Recent Developments in the Marriage Tax

Abstract

The new tax law increases tax rates for 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.

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