THE RISE AND FALL AND RISE . . . OF THE MARRIAGE TAX...THE RISE AND FALL AND RISE...OF THE MARRIAGE TAX 573 1 2 1 2 consequences of marriage depend both on the features of the tax

THE RISE AND FALL AND RISE...OF THE MARRIAGE TAX

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THE RISE AND FALL ANDRISE . . . OF THEMARRIAGE TAXJAMES ALM * &LESLIE A. WHITTINGTON **

Abstract - In this paper, we use house-hold data from the Panel Study ofIncome Dynamics to calculate the realvalue of the so-called “marriage tax” or“marriage subsidy” in the federalindividual income tax over the period1967 to 1994. Our calculations demon-strate that the marriage tax/subsidy canbe calculated in numerous defensibleways; its magnitude—in fact, its veryexistence—is quite sensitive to theassumptions made about financialarrangements outside of marriage. Ourcalculations also demonstrate that theaverage tax or subsidy has variedsubstantially over time. These changesare due both to changes in the tax codeand, especially, to changes in familycharacteristics over this period.

INTRODUCTION

An important but unintended effect ofthe individual income tax in the UnitedStates over the last half century is that a

couple’s joint tax burden can change,and change significantly, with marriage.For many couples, their taxes whenmarried are more than their combinedtax liabilities as single filers, so that theypay a “marriage tax.” Many othercouples receive a “marriage subsidy”because their joint taxes fall withmarriage. The potential for marriage tochange taxes is thus present and strongand has frequently and increasinglybeen noted.1

However, the actual magnitude of themarriage tax or subsidy can be surpris-ingly complicated to calculate. Oneapproach constructs various types of“representative taxpayers” usinghypothetical and constructed informa-tion on their characteristics as marriedand as singles (Brozovsky and Cataldo,1994; Schultz, 1993; Quinn, 1995).Calculating the tax/subsidy is thenstraightforward, but generalizingbeyond these stylized taxpayers isdifficult. Another approach examines an“average” or a “median” taxpayer,based on aggregate information (Almand Whittington, 1995; Sjoquist andWalker, 1995). However, detailedinformation on many relevant taxcharacteristics is not available, andaverages or medians necessarily miss

*Department of Economics, University of Colorado at Boulder,

Boulder, CO 80309–0256.**Graduate Public Policy Program, Georgetown University,

Washington, D.C. 20007.

NATIONAL TAX JOURNAL VOL. XLIX NO. 4

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much variation across family types.Perhaps the most systematic approachexamines the actual tax returns of asample of married taxpayers andcompares a couple’s taxes as marriedwith their combined taxes if theindividuals were to divorce (Rosen,1987; Feenberg and Rosen, 1995).Although the married tax liability isdetermined directly from the couple’stax return, the tax liabilities as singlesdepend upon the precise way in whichexemptions, deductions, and incomesare allocated between the two individu-als in the event of a divorce, as well asupon the tax schedule the individualselect (or are allowed) to use. Becausethe “divorce” implicit in the tax calcula-tion is purely hypothetical, the informa-tion needed to determine the single taxliabilities is not—and cannot be—unambiguously specified.2 As noted byFeenberg and Rosen, there are anumber of “reasonable algorithms” formaking these allocations.

These different approaches haveprovided many important insights onthe tax consequences of marriage.However, there is still much that is notknown. It would be useful to examinealternative methods of calculation, inorder to test the potential sensitivity ofthe calculations to the different meth-ods; that is, does the magnitude of themarriage tax/subsidy depend on itsmethod of calculation? It would also beworthwhile to have detailed informationon the evolution of the marriage penaltyor subsidy for actual married couplesover an extended period of time, ratherthan for representative taxpayers at onlysome selected points in time, in order toanswer the question how has themarriage tax/subsidy changed overtime? In a related vein, it would bevaluable to know the reasons forchanges in the tax/subsidy over time.Over the last quarter century, there have

been frequent changes in the tax laws,as well as significant changes in familystructure (e.g., one-earner versustwo-earner families and families withchildren versus families without chil-dren). Both sets of changes haveundoubtedly contributed to variationsin the marriage tax and subsidy overtime, but the separate impact of eachis not known. Put differently, how havetax law and family structure changescontributed to the changes in themarriage tax/subsidy over time?

