Does the federal tax code penalize single people? The answer, as it turns out, is yes. But it is also no.
The same can be said for married individuals. In some cases, a person incurs a “marriage penalty,” depending on how much he or she makes and how much that person’s spouse makes, if anything. But, in other cases, a person gets what’s known as a “marriage bonus” for having a magic combination of incomes and, well, a marriage license.
The tax code gets very complicated very quickly when you start to compare the pros and cons of being single versus married. As we discovered, for anyone who is not a tax professional, it’s enough to make your head spin several times over like that scary kid in “The Exorcist,” but perhaps without the vomiting. Although, depending on how much gets taken out of your paycheck, some nausea may be involved.
So, we tried a straightforward, simplistic approach to the issue to avoid having to pen a 4,000-word, overly complicated article that no one would read.
We took a few examples straight from the IRS wage bracket method tables for income tax withholding, which are designed to help employers figure out how much in taxes to take from employees’ paychecks based upon their marital status and how many deductions they’re taking. We did not take into account end-of-the-year filings, how many children a person has, whether they own property, or any additional factors outside of salary, marital status, and deductions taken.
In our scenarios, we compared the taxes for a single person making a certain salary to those of a married individual making the same amount of money. In each case, the single person lost out. Surely, someone would be able to tell us why a single individual consistently has to pay more income tax per paycheck than a married person. In California, this is also true for the state income tax.
The spokesperson who picked up the phone at the IRS’s regional media office told us that the IRS simply follows the law when it comes to taxation, and if we were looking for the “why” – an explanation as to why the tax code seems to immediately penalize someone for being single when it comes to income tax withholdings – we might be better off asking a certified public accountant.
So we sent our charts to Blake Christian, certified public accountant and partner of accounting firm Holthouse, Carlin & Van Trigt, and asked why singles had to pay more income taxes up front. “As far as the logic for why they force withholdings so much higher on a single versus a married [person] it’s probably anyone’s guess,” he told us.
The marriage-withholding bracket was established in 1955. That’s a year after “Father Knows Best” premiered on TV, and two years before “Leave It To Beaver” made its debut. Some, like the boardmember we interviewed from the nonprofit Unmarried Equality, suggested that the tax code’s differing treatment of single and married individuals is rooted in a moral bias from this era, one that promotes family values – i.e., that everyone is better off hitched.
Roberton Williams, Sol Price Fellow with the Urban Institute’s Urban-Brookings Tax Policy Center in Washington, D.C., told us that married individuals pay less income tax up front per paycheck because the assumption is that they are the sole wage earners of their households. The premise has to do with ensuring more than enough withholdings are taken so that after year-end filings, most of us get tax refunds, he explained.
On April 22, the U.S. Bureau of Labor Statistics (BLS) reported that, “Among married-couple families, both the husband and wife were employed in 48% of families.” Does it make sense then to assume that if someone is married that person is the sole wage earner?
According to 2014 statistics from BLS, at the time, 50.2% of Americans over the age of 18 were single. In 1978, according to Pew Research Center, that figure was just 28%. In 1950, that figure was even lower: about 22%.
The times are changing. Should the tax code?
While up front, paycheck to paycheck, the tax code penalizes single people, Williams and Christian each took us through several scenarios in which being married actually results in a tax penalty after filing at the end of the year. They also took us through several in which it results in a bonus.
We would try to explain these scenarios but we aren’t tax professionals. But should it be so confusing? The tax code, Christian pointed out, is lengthier than the Bible. He pursued a career in taxes because he found the industry to be dynamic. Now, he thinks the tax code needs some serious cleaning up.
On the face of things – excluding complicating factors like mortgages and children and so on – should single people and married individuals be treated differently by our nation’s tax code? And would it be simpler if they weren’t?
Consider that women still earn less than their male counterparts. Should women be treated differently than men for performing the exact same work? Is that a defensible status quo?
Should a single person be taxed differently than a married person who has the same lifestyle and makes the same income? Should people be treated differently at all – for better or for worse – based on their marital status?
Is that a defensible status quo?