TAX CUT MATH
WaPo has some graphics and various figures illustrating the tax cut that has just passed Congress. The thing that amuses me is that, while the press is so ridiculously cynical on most political claims, using “claims” or “so-called” in front of even the most innocuous political spin, the term “marriage penalty” is always reported as if it were an objective measure. The chart reports that the standard deduction for married couples will increase to twice that of singles, as will the amount of income subject to the 15% tax bracket. Fine. But, of course, this is not a benign move. For some married couples with two incomes, this move is indeed “fair;” currently, they are indeed “penalized” for being married in that they would be better off filing as two single people. But, for “traditional” couples in which there is only one earner, this amounts to a huge bonus.
The other thing that never seems to come up in these discussions is regional variation. $50,000 a year is big money in Podunk, Mississippi; it is near-poverty in Manhattan. But the two earners are treated identically for the purposes of federal income taxes. Which isn’t particularly “progressive.”
More info on the tax cut is available here.
(Hat tip: PoliBlog)
I believe it is the case that the deduction only goes up for only two-earner married couples, and that it stays the same for single-earner married couples.
I can’t figure that out, to be honest. The chart seems to indicate otherwise, as does this story. But I haven’t actually seen the bill.
Of course, one can also assume that it’s like a little credit for the spouse who stays home and does the work that hired help would otherwise be doing for the two-earner household.
I have read numerous stories about the bill the last several days, and am fairly certain that I read that it only applies to two-earner families, but I can’t remember where I read it.
One thing is for certain–the reportage on these stroeis really isn’t very good insofar as they are lazy with the numbers, as I pointed out the other day.
MB: …one can also assume that it’s like a little credit for the spouse who stays home and does the work that hired help would otherwise be doing for the two-earner household.
Sure. Indeed, the whole point of having a category for “married” to begin with was for it to be a disguised government subsidy. The tax code takes money away from singles at a disproportionate rate and redistributes it to the married, even those without kids; those with kids get even more.
My point, though, is that there is no “marriage penalty” in the tax code in the sense that the government penalizes you for getting married. Most married couples, even under the old code, were better off being married. It’s just that the rewritten one takes away a glitch that penalized dual earners who both had highish salaries–a fairly small subset of the population.
Someone needs to lobby for the single people with no dependents and no property. We get screwed.
Despite popular imagination, there is no town of Podunk in Mississippi. However, we do have the towns of Saucier (pronounced not “sau-see-eh” but “sow-sheer”) and Wiggins.
You sure, Scipio? I thought Ole Miss was located in Podunk?