This paper answers these questions.We use information from the PanelStudy of Income Dynamics (PSID) tocalculate the marriage tax or subsidyfor all married couples for the period1967 to 1994, a period in which themarriage tax first emerged as a substan-tial amount and in which numerous taxand demographic changes haverepeatedly changed its magnitude inpositive and negative directions. Severalalternative methods are used in thecalculations. These alternative estimatesare used to trace the changes in themarriage tax/subsidy for the entireperiod. Particular emphasis is placedupon the different effects of tax law andfamily structure changes on theseestimates.

Of perhaps most importance, ourcalculations show that the magnitude ofthe marriage penalty or subsidy—infact, its very existence—is sensitive tothe method of calculation, even thoughthe trends in the different measures arequite similar; that is, although themarriage tax or subsidy certainly exists,its calculation is not straightforward.The results also show that, on average,the marriage tax over time has risen,fallen, and more recently risen, and inthe last several years has averaged morethan $350 (in real 1994 dollars). Finally,our calculations indicate that the tax


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consequences of marriage depend bothon the features of the tax law and onthe family’s characteristics. Changes inthe tax law—for example, in 1969,1970, 1975, 1977, 1981, 1986, 1990,and 1993—have systematically alteredthe magnitude of the tax/subsidy. Familycharacteristics appear to be even moreimportant determinants of changes inthe marriage tax/subsidy. Families thatincur a tax tend to have two earnersand, in recent years, children, whilefamilies that receive a marriage subsidyoften have a single earner.

The next section presents the data andmethodology. Results are discussed inthe following section, and the conclu-sions are in the last section.

DATA AND METHODOLOGY

The data for our analysis are drawnfrom each year of the PSID cross-yearfamily records for the period 1968 to1993. The PSID originated in 1968 with5000 families. Nearly 3000 of theoriginal PSID families are a randomprobability sample, and the remainingfamilies are a low-income sample fromthe earlier Survey on Economic Oppor-tunity. Since 1968, the PSID has at-tempted to interview each originalfamily and the offshoots of thosefamilies. Becketti et al. (1988) reportthat, despite its long history, there is noserious bias in the PSID random prob-ability sample (due, for example, tounbalanced attrition) and that thereforethe economic variables can be consid-ered as representative of nationalvalues.3

In each year, all married couples whoare part of the random probabilitysample are examined. The actualnumber of families in the sample variesover time, from 1919 to 2558. Observa-tions of these families are weighted to

represent the overall U.S. population ofmarried couple families. All marriedcouples in each year (or wave) of thePSID are examined, and their taxes asmarried couples and as single individualsare calculated and compared underdifferent assumptions on the allocationof tax preferences between the twoindividuals as single taxpayers. Taxes arecalculated using the rate schedules forthe specific year, as well as any otherrelevant tax code features for that year.Note that we include estimates of themarriage tax/subsidy for 1967 eventhough the original sample began in1968, because the PSID records incomeas the value obtained in the previousyear. Note also that our estimates coveryears after the 1993 interview. Weadjust all post-1993 income informationby a growth rate of approximately threepercent, or the rate of wage growth inprivate nonagricultural industries asreported by the Bureau of LaborStatistics. All dollar amounts areexpressed in 1994 dollars.

There are several advantages of the PSIDinformation over tax return data. Unliketax returns, the PSID has detailedinformation on the income of each ofthe family members. In particular, thePSID lists the earned income of eachfamily member, while tax returns reportonly the combined income of the family.This feature means that we do not needto use any indirect imputation methodto determine the division of laborincome between the husband and thewife. The PSID also has a richer array ofeconomic and demographic informationon the families than reported on taxreturns, which allows a number ofinteresting family classifications to beexamined.

Unfortunately, the PSID does not haveinformation on whether taxpayers haveitemized deductions prior to the 1984


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interview year. In the absence of thisinformation, we assume in most of ourcalculations that the family or theindividual takes the relevant standarddeduction.4 This assumption is clearlynot ideal. In other calculations, we haveexamined the sensitivity of our calcula-tions to this assumption by estimatingthe amount of itemized deductions forthe family or the individuals, using theprocedure employed by Feldstein andClotfelter (1976); we have also appliedtheir procedure only to those house-holds who itemize, according toinformation from post-1984 interviews.Overall, we find that the marriagepenalty is somewhat lower when usingestimated itemized deductions thanwhen assuming standard deductions,but the trends are quite similar for bothsets of results.

