18 January 2006

Marriage Penalty, My Shiny Metal Ass

At my taxable income, if you're "married filing jointly," you pay $700 less in federal income taxes than single people. That's at the same taxable incomeafter all of the deductions and adjustments and what have you. Does it really cost more per person to run a two-person household than a one-person one?

Evidently not:
A big reason married people accumulate more wealth than others is simple economies of scale — one household is cheaper to maintain than two, Zagorsky said. (Study Finds That Marriage Builds Wealth)
Or, to put it another way, the per capita cost of running a household is less for a couple than it is for singles. Sure, the food bills are about the same; but there's only one rent or mortgage, and its value/cost is split between the two. This is a huge factor: I would bet that home equity accounts is the single greatest source of wealth for most families — and you need to own to realize those gains. (It's certainly a reason for wealth disparities between blacks and whites: read the bits after 1:43:29.) I would also bet that couples are more likely to own than singles, not simply because they are married, but because being married permits more household economic power.

So married people pay less tax on the same taxable income — that's after the mortgage-interest deduction, that married people are more likely to have.

I don't mind paying my fair share of taxes. Note: that's my fair share. It's not the amount I have to pay that bothers me. It's that I have to pay $700 more because I'm single that bothers me. I don't see anything fair in couples, with lower average per capita household expenses, paying less in taxes on the same taxable income. And while I would certainly appreciate a $700 cut in my own tax bill, I would be well satisfied if they just raised couples' bills by $700.

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