Working Paper: NBER ID: w4705
Authors: Daniel R. Feenberg; Harvey S. Rosen
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; 38 percent will receive a subsidy averaging about $1,399. 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 $3,000 annually; for certain very high income families it can exceed $10,000 annually.
Keywords: marriage tax; earned income tax credit; tax policy
JEL Codes: H24; H31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Changes in tax law (OBRA93) (H20) | Marriage tax implications for couples (H31) |
| Marriage tax implications for couples (H31) | Tax burdens depending on income levels (H22) |
| Tax rate schedules (H20) | Marriage tax for couples with equal incomes (H31) |
| Tax rate schedules (H20) | Marriage subsidy for couples with unequal incomes (H31) |
| Earned income tax credit structure (H31) | Penalty upon marriage for couples (J12) |
| Standard deduction for joint returns < Combined deductions for single returns (H31) | Marriage tax penalty (H31) |
| Marriage tax implications (H31) | Tax burdens for low-income and high-income couples (H22) |