The government is sexist. Let me prove it to you.
Out of curiosity, I surveyed five of my married friends to answer two questions: 1) Did you pay more or less in taxes after you got married, and 2) How much more or less did you pay? The answers I got were concerning. They all responded they paid more and by a magnitude of $3,000 to $25,000!
It's just not true that the “marriage penalty tax” no longer exists. The IRS just renamed it the “love me long time tax.”
I'm by no means a personal income tax expert. All I'm doing is highlighting facts from people around me, and proposing the likely reasons as to why their taxes went up. Our income tax system is so darn confusing, hopefully someone can shed some light on the situation!
TWO QUESTIONS TO THINK ABOUT AND UNDERSTAND
1) Why Don't Tax Bracket Levels Double When People Marry?
The reason is because the government believes men and women are NOT equal, hence why the tax brackets for married filers do not double. To prove my point, let's say Johnny made $500,000 a year (35% tax bracket) and marries Susie who also makes $500,000 a year.
As a single filer with no deductions, Johnny pays an effective Federal Tax rate of 29% or $148,000 in taxes (gulp). As a married filer, their effective tax rate jumps to over 32%, thereby paying roughly $20,000 more in taxes. How is that fair?
Solution: Double the 35% tax threshold from $380,000 for individuals to $760,000 for couples. That's equality!
2) Why Can't Both Individuals Have A Deductible Mortgage?
Furthermore, let's say Johnny has a $1,000,000 mortgage on his condo in San Francisco, while Susie also has a $1,000,000 mortgage on her house in Palo Alto. They both have a 6% mortgage interest rate and pay $60,000 a year in mortgage interest, saving them $25,000 in taxes ($60,000 X their marginal tax rate of 35% = $25K not taking into account phase outs).
Both Susie and Johnny save a combined $50,000 in taxes if they were single because of their mortgage interest deductions, yet if they marry, they lose $25,000! How so you ask? The current limit for mortgage indebtedness for single and married filers is $1,000,000. When Susie and Johnny get married, they have a combined $2 million mortgage, but they can only write off interest on half!
Solution: Raise the amount of mortgage indebedtness for interest deduction to $2,000,000 from $1,000,000 for married couples. Equality! I told you the government is sexist.
Fighting A Sexist Government
The government is essentially telling Susie and Johnny that one of them doesn't deserve to make the money they do. Have your own place with a mortgage? Forget about it. The government thinks one partner will give up his or her job and house, so that the other partner will provide for everything!
The government is targeting independent women because when politicians drew up their archaic tax laws they assumed men would be the primary breadwinners.
What if the man wants to be the homemaker? The government is telling women and men to not marry, for if we do, one should stop working or work less to take care of the kids. Who's to say we're going to have kids anyway? It would be nice to one day “love you long time” and not have to pay extra for anything!
Related: The Marriage Penalty Tax Has Finally Been Abolished!
Readers, is the reason why more people aren't up in arms with government sexism because not many people make enough to get negatively effected? If so, does that make government sexism right?
Why doesn't the government recognize there are successful, highly paid women who also want to get married as well?
What is your experience with your tax liability after marriage? Have you ever considered not getting married due to an increased tax liability?
Regards,
Sam @ Financial Samurai – “Slicing Through Money's Mysteries”
Updated for 2020 and beyond. .
In my home country, income taxes are proportional to what you earn, and it doesn’t matter if you’re married, single, etc. If a household has only one breadwinner, s/he can declare the other family members as dependents and get tax deductions. Otherwise, each breadwinner pays for their taxes, as independent individuals. This seems way more fair and less confusing to me.
Context: my husband and I are NOT high earners, and we got married a little over a year ago.
Our first year filing taxes, we did pay slightly more in taxes than we had previously paid individually, but we’re talking just a few hundred dollars. (The two biggest sources were that he lost his health insurance deduction as an independent contractor when he married me and became “eligible” for my work’s insurance even though he never went on my insurance, and we had to both itemize when previously he had benefited from the standard).
This year, we are going to end up paying way less than either of us did previously simply because marriage in our case has meant dramatically reduced per-person expenses, which means dramatically increased per-person retirement savings, which means lower taxes. It’s actually kind of crazy: I have never felt this rich, but I have also never paid such a low percentage of my actual income in taxes–not even when I was in grad school living on a 15K stipend. All that to say, I think this is why tax rates for married people look bad on paper: there is a real financial benefit to marriage that they are trying to reflect in the policy. I have no complaints about my taxes as a married person.
Congrats! Check out this post for more on the marriage penalty tax and credit:
https://www.financialsamurai.com/at-what-income-level-does-the-marriage-penalty-tax-kick-in/
this is sick that is very sexsit towards people.