We use two alternative methods forcalculating the marriage penalty orsubsidy. The first method assumesthat the higher earner in the familybecomes the custodial agent of anychildren, and so receives the potentialto take all relevant dependent exemp-tions, to file with the head-of-householdrate schedule, and (where applicable) toreceive the earned income tax credit;this person also receives any otherrelevant tax preferences. If there are nochildren, then both individuals areassumed to file under the singletaxpayer rate schedule. Any assetincome is equally divided between thedivorcing partners. This method assumesimplicitly that the couple chooses theallocation to minimize its joint taxliability and is the method used byRosen (1987) and Feenberg and Rosen(1995). It is designated the “high earnerallocation method” (HEAM). In over 80percent of the cases, the higher earneris the male.

The second method assumes that thewife becomes the custodial agent ofany children and so receives all relevanttax preferences. If the wife has noincome, then the husband is assumedto claim the children. Also, if there areno children, then both individuals aretaxed under the single rate schedule.This method reflects the institutionalreality in the United States that womenare far more likely to be awardedchildren in divorce settlements thanmen. In fact, 90 percent of single parenthouseholds in the United States arecurrently headed by women (Folbre,1994). As with the HEAM, any assetincome is equally divided between thedivorcing partners. This method isdenoted the “female allocationmethod” (FAM).

An example may help clarify the twomethods. Take a couple in the year1980 with four children, combinedlabor income of $30,000, and zeroasset income. The husband earns$21,000 and the wife $9,000. Theirmarried tax liability then equals $4,337.When we use the HEAM to calculatetheir marriage tax, the husband’s taxliability as single is $2,736 while thewife’s single tax liability equals $977,for a combined tax liability of $3,713.Under the HEAM, the couple incurs amarriage tax of $624. Using the FAM,the husband’s tax liability as singlebecomes $4,177 and the wife’s is $238,for combined taxes of $4,415. TheFAM therefore gives a marriage subsidyof $78 (or, equivalently, a marriage taxof –$78).

RESULTS

This section addresses each of thequestions raised earlier. Again, allcalculations are expressed in 1994dollars. Averages are calculated as


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simple arithmetic averages for therelevant classification. The results areshown in Figures 1 through 8. Thedetailed calculations are available uponrequest.

Does the magnitude of the marriagetax/subsidy depend on its method ofcalculation? The impact of differentmethods of calculating the marriagepenalty or subsidy is shown mainly inFigures 1, 2, and 3. It is clear that theallocation method has a major impactboth on the magnitude and on theexistence of the tax or subsidy. Bothmethods indicate that the individualincome tax is typically not marriage-neutral, and both suggest that, sincethe early 1970s, the average family hasincurred a marriage tax that hasgenerally tended to rise over time.However, because the HEAM effectivelyminimizes the joint tax liability withdivorce, it also generates a consistentlyhigher marriage tax than the FAM; thatis, with the HEAM, the individual withgreater income is allowed to use withdivorce all tax preferences and thehead-of-household rate schedule,features that lower the taxes paid bythe higher earner with divorce andthereby create a larger tax effect fromdivorce. The difference in the twomethods averages roughly $200 acrossall families until the last several years.Indeed, the FAM suggests that in manyof the years of the last quarter centurythere may have been effectively nomarriage tax or subsidy on average. It istherefore clear that discussions of thetax effects of marriage depend cruciallyand intimately on the method ofcalculation.

Note, however, that the consideration ofalimony would likely narrow thedifferences between the two methods.

In many actual divorces, the husband isrequired to pay some alimony to thewife. Because alimony is deductible bythe husband and taxable for the wife,and because the husband typically hashigher income and faces a highermarginal tax bracket than the wife, thepayment and receipt of alimony uponactual divorce will tend to lower thetaxes of the now-divorced husbandmore than it raises the taxes of the now-divorced wife; by lowering the com-bined taxes of the divorced couple,alimony will make it more likely thatincome taxation will generate a mar-riage tax. In fact, consider the casewhere we calculate the marriage subsidyto be the largest: there is a high-earninghusband with a low-earning wife andthe FAM is used. The consideration ofalimony would lower the combinedtaxes of the divorced couple, therebynecessarily lowering the marriagesubsidy and possibly changing amarriage subsidy to a marriage tax. Putdifferently, any marriage subsidycalculated by our methods is likely to beoffset substantially in just the case inwhich the subsidy is estimated to be thegreatest. However, the “divorces” in ourcalculations are purely hypothetical, sothat we do not have any informationabout alimony payments for thecouples.5

