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Recent Developments in the Marriage Tax
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Abstract
The new tax law increases tax rates of high income individuals, and expands the earned income tax credit for low income individuals. We use a sample of actual tax returns to compute estimates of the 'marriage tax' - the change in couples joint tax upon marriage - under this new law. We predict that in 1994 52 percent of American couples will pay a marriage tax, with an average of about 1,244;38percentwillreceiveasubsidyaveragingabout1,399. These aggregate figures mask a considerable amount of dispersion in the population. Under the new law, the marriage tax for certain low-income families can exceed 3,000annually;forcertainveryhighincomefamiliesitcanexceed10,000 annually.