I am a high income earner with a medium for California mortgage. I am single. When I think about getting married, I have two options: (1) marrying a guy with a small income so I get more deductions (which really isn’t all that attractive to me because I would effectively be making less money) and (2) marrying a guy with an income equal to or greater than mine (which results in higher taxes and phaseouts of deductions (I’ve conducted my own independent research on this which corroborates yours). I’ve thought about the possibility of instead of getting married, entering into a partnership agreement that effectively functions like a prenup, spells out child raising duties, and determines how assets are to be divided upon dissolution. California law does not provide for common law marriage so this could be an effective solution to the problem. I, for one, won’t take that BLEEP from our government.
No, I don’t think the government is sexist, if anything it goes out of its way to promote the “equality” gender-less philosophy that is the order of the day.
However, it certainly is not pro-marriage, since it considers any relationship to be of equal merit – which I don’t agree with. But then, that is all part of the aforementioned equality philosophy that it is so enamoured of.
Isn’t the government racist as well? I believe in Canada that incomes are split so marriage or common-law is an advantage, but as I haven’t been in that situation myself I’m not sure.
Get rid of the mortgage subsidy, btw, and you’ll end that problem. ;)
I realize the government is made up of people that may be like you and me, but I think it is a huge leap that there is any thought behind the income tax legislation other than generating income for the government. Too many lobbyists and other vested interests have made legislation illogical at best. My approach is seeking the best tax advice and do what I can to reduce the tax bite.
I think the government is more desperate than sexist…..at least by a little. There are fewer and fewer people contributing and at the same time less and less traditional “nuclear” families. Meanwhile debt keeps expanding. I read the other day on CNN that 1 in 7 Americans collects food stamps. Looks like its time to revamp a lot of different things in the U.S.
Really interesting topic, I enjoyed reading it and everyone’s topics.
Maybe, but I think old habits die hard. The government is CLEARLY sexist in this case! I’m amazed more women don’t stand up and fight. Man or woman for that matter.
very interesting discussion. as a CPA that charitably does tax returns for all tom, dicks and harry’s in my family, i agree that the intent is to benefit the average married couple. average is the key word here – so think average household income in the USA. moreover, the conventional thinking that one individual works as the breadwinner while the other takes care of raising kids and cleaning the bathrooms at home has carried over in modern day tax law. for higher earning families, the tax code certainly works the other way around and provides no incentive to grow financially. the same goes for a single unmarried individual.
Why does there have to ONE breadwinner is my question? That is an outdated way of thinking by us and the government who implement these tax policies.
Why can’t there be two equally successful, career oriented men and women? That’s equality.
There totally can be FS, and the tax burden also moves in direct correlation with that. The code does carry over with it older wisdom, and the justification seems to be to tax entities based on total income generated much like companies. Consider a family business where the husband, wife and 3 kids all work at the family restaurant. All generate money as one entity and live under the same roof. Because of our tax laws, each pays the proportion of tax levied to them, whether they file individually or as a joint family / business.
Going back to the original discussion – yes, the Government taxes a married couple more (assuming they are both working and making good money), just like it would tax an individual or an entity on a progressive basis. Because there are synergies/savings derived from certain activities (i.e. living under one roof, cooking on one stove vs two), the tax effect is not directly proportional. The analysis really should be to compare the savings a married couple is able to keep vs. the incremental tax burden. This, compared to what would have been the case had the couple not married will yield more concrete and objective results. One will find that the results vary greatly depending on specific individual situations, and therefore it is difficult to make a general claim one way or another regarding how the tax code impacts individuals and families.
All I know is that if two successful people who make much more than $250,000 a year get married, they are punished by the government b/c the government considers only one can be the main breadwinner. That’s not right and yet more people aren’t up in arms about this simply b/c not many people make $250K+.
Which also means many people don’t shoot for the stars.
If my wife had a $500k annual income, then I wouldn’t bother working…
We waited until the marriage penalty went away before getting married on Sep 11, 2001. (the date was set in advance and I’m not going to let any selfish terrorists screw up a good thing!). Normal people (rather than the upper 2% of income earners) do not need to be hit with the marriage penalty.
I’m contemplating a strategic divorce should the marriage penalty be reinstated for us normal people. The marriage penalty just doesn’t foster a family atmosphere.
George, but let me ask you, should married people, no matter what the income be treated THE SAME as any other married couple?
You have to ask yourself WHY the government isn’t making 1+1 = 2, and instead 1+1=1 as in the case with the mortgage deduction. It’s important for people to be aware of the government’s action to discriminate against women and men.