In recent years, there is an averagemarriage tax when all families areconsidered (Figure 1). During the 1980s,the marriage penalty under the HEAMaveraged about $300 in real (1994)terms. The FAM generates a loweraverage tax, including an averagesubsidy in many years. However, by1994, the difference between the twomethods had narrowed to only $30, andthe average real marriage penalty acrossall families under both methods wasroughly $375. Because, on average,


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married couples incur a marriage tax,the aggregate revenue gain in 1994ranged from $17 to $19 billion.6

When the calculations are restricted tothose families that incur a marriage taxand, separately, to those that receive amarriage subsidy, the HEAM generates amarriage tax that is larger in all but oneyear (Figure 2) and a marriage subsidythat is always smaller in absolute value(Figure 3) than the FAM. Among familiesthat incur a penalty, the real averagepenalty has generally exceeded $1,000for most of the last 20 years under bothmethods of calculation, and climbed toover $1,900 for the HEAM before thetax cuts in the 1981 Economic RecoveryTax Act. The average marriage subsidyhas also generally exceeded $1,000 inreal terms for all families that receive asubsidy, under both methods ofcalculation. Note that our calculationsfor 1994 show an average marriage taxfor families that pay a tax of about$1,200 and an average marriagesubsidy for families that receive asubsidy of roughly $1,100, both ofwhich are similar to (though a bit lowerthan) the averages of Feenberg andRosen (1995) based on tax returninformation.

How has the marriage tax/subsidychanged over time? Although theHEAM and the FAM generate differentmagnitudes for the marriage penaltyand subsidy, the basic time trends arequite similar for the two approaches.When all families are examined (Figure1), the marriage subsidy grew from1967 to 1969 due largely to changes inthe standard deduction, and by 1969,the average subsidy ranged from $875to $1,065. The marriage subsidy thendiminished rapidly through 1976, andeven became a tax under the HEAM, asthe special tax provisions for singlesemerged. The introduction of the

earned income tax credit in 1976 andthe replacement of the standarddeduction by the zero bracket amountin 1977 reduced the average tax burdenon married couples. The average taxunder the HEAM then rose steadilythrough the rest of the 1970s, and theaverage subsidy similarly fell under theFAM after 1977 as inflation pushedmany taxpayers into higher marginal taxbrackets and, as discussed later, as morecouples became two-earner families.The Reagan tax cuts and the two-earnerdeduction in 1981 reversed the rise inthe average tax under both methods ofcalculation, and it generally fell until therecovery from the recession when,again, income growth caused bracketcreep. The Tax Reform Act of 1986caused a one-year decline in themarriage tax, but since then the averagemarriage tax has risen steadily, especiallysince the recent increases in marginaltax rates.

The overall trends are markedly differentwhen couples paying a tax or receiving asubsidy are considered separately,although again the two methods ofcalculation generate quite similar timepatterns in the tax and the subsidy. Forthose with a penalty (Figure 2), theaverage marriage tax rose steadily anddramatically from the early 1970s untilthe early 1980s, due largely to inflationand changes in family structure duringthis period. The tax then generally fellthrough the 1980s, with the exceptionof the upward surge after the economicrecovery, and the average tax has risento over $1,100 in the last several years.Both methods of calculation show thesame trends and nearly the samemagnitudes in the average tax. On theother hand, for those families thatreceive a marriage subsidy (Figure 3),the subsidy initially increased in absolutesize until a reversal after the 1969 taxchanges. The average subsidy then


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increased in size until 1977, but it hastended to fall since then, although itsaverage size has been fairly constant atroughly $1,050 in real terms since the1986 tax reform.

The percentage of all families that incura marriage penalty has risen fairlysteadily since 1967 under both methodsof calculation and now is about 57percent of all families. Conversely, thepercentage of families receiving asubsidy has fallen from over 65 percentin 1967 to under 30 percent in 1994.For approximately 15 percent of allfamilies, marriage does not change theirjoint tax liability, a proportion that hasnot changed much over time or overmethod of calculation. See Figure 4 forHEAM calculations only.

