those of singles. Then marriage can never put you in a higher bracket. Bob McIntyre did numbers on how to do it while leaving the system progressive and not losing money. Problem is, if you get rid of the penalty, you create a problem re: householders. A single parent w/child could owe more tax than a couple with no children and the same income. If you give the householder the same standard deduction and brackets as the couple, then two householders who marry can get . . . you guessed it, a marriage penalty. The real problem w/the 'penalty' is with EITC recipients. Combining incomes of spouses can push them out of range of any benefits (the limit is $30K). That's what should be fixed, if anything. mbs
Re: marriage penalty
>what do pen-l's tax wonks think of the alleged "marriage penalty" of the US >tax system? (Forget the GOP plan. It won't go anywhere.) I'd be interested to know the income brackets that are getting nailed. I know that if you're low income and collecting the earned income tax credit getting married is a penalty -- which is the irony since they supposedly want to encourage the heathen poor to shack up legally. kelley
marriage penalty
from Scott Shuger's SLATE "Today's Papers" column: >The NYT quotes a Treasury Dept. finding lending much perspective to the >marriage penalty discussion: according to the latest available figures, >nearly the same number of people pay [get?] a marriage bonus (21 million >joint returns) as pay a marriage penalty (24.8 million). And the amount of >money at stake is about the same too. The penalty payers fork over an >average extra of $1,141 and the bonus receivers get an average extra of >$1,274. But why hold this data until the 22nd paragraph? what do pen-l's tax wonks think of the alleged "marriage penalty" of the US tax system? (Forget the GOP plan. It won't go anywhere.) continuing Shuger's story: >At one point, the Times quotes a Republican House member's >question, "What is more immoral than taxing people just because >they fall in love?" Oh, that's easy...not letting them get married. Jim Devine [EMAIL PROTECTED] & http://liberalarts.lmu.edu/~jdevine