Yes, this marriage penalty for high-income earners really pisses me off and is the reason why I didn’t formally get married. We already pay a disproportional amount of the nation’s taxes. The government needs to fix this, but won’t.
Let’s hope that the government does. We need to find a better way!
Nice information, this really useful for me. There is nothing to argue about.
Keep posting stuff like this i really like it. Thanks.
I agree with Kevin above.
The tax law penalizes two high earners who are married. There is no sexism here, if the woman makes big bucks and the man stays at home then it’s the same result as the man making big bucks and the wife staying at home.
I make $260K a year and the wife doesn’t work, filing married jointly is a great deal for us!
I tell my wife that with the effort required making $260K a year, I need her support to help me back at home- it’s a good deal all around and I’d gladly switch places when she lands a similar job.
If you can’t change the system, learn to work around it!
-Mike
@Kevin@OutOfYourRut
Maybe not a new one, but keeping an old one around is pretty easy. It’s not like a lot of people are going to be subject to it in a disadvantageous way, so its largely ignored.
I can’t imagine us seeing this law disappear…
1. You each have to earn 68k or so before this comes into effect. (or one person earns 100 and another earns the rest. Whatever).
What % of the population earns more than 134k per household?… maybe 10%? 15?
https://en.wikipedia.org/wiki/Household_income_in_the_United_States
2. You have to be married in the eyes of the federal govt (I live in Washington :) no state tax)
Thus Same Sex couples aren’t subject to it, so another 10% of the population escapes
3. You have to earn roughly equal amounts. If one person outearns another by a LOT there’s still an advantage to getting married. Likewise households with 1 earner. How many 2-CEO households are out there?
No idea on % here.. maybe half?
So 90% of 10%, and then perhaps half of that.
I don’t see this law disappearing !
Money Reasons–I totally agree, it’s all about revenue, and that largely comes from high earners, married or single.
Also, I don’t think the gov’t has the guts to risk the feminine backlash on a blatantly sexist policy slanted against women. If it’s anything, it’s far more likely to be an anti-married policy, since marrieds aren’t considered a protected class. Married couples just pay and keep on plugging.
.-= Kevin@OutOfYourRut´s last blog ..Good Retirement Planning Should Include a Low Cost/Debt Free Lifestyle =-.
@ david M
I do agree with your general point that I lot of people don’t really understand what goes into the numbers they see on their tax forms. I’ve had multiple discussions with people on forums and blogs who swore up-and-down that the 2008 stimulus tax credit, or the 2009 stimulus tax credit, was ‘taxable’ or being ‘taken back’ because their taxes ended up higher that year then previous years.
In reality, neither of those things are in the slightest bit true. And once they actually looked at their taxes closer, they realized either that they’d had some more investment income, of they got a bigger bonus at work that they forgot about, they had typed something in wrong, or lost a dependent who graduated from college, etc.
So it is true that a lot of people don’t really look close enough to really understand the differences from year to year. It wouldn’t surprise me at all if some people got married, ended up owing more and figured it was from the marriage when in reality it was because they sold a home, or changed jobs and got a vacation-time payout when leaving, or one of a variety of other factors.
However, since these are Samurai’s friends, I wouldn’t be particularly surprised if they did know what they were talking about either.
@ david M
The real reason that the current tax structure exists as it does, is because if they did make it fair, they would lose to much tax revenue!
Exactly. And in order to make it fair and also be revenue-neutral, they’d have to eliminate other tax breaks or raise marginal tax rates. And that always goes over like a lead balloon.
I’ve enjoyed reading the this discussion!
The real reason that the current tax structure exists as it does, is because if they did make it fair, they would lose to much tax revenue!
Afterall, doesn’t the top 1% in wealth pay something like 33 to 40% of in the federal income taxes (thanks Bill Gates and Warren Buffett, I love my newly paved road!)
This is just and example of a stupid tax code change they did at some point in time and now the undesirable effects of promoting non-married lifestyles over married lifestyles. Nice job government! People take about fairness, well I think children are raised better with 2 parents instead of 1…
Hmmm kind of reminds me of some of the bailout and mortgage re-engineering that’s going one…
And people wonder why “Strategic Defaults” are happening… ;)
@admin
I just realized an oversite in my thinking – did your friends happen to sell houses after they got married?
If yes, this may be the reason their taxes went up. Say they sold a house that had $16,000 in interest deductions and $4,000 in property taxes, if they are in the 25% tax bracket there taxes would go up by $5,000.
To me, this is not due to the “Sexist Government” and I think they should be happy to have paid $5,000 extra in taxes. Why, because they have $15,000 extra even after paying $5,000 more in taxes.
I’m sure MANY people will think my logic is CRAZY – that’s okay I already realize that!