How have tax law and family structurechanges contributed to the changes inthe marriage tax/subsidy over time?Over the last quarter century, frequentchanges in the tax laws and significantchanges in family structure have bothcontributed to variations in the marriagetax and subsidy over time. However,the separate impact of each is notknown.

One crude way to disentangle tax anddemographic impacts is to calculate overtime the marriage tax/subsidy for somegiven, specific family characteristics. ThePSID makes it possible to classify familiesalong a variety of dimensions. Twoclassifications in particular seeminteresting to examine: one- versus two-earner couples and couples withchildren versus those without children.7

In all cases, only the HEAM is discussed.Similar conclusions generally apply tothe trends using the FAM.

As shown in Figure 5, families with twoearners pay a much greater penalty thanfamilies with a single earner, although

the difference has narrowed slightlysince the late 1970s with the flatteningand the reduction in marginal tax rates.Two-earner families, on average, nowincur a marriage tax of $809, while one-earner families receive a marriagesubsidy of $310, for a difference of$1,119. The negative tax consequencesof marriage for two-earner couplestypically occur because the highercombined income of the couple pushesthem into higher brackets in theprogressive income tax. Because theproportion of two-earner families in allmarried couples has steadily increasedover time, this family trend has contrib-uted heavily to the general rise in theaverage marriage tax.8

Until the 1986 Tax Reform Act, therewas little tax difference betweenfamilies with and without children(Figure 6). Since then, however, familieswith children pay a substantial marriagetax equal in 1994 to $750, whilefamilies without children now pay only$94. Families with children are penalizedin large part because married couplescannot use the head-of-household rateschedule. The elimination of the two-earner deduction in 1986 has also mademarriage more burdensome for manymarried couples with children, as hasthe presence of the earned income taxcredit for (low-income) families withchildren.

Another, more useful way to examinethe separate effects of tax and demo-graphic changes is presented in Figure7. Suppose that we allow familycharacteristics and relative familyincomes to change over time, inaccordance with actual changes indemographics and relative incomes overthis period, but that we also holdconstant all the various provisions of theincome tax (e.g., marginal tax rates,personal exemptions, deductions, and


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the like) at their 1994 levels. Anychanges in the marriage tax or subsidyare then due entirely to changes in laborforce behavior, relative incomes, andhousehold size.9 Figure 7 presents theresulting pattern in the average tax/subsidy for all married couples. Figure 7clearly indicates that changing familycharacteristics and relative familyincomes have contributed heavily toincreases in the marriage tax over time.With constant 1994 tax laws, changesin family structure and husband-wifeincome distribution over the last 28years have led to a steadily increasingmarriage tax, one that in 1994 reachesnearly $400 under both methods ofcalculation. As suggested earlier, thedominant demographic change over thisperiod is the increase in two-earnerfamilies.

Still another way to examine theseparate effects is to hold constant overtime all basic family and relative incomecharacteristics at, say, 1992 levels (or thelast year for which we have actual familyinformation) and to allow the tax lawsto change in accordance with actual taxchanges over this period. This procedureisolates the separate effects of taxchanges for a given (1992) family andrelative income structure. These resultsare shown in Figure 8 for the HEAM andthe FAM. With a constant 1992 familyand income structure, tax changesgenerated an enormous increase in theaverage marriage tax in 1970 and 1971.The marriage tax has largely declinedsince then, with a fall, rise, and subse-quent fall in the mid-1970s to early1980s; it has risen slightly since 1993.Tax changes like a reduction in marginaltax rates, the introduction of the earnedincome tax credit, and the expansion inthe two-earner deduction have movedthe income tax in the direction ofgreater marriage neutrality. In combina-tion with the results in Figure 7, these

effects in Figure 8 suggest that recentchanges in marriage non-neutrality inthe income tax are due largely tochanges in labor force behavior, relativehusband-wife incomes, household size,and, to a lesser degree, tax rules.

It is important to remember that theseaverages hide a huge dispersion acrossfamilies in the income tax treatment ofthe family. As noted earlier, the levelsand trends in the marriage tax/subsidyare quite different when families arebroken down between those that face amarriage tax and, separately, those thatreceive a subsidy (Figures 2 and 3). Theaverage penalty has generally exceeded$1,000 in most years; the maximum taxreached nearly $25,000 (in 1978 for theHEAM) for one couple and exceeded$10,000 for other specific couples in 15of the 28 years in our sample. Similarly,among families that receive a marriagesubsidy, the average subsidy has oftenexceeded $1,000 in real terms; onecouple received a marriage subsidy inexcess of $29,000 (in 1969 for theFAM), and the largest subsidy receivedby some other specific couples wasalways greater than $11,000 until theearly 1980s.

