Marriage Penalty? I Don’t Think So

Don't cry for married people during tax season.

Posted Apr 13, 2009

What if I had a taxable income of $50,000 and a married couple filing jointly had the same $50,000 of taxable income? I'd pay $8,844. How much more would the married couple pay? Their tax bill would be $6,698. Hey, that's less! $2,146 less!

Hmm, well what if the married couple and I both report taxable incomes of $100,000? I owe $21,978. The married couple owes $17,688. Wait, there's still no "marriage penalty" - the couple is paying less! ($4,290 less)

Let's try a million dollars. I pay $328,597. A married couple pays about $7,000 LESS.

I kept at this for a while. No matter how giant or how tiny a taxable income I entered into the calculator, the answer was the same: Single people always pay more taxes.

Does it seem unfair to compare the taxes paid by one person to the taxes paid by two? Then remember that the married couple does not need to have two wage-earners and they also do not have to have any children to qualify for the break. So one spouse can go to work, the other can stay home and watch TV, and the couple will still get tax breaks that are subsidized by single people.

In any case, it is clear that I hadn't understood what the so-called "marriage penalty" really was. Now I've read up on it and learned that when Americans rail against the marriage penalty, what they usually mean is this: If two people marry, their total taxes are sometimes higher than if they stayed unmarried. But even this is misleading, because more than half the time, the twosome reaps a tax bonus when they marry, not a penalty. What's more, the comparison is only about couples - married ones and unmarried ones. It is not as if a single person could file jointly with a sibling, friend, or parent - even if the two of them vowed to care for each other as long as they lived, and actually honored that vow.

Tax rates around the world: Do singles always pay more?

David from Chicago, a Living Single reader, sent me this mind-expanding link documenting tax rates across the globe. The numbers, from 30 different countries, were compiled by the Organization for Economic Cooperation and Development (OECD).

I'm going to unveil some mighty big numbers, so before you gasp, keep this important qualifier in mind: These aren't just income taxes. They include payroll taxes, social security contributions, and cash benefits as well.

Of all the nations in the study, the most tax-burdensome to singles is Belgium, where singles (with no kids) pay a rate of 55%! Married couples with 2 kids pay 40%. (That's the only other category in the table; the more appropriate comparison would be married without kids.)

Germany is the next most onerous place for singles. There, they pay 52%, compared to 36% for married with kids.

The lightest tax rate for singles is in Korea, at 17% (compared to 16% for marrieds). Mexico's rates are nearly as low, at 18%. Here's something else interesting about Mexico: It is one of only 3 countries, out of the 30, in which singles do NOT pay higher rates than marrieds. In Mexico, as well as in Turkey (where the rate is 43%), singles and marrieds pay the same rates. Greece really stands out from all the rest - singles actually pay less than marrieds (a shade under 39%, compared to a tad over).

At this time of year it can be hard to think kindly about taxes, but they actually can be put to good use. As a general rule, nations that have higher tax rates also offer more services and protections, such as health care and pensions. So I'm not going to take to the streets (or seaports) to protest taxation. But I don't think married people should get a tax break just because they are married. (Kids are a separate question.) And they surely should not get a tax break and call it a penalty. That, I will protest.

[UPDATE: A law professor just published an article in a law journal with the same conclusion: Uncoupled singles ALWAYS pay a penalty. I wrote about it here.]