David M – You bring up valid points. If their finances are not completely apples to apples, with no changes of deductions, it is hard to compare. However, I don’t think anything changed for the most part with these 5 friends. None sold their house, and lost their deductions on their income.
The term “marriage penalty tax” exists for a reason. And the reason is that the government is against the union of marriage, and is against two successful working spouses.
.-= admin´s last blog ..The Best Super Bowl Commercials for 2010 =-.
@ admin
Absolutely I do NOT think they lied. I just think they were mistaken.
I doubt they actually took the time to look the time to compare and see that there tax liability was $3,000 to $25,000 higher.
Of course I could be wrong – I do not know your friends.
“You think all 5 of my friends lied to me?”
Lied? No.
Representative sample? Perhaps not.
If the couples had similar incomes, they’ll hit the marriage penalty. If they have very different incomes – regardless of who makes more – they’ll get the marriage bonus, as the high earner gets dragged down to a lower bracket.
.-= Kosmo @ The Casual Observer´s last blog ..What’s Going On? =-.
@david M
You think all 5 of my friends lied to me? What incentive do they have to lie and say they paid more tax and by 3-25K more? Adding up their tax liability before they were married, and the year after they are married with the same income is very easy to compare.
@LeanLifeCoach
Forgot about the stat that some 40% of Americans don’t pay tax. Good point. Congrats on being highlighted in Wise Bread’s round up!
.-= admin´s last blog ..The Best Super Bowl Commercials for 2010 =-.
I wonder if this is why more and more celebrity couples are staying together long term but not actually getting married. Tax laws bite
Great thread of comments! OK, so the tax regulations are archaic, we have consensus. The government being sexist? No doubt when the rules were written we had sexists running the country but the regs probably made a lot more sense back when successful women were not the norm. Today we might still have sexists leaders but they are simply incapable to getting anything of significance done unless it is spending more.
Why aren’t more people up in arms… hmmm, Could it be that something like half the country pays little or no taxes. They don’t care if the wealthy pay but would certainly be vocal of the wealthy were up for a reduction in their tax liability?
.-= LeanLifeCoach´s last blog ..Combat The Closing Techniques – The Puppy Dog Close =-.
@ FinEngr
Possibly kids would make it worth it, though I haven’t looked into that as they’re not on my list of interests or hobbies in the next few years. But I think the deduction per kid is the same whichever way you file. So ideally, the higher earning partner could deduct the kids in a non-married situation.
However if me or my fella were in the hospital, or owned a lot of things together, or had other such things to worry about, we’d need a “guaranteed relative” which is what marriage provides, per SameSex-Marriage argument above that @ fredct already responded to. Luckily his parents are still alive and could sign over a lot of responsibility and visiting rights if necessary.*
@ admin
BTW “successfuly highly paid men” was snark. The social conditioning is so deep that we don’t even realize sometimes though :)
*Could become moot as he’s seriously considering his own business and we’d need to get married for health benefits, etc, similar to other posters here.
@ admin
To Admin,
I’m happy you responded and this was from the heart.
However, I wonder if you friends are correct – that is, did they really pay more in tax on their combined income than they would have had they filed separately? And if yes, were the numbers really $3 to $25 thousand?
I believe the answer to my questions is most likely, No and No.
What people believe regarding taxes and REALITY are often VERY different.
For example, I heard a recent poll and the results were that almost everyone thought their taxes went up under President Obama. However, the truth is almost EVERYONE’s taxes went down.
@ FinEngr
thanks for the clarification. I imagine then that same-sex partnerships have to go through rigorous estate planning to make sure everything goes exactly where it’s intended to?
Most certainly, and in many times its not possible at all. Various benefits that would be available to married people – such as survivor pensions, joint SS benefits, family leave, the right to visit a loved one in a hospital, to make medical decisions if they were unable, to make funeral plans, etc, etc – would not be available to Geek if she were not married. And, yes, aren’t available to same-sex relationships at all. And that’s just scratching the surface.
@fredct
thanks for the clarification. I imagine then that same-sex partnerships have to go through rigorous estate planning to make sure everything goes exactly where it’s intended to?
Taking the plunge later this year…yay looking forward to govt discrimination
.-= FinEngr´s last blog ..Can Shrinking Yields Be a Good Sign? =-.
Example: how would it affect taxes if you claimed the children as dependents and your partner paid child support? Would that be a double-dip on the tax credit side?
To answer your tax question, child-support does not appear on your income tax return. Alimony (legally declared and required) does, but not child support.
Meanwhile, staying unmarried for tax purposes could end up having significant implications to beneficiaries, inheritance, estate planning, etc. If you don’t want to get married, don’t get married, but do realize that – especially if you have kids – you better cover yourself legally in a variety of ways.