The dispersion in the marriage tax/subsidy across families is also shown inthe variation by income class. Onaverage, couples in the highest familyincome quintile have a marriage tax thatis always greater than that borne bycouples in either the lowest or themiddle family income quintile, ever sincethe single tax schedule was introducedin 1971. In 1994, couples in the highestincome quintile paid an averagemarriage tax of over $1,500. It isimportant to note, however, that thelevel of family income does not unam-biguously determine the magnitude ofthe marriage tax or subsidy. Couples inthe lowest quintile currently pay an


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average marriage tax of $41, whilethose in the middle quintile actuallyreceive an average subsidy of $40;indeed, for almost every year since1977, middle-income couples havereceived a larger marriage subsidy thanlow-income couples. Clearly, thedistribution of income across husbandand wife has a significant impact on thecalculations.

Conclusions

Our calculations suggest three broadconclusions about the effects ofmarriage on taxes.

(1) Although the individual income taxcannot be marriage-neutral withits current structure, calculatingthe exact magnitude of themarriage tax/subsidy requiresmaking a number of assumptionsabout the family, the validity ofwhich cannot be known. Becauseof this difficulty, the magnitudeand even the existence of themarriage tax or subsidy are notunambiguous.

(2) There are clear trends in themarriage tax over time. Onaverage, all married couples incura marriage tax whose magnitudeover time has risen, fallen, andmore recently risen. When couplesthat incur a tax are examinedseparately from those that receivea subsidy, however, these trendschange significantly.

(3) The trends in the marriage tax/subsidy are due both to changes intax laws and to changes in familystructure over time, althoughdemographic changes appear tobe more important determinantsthan tax changes. This resultsuggests that it is risky to discussthe marriage tax or subsidywithout specifying the precise

characteristics of the family. Otherthings equal, families more likelyto incur a marriage tax includethose that have two earners andthat have children. Families morelikely to receive a marriage subsidyhave the opposite characteristics;families with a single earner arealmost certain to receive a largemarriage subsidy.

Of particular interest, we believe, is thedifficulty in calculating the marriage taxfor married couples. Many populardiscussions of the marriage tax suggestthat its magnitude is precisely anddefinitively determined. On one level,this view is certainly true: if the incomesand any other relevant characteristics ofthe partners when single and whenmarried are known, then it is simple tocalculate the joint tax liabilities of thecouple when single and when married.However, on another level, this view isalmost certainly false. It is clearly notpossible for outside observers to knowmany of the characteristics relevant forthe marriage tax computations, becausethese characteristics are determined onlyupon a purely hypothetical divorce.Indeed, it is not possible even for theaffected married couples to know withcertainty many of these characteristics.This observation suggests that currentcalls for giving married couples a taxcredit precisely related to their marriagetax are likely to be impractical, althougha simple form of approximate tax reliefcould well be achievable.

In short, the individual income tax is notnow, and has not been for many years,marriage-neutral. Elimination of themarriage tax may well be desirable; it iscertainly achievable. However, doing sois not as simple as legislating a credit tooffset the tax. Instead, eliminationrequires either the reinstitution of theindividual as the unit of taxation or the


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removal of the progressive rate struc-ture, and each path presents numerousdifficulties of a different nature.

ENDNOTES

Jeong-Bin Im and Jaesung Shin provided researchassistance on this project. We are grateful to JoelSlemrod and three anonymous referees forespecially detailed and helpful comments.

1 The reason for the lack of “marriage neutrality” inthe income tax is simple to explain. Marriedcouples effectively split their income on tax returns.If two people marry and one of them has zeroincome, income splitting allows the individual withsome income to move into a lower marginal taxbracket and therefore reduces the combined taxburdens of the two partners. Conversely, whenpeople with similar earnings marry, their combinedincome pushes them into higher brackets than theyface as singles, and they pay higher taxes withmarriage. Of course, the magnitude of the tax/subsidy depends upon the whole array of taxfeatures, as well as the incomes and othercharacteristics of the partners. For detaileddiscussions of the tax treatment of the family in theUnited States, see Bittker (1975) and Rosen (1977).Pechman and Engelhardt (1990) discuss familytaxation in selected other countries.