@admin
against marriage….just like they are AGAINST savings. What’s your thoughts on the idea that there are greater forces out there working to keep us IN debt, and that getting OUT of debt would crumble our system? People are outraged at the number of jobs lost from the housing bubble, how many would be lost from the marketing/salesman bubble??
Gave you a shout-out over at Darwin’s Finance (financial freedom article). Hope I didn’t mis-quote your beliefs.
.-= FinEngr´s last blog ..Can Shrinking Yields Be a Good Sign? =-.
@Geek
Good points, sorry I reiterated. Maybe I should have read the comments before I commented!! ;)
On your newer comments, while I think the govt would capitalize on same-sex marriage, what’s the “moral” ramifications. How would you relate this to the example of legalizing marjijuna in order to tax it.
Given your personal situation, if you two stayed unmarried and had kids would that add anything of value? Example: how would it affect taxes if you claimed the children as dependents and your partner paid child support? Would that be a double-dip on the tax credit side?
**Taxes are my weakest area. I could be completely off base here, just throwing ideas around.
.-= FinEngr´s last blog ..Can Shrinking Yields Be a Good Sign? =-.
@ admin
What a good feminist you are today :)
@ Investor Junkie
“Let me put the whole post into perspective the our tax code isn’t sexist. If our government legalized marriage for gay couples, would the tax rate be any different for them? NO”
“Pure salary earner to salary earner in a marriage yes you get screwed, but it’s not ’sexist’ as you state.”
1. I’m sure the government would love to collect if same-sex couples could marry.
2. The government itself may or may not be sexist, but the tax law, in this case, IS. The law is based on archaic ways of running a household where only the man earns any money worth speaking of.
3. How is taxing 2 married people who earn 200k combined at ~44.2K vs 2 single people who earn 200k combined at ~21.7k*2= 43.4k “progressive”?
Calculator:
@ admin
At best it’s a marriage tax, that’s it. Still has nothing to do with being sexist.
.-= Investor Junkie´s last blog ..Is Owning a Toyota Risky?? =-.
@david M
Actually, this post comes from the heart… as it bleeds for my friends who are paying 3-25K more in taxes after marriage, as well as equal dual income earners who want to get married. Go ahead and have a debate with Geek about the topic.
The government already dictates so much of what we can and cannot do. To now penalize equal earners because they love and want to marry is not right. We can debate the purpose of marriage some other time.
It is fascinating to read the responses from women compared to the responses of men. So far, I am 100% siding with the women on this one. It’s EASY to say sexism doesn’t exist, if you’re a man, but it very well does. It may be latent, but it does. Today’s example is an illustration of the point.
People need to care, b/c there is a woman in our lives somehow.. be it girlfriend, mother, sister, daughter. To not fight for equality is a damn shame!
.-= admin´s last blog ..Getting Busy This Valentine’s Weekend! (Singles Especially) =-.
@Investor Junkie
Yes, it is the best of both worlds to have a tradition worker and an entrepreneurial roll, I agree.
Regarding, your gay marriage angle, yes the gov’t is sexist 1) for not allowing gay marriage, and 2) for penalizing people who do marry to pay more in taxes. This is another topic that we can discuss at a later date, but not here.
In the meantime: Why is it that the women commenting here are all so much more rational and level headed on average than the men? Geek, for example is a real-time, living person facing government sexism due to her earning a decent living. Increased taxes post marriage shouldn’t inhibit her desire to get married. Why can’t folks accept this?
@ admin
Nope actually we are close in the same income last year, though this year will more than likely make more than her. Previous years she was the bread winner. At least in may case, including my business taxes I think I pay similar or slightly less than she does. It gets really complicated :-(
Honestly we couldn’t live (ok it would make it much harder) just on my income because of the benefits she gets through a large corporation (ie insurance). In fact it would be much easier to live on her salary alone because of the benefits.
Needless to say it’s very advantageous one partner works in the traditional world, while the other owns a business. You get the best of both worlds! In the process helps with the tax issue you describe.
The salary numbers get all funny when one owns a business while the other one does not and jointly file. Plus things that I get run through the business, I may not normally be able to deduct personally I can via the business, plus usually at a lower tax rate.
Pure salary earner to salary earner in a marriage yes you get screwed, but it’s not ‘sexist’ as you state. My example if a gay couple were to marry, who is it being ‘sexist’ to? It still comes back to being progressive and “taxing the rich” for their hard work.
.-= Investor Junkie´s last blog ..Is Owning a Toyota Risky?? =-.
@JB
Yes, I’m ignoring those who save some money post marriage b/c I think that’s just fine and dandy. Why can’t high earning women who marry equally high earning men also enjoy the same benefits of marriage, or at least pay the same, and certainly not more? It’s b/c the government believes men and women are UNEQUAL and someone will be the lesser earner and/or stay at home parent.
@Investor Junkie
You are welcome to call BS any time you want, but the TRUTH will set us all free. People shouldn’t have to play “tricks” when it comes to their own earnings and love. Yes, the government taxation system is progressive, but you have to think when it comes to marriage WHY the taxation system is progressive. The WHY is what we are realizing now.
From your comment, is it safe to assume you make much more than your wife, or your wife is the homemaker? If so, do you think you will feel the same way if she suddenly earned as much as you because of some company she starts, and has to pay relatively more in taxes because of her success?
.-= admin´s last blog ..The Best Super Bowl Commercials for 2010 =-.
@Geek
Geek, you get the GOLDEN SWORD so far for being the one who really gets to the essence of this post. You are experiencing it first hand, and know what I’m talking about. I share in your frustration, and we’ve got to STAND STRONG!
“Why doesn’t the government recognize there are successful, highly paid women who also want to get married as well?
You mean successful, highly paid men?”
No, I mean highly paid women. If the government recognized there are highly successful women, who also desire love and marriage as well, there wouldn’t be higher taxes for married people than single people.
@Cynthia
Well said. The government is full of older men, with their outdated perceptions of women and the home. I wonder if readers from big cities would agree with this post more.
@Little House
Archaic is right. Another level headed comment.
@Money Funk
Hmm, don’t want to imagine what happens if I have to file single but married. All I’ve read is that it’s bad.
TO ALL: Why is it that the women commenting here are all so much more rational and level headed on average than the men? Geek, for example is a real-time, living person facing government sexism due to her earning a decent living. Increased taxes post marriage shouldn’t inhibit her desire to get married. Why can’t folks accept this?
@fredct
Stir up anger? I’M angry already for our sexist tax system. There’s no need to stir anything.
@David @ MBA briefs
Good luck on #3 buddy! Third time is a charm as they say!
@The Genius
I like how you two fight. Good points from both of you.
@FinEngr
The answer to your question is simple. The reason why the government doesn’t spend more time and money to promote marriage is because they are AGAINST marriage.
@Evan
Once your wife starts making as much as you, or more, you will feel it’s sexist. Or, once you start making much much more than your wife, and see why the gov’t has to tax your wife at your higher marginal tax bracket, even though by herself, she is in the lower tax bracket, you will feel the gov’t is sexist.
@Kevin@OutOfYourRut
Maximizing tax revenue by the gov’t is right, and they are blatantly against women once women start making a certain amount of money and decide to get married. Peel away the onion, layer by layer.
“love me long time tax.”
Hahahaha.
.-= Mike´s last blog ..Step by Step Directions on How to Get a Bank Fee or Charge Waived =-.
I think Financial Samarai is having a good laugh over this post.
I’m pretty sure he realized the comments he would get on this post.
He realizes that his example only works if he used the very high salary and mortgages that he used.
Let me put the whole post into perspective the our tax code isn’t sexist. If our government legalized marriage for gay couples, would the tax rate be any different for them? NO
The government just wants more of your money if the household has two high income earners, that’s all. As stated previously, it’s progressive!
.-= Investor Junkie´s last blog ..Is Owning a Toyota Risky?? =-.
Lets not talk like the tax brackets are from the 1930s or even the 20th century. The last major revision of the tax brackets were in 2003, in which the marriage penalty was distinctly reduced (standard deduction was increased to twice single, and bracket penalty was moved up from the 15% area to the upper reaches of the 25% area:
See here:
The reason it wasn’t eliminated entirely wasn’t because George Bush and the Republican congress were sexist – again, the tax bracket don’t give the slightest darn which person is male and which is female – but because otherwise congress would need to either increase tax rates to make up for it, or cut spending… something that hardly any Congress of any stripe can ever agree to do.
I call BS on this post. Don’t take my comment the wrong way as I understand what you are getting at.
While I agree as your income increases tax deductions decrease and it’s not equal for a two income household compared to a single income. This is especially true as you become a very high income earner.
In many cases getting married IS a tax deduction. Now add kids on top of it’s usually better.
The trick is living in a low income and low taxed area (ie Texas) and have a higher than typical salary. Living in a high income and high taxed area (ie San Fran) can decrease your take home income, not increase it.
In addition, just a straight salary you are doomed with a high income. The trick is owning a business, which will legally decrease your taxes. As many more tax deductions decrease next year, owning a business will be one of the few ones left.