2 For example, the couple’s tax return cannot provideinformation on which individual is allowed in theevent of a divorce to claim children (if present) astax exemptions and so on which individual isallowed to use the head-of-household tax schedule.The return also cannot indicate the division ofitemized deductions (if present) between theindividuals, and it does not show either the amountof income earned by each individual or the split ofasset income between the individuals.

3 For detailed information on the PSID, see Institutefor Social Research (1984).

4 Note that in their aggregate calculations of the taxconsequences of marriage, Rosen (1987) andFeenberg and Rosen (1995) make the samesimplifying assumption; Feenberg and Rosen(1995) also use the standard deduction in theircalculation of marriage taxes using the NationalLongitudinal Survey data, because, like the PSID,these data have no continuous information onitemized deductions.

5 We are grateful to an anonymous referee for raisingthis issue.

6 These estimates are derived by multiplying theaverage marriage tax by the number of joint taxreturns. In 1994, the average marriage tax was$389 under the HEAM and $358 under the FAM,and the total number of joint tax returns wasroughly 50 million.

7 We have also examined classifications by race, age,and income. These results are available uponrequest.

8 The percentage of two-earner families in the PSIDhas increased from 42 percent of all marriedcouples in 1967 to 49 percent in 1975, 56 percentin 1980, 60 percent in 1985, and 63 percent in1994.

9 Specifically, we inflate income in each year 1967 to1994 so that all incomes are measured incomparable 1994 values. The distribution ofincome across spouses is left as recorded in eachyear, as are all other family characteristics. We aregrateful to an anonymous referee for thesuggestion that we explore this issue.

REFERENCES

Alm, James, and Leslie A. Whittington.“Income Taxes and the Marriage Decision.”Applied Economics 27 No. 1 (January, 1995): 25–31.

Becketti, Sean, William Gould, Lee Lillard,and Finis Welch. “The Panel Study of IncomeDynamics after Fourteen Years: An Evaluation.”Journal of Labor Economics 6 No. 4 (December,1988): 472–92.

Bittker, Boris I. “Federal Income Taxation andthe Family.” Stanford Law Review 27 No. 6(July, 1975): 1388–1463.

Brozovsky, John, and Anthony J. Cataldo II.“A Historical Analysis of the ‘Marriage PenaltyTax’.” The Accounting Historians Journal 21No. 2 (June, 1994): 163–87.

Feldstein, Martin S., and Charles T. Clotfelter.“Tax Incentives and Charitable Contributions inthe United States: A Microeconomic Analysis.”Journal of Public Economics 5 (January–February,1976): 1–26.

Feenberg, Daniel R., and Harvey S. Rosen.“Recent Developments in the Marriage Tax.”National Tax Journal 48 No. 1 (March, 1995): 91–101.

Folbre, Nancy. Who Pays for the Kids?London: Routledge, 1994.

Institute for Social Research. User Guide tothe Panel Study of Income Dynamics. AnnArbor: The University of Michigan Press,1984.

Pechman, Joseph A., and Gary V. Engelhardt.“The Income Tax Treatment of the Family.”National Tax Journal 43 No. 1 (March, 1990): 1–22.

Quinn, Jane Bryant. “Repeal the MarriageTax?” Newsweek (April 3, 1995): 48.


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Rosen, Harvey S. “Is It Time to Abandon JointFiling?” National Tax Journal 30 No. 4 (Decem-ber, 1977): 423–8.

Rosen, Harvey S. “The Marriage Tax Is Downbut Not Out.” National Tax Journal 40 No. 4(December, 1987): 567–76.

Schultz, Ellen E. “Living in Sin to Cut Tax BillWould Look Even Better to Some Under ClintonPlan.” The Wall Street Journal (March 9, 1993):C1.

Sjoquist, David L., and Mary Beth Walker.“The Marriage Tax and the Rate and Timing ofMarriage.” National Tax Journal 48 No. 4(December, 1995): 547–58.

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THE RISE AND FALL AND RISE . . . OF THE MARRIAGE TAX...THE RISE AND FALL AND RISE...OF THE MARRIAGE TAX 573 1 2 1 2 consequences of marriage depend both on the features of the tax