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Without researching the history of tax reform, I would surmise that the reason taxes aren’t 2x for married couples is based on antiquated social norms.
Point #1: At a time when most women were tasked/expected to be fully invested in the child rearing process, it probably was never fathomed that there would be 2 full-time working individuals.
Point #2: At a time when women/men married, THEN bought a house, it probably was never fathomed that each individual would have houses going into the marriage initially.
Many articles talk about the financial benefits of marriage, it is a wonder the government doesn’t extend more benefits to promote it.
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This post is ignoring the fact that many people pay less when they get married. Especially when one spouse stays at home and doesn’t make an income.
You could make this argument about various components of the tax code. The tax code is ridiculous, rewarding people for having children (that they may or may not be able to afford) and buy a home (that they may or may not be able to afford) is not based on equality. As a single person without kids and no mortgage, I get no special tax breaks. These are things that never should have garnered a tax deduction in the first place IMO.
“Why doesn’t the government recognize there are successful, highly paid women who also want to get married as well?”
It’s because the government is full of men, and many congressmen and senators are of the older generation, and still believe women can’t make as much as men, and our place should be at home.
People who are commenting that the government ISN’T sexist are either 1) not women, or/and 2) didn’t read the post carefully based on the logic you’ve proposed Sam.
Yes, RAISE the income threshold for married couples to $780K and raise the mortgage deduction to $2 million.
@Admin:
1. Why don’t tax brackets double…
Women didn’t work much when this first went into effect, so this was a tax BREAK back in the day.
2. Million dollar mortgages…
Probably similar to above.
Readers, is the reason why more people aren’t up in arms with government sexism because not many people make enough to get negatively effected?
Yes.
If so, does that make government sexism right?
No. Since the woman is usually earning less, she just gets taxed at a higher rate than otherwise, making the “stay home b/c daycare is expensive and you don’t get paid that much” argument stronger for the sexists in her family too.
Why doesn’t the government recognize there are successful, highly paid women who also want to get married as well?
You mean successful, highly paid men?
What is your experience with your tax liability after marriage? Have you ever considered not getting married due to an increased tax liability?
I think I answered this before, but I’m still ‘single’, and we’re in the low end of the marriage tax pain.
Because my Wife makes less than I do I actually got some of my deductions back! When I was single I couldn’t deduct my student loan interest in particular, and then boom June 14th came and I was able to!
I am going to have to agree with some of the others above, its not sexist, but as we talked about before, No One Feels bad for High INcome Wage Earners
https://www.myjourneytomillions.com/articles/feel-remorse-high-earners-income-taxes/
.-= Evan´s last blog ..Why Does Everyone Hate on Financial Planners? Defending Financial Advisors =-.
The tax code isn’t sexist, it’s just… progressive. What we call prejudice against rich people, others call a Constitutional amendment.
Mortgages aren’t the only deductions that are phased out. If you really want to talk fairness, we should discuss the student loan deduction being capped at $2,500/yr, not to mention income limits where the deduction phases out.
Also, every deduction limit I’ve ever seen is one dollar amount for single people, and twice that amount for married people.
Archaic? Probaby. But sexist? Nah. It cuts the exact same way for men & women. If a married couple gets penalized, it’s because they were successful, not because the gov’t is sexist.
The sexist angle is interesting of course, but I don’t think it has anything to do with why couples pay more tax than singles.
It’s all about maximizing tax revenues. One of the best, least challenged ways to do that is to zero in on high earning, dual income couples. There’s no group in Congress lined up to protect this group either.
One more point to make here…there are so many deductions and tax credits in the IRS code that no one really knows what bracket they’re really in. This is especially true for families with children. The deductions and credits mask the brackets; only when your income is above a certain threshhold do the deductions and credits begin to disappear, so high earners get to see the real tax code in all of it’s naked splendor–and it ain’t pretty!
.-= Kevin@OutOfYourRut´s last blog ..Good Retirement Planning Should Include a Low Cost/Debt Free Lifestyle =-.
P.S. Lets not forget about filing separately. While there are disadvantages to doing so, you can always chose to file separately and be taxed as if you were two single people.
@ The Genius
Let us know when you get married and THEN do your taxes and come back to us.
I’ll be glad to. My opinion is not going to change out of pure self-interest.
Actually, come to think of it, “for tax purposes” I already am married, so my tax is already being withheld from my dual-income married rate. And I still haven’t changed my opinion. Shocking that I’m not a self-interested hyprocrit, huh?
Subsidizing Suzie’s 2nd home? Huh? This is exactly the sexism this post points out which YOU contain!
Except I didn’t say “subsidizing Suzie’s 2nd home”. You deceptively misquoted me. I said “subsidizing Suzie’s and Johnny’s 2nd home”.
Again, gender marries absolutely zero to the tax code. It doesn’t matter which gender is doing what, who’s working or not, who’s making more or less. You can argue it discriminates on dual-income couples, and you’d be right. You can argue many things are outdated and you’d be right. But gender plays zero role. It is gender-blind in the most literal way possible.
@ fredct
Let us know when you get married and THEN do your taxes and come back to us. Again, all you write is conjecture.
Subsidizing Suzie’s 2nd home? Huh? This is exactly the sexism this post points out which YOU contain!
In the example they each had a $1mil mortgage. If they are both living together, why are you so narrow minded to assume that one must sell the other and live in another’s existing house? Maybe they want to combine (that’s what marriage is) and live in a $2mil+ mortgage house. Duh.
So tell us again, why don’t you think Suzie is allowed to earn an equal large some of money and be successful? Hope you treat your future bride with respect!
@ The Genius
Just look at fredct’s comment. Probably a single guy who we already know is in the 25-28% tax bracket spouting off again! Haha.
Way to not pay attention. I said in my comment I am getting married and I will be dinged on my state taxes. It will effect me. Try again.
Agree w/@ David @ MBA briefs .. somewhat. I didn’t see the point in getting married anyway, but this makes it even sillier for me.
The tax code IS sexist – it is based on the assumption that married people will not make twice as much as single people because *someone* isn’t going to work. That someone was intended to be the female in the relationship.
I earn slightly more than my guy (7 years running, no marriage). However he may start up his own business sometime in the future, and then we’d probably get married for the lowered taxes!
And exactly this has happened. I’m a married Geek now.
Very good points. The reason why the government is sexist is because…. look at the government! It’s majority male!
And yes, the reason why a lot of people/women don’t care against being discriminated against is because they aren’t making enough to get dinged. Equal high earners get marginally screwed by the system as you mention in your example, and that’s just not right.
It’s OK to increase taxes and penalize others, so long as it doesn’t affect you. Just look at fredct’s comment. Probably a single guy who we already know is in the 25-28% tax bracket spouting off again! Haha.
Not much of a comment on that other than, that i’m married and tax time is not fun.
.-= Mr. Finance´s last blog ..Saving Like A Robot =-.
I agree that the tax laws are archaic, they are based on the premise that one spouse will make more of the money than the other (I’ll assume that they think it’s the man and agree with you that this is sexist!). I’m not a tax law expert either, but I’ll also assume that these laws or at least the way they work haven’t been updated to more current circumstances: usually both spouses work and may make similar wages.
As for if I pay more or less due to marriage, it’s hard to say. My spouse and I don’t make anywhere near your example, we also use our business to write off some of our expenses, so in the end we probably aren’t being dinged for being married. It’s a wash.
.-= Little House´s last blog ..More Coupon Savings! =-.
…is the reason why more people aren’t up in arms with government sexism because not many people make enough to get negatively effected? If so, does that make government sexism right? That’s a really good question. You’ve probably hit on one of the big reasons, but it could also be due to the fact most of us don’t have the knowledge, energy, or time to do anything about it. I don’t even know if I would consider it sexism as much as it is an affront to the institution of marriage. Where’s the incentive to get married if you and your wife are both successful and doing well as single people?
Why doesn’t the government recognize there are successful, highly paid women who also want to get married as well? I think you’ve already done a good job of answering that question – the tax code is outdated and not keeping up with the times. The government would rather add to an already weighty tome than make it more applicable to our society and culture.
What is your experience with your tax liability after marriage? Have you ever considered not getting married due to an increased tax liability? Unfortunately none of my ex’s made enough money to worry about increased tax liability. Wish me luck with Number 3 :-)
.-= David @ MBA briefs´s last blog ..How long are you going to live? =-.
You have made a good POINT. Now, why don’t you run the numbers with salaries that AVERAGE people make.
Most people now pay less in taxes than they would if they were not married. I certainly know that I do.
Yup, some people pay more, some people pay less. I’m getting married this year, and while it won’t effect our federal taxes much, our state actually does have a distinct (although small-ish) marriage penalty built into the tax brackets that we will hit. It’s unfortunate, but just one of many things that various people may not like.
Calling the whole things ‘sexist’ however, is pretty ridiculous. And clearly just designed to stir up anger/play to people’s emotions. The tax law makes no distinction between genders, it doesn’t matter which person is doing what. You can call it anti-marriage in certain cases, if you’d like, but tax law is completely gender-blind.
So go ahead and keep up your crusade about the persecution of high-income earners, but drop the phony-sexism outrage.
P.S. I’m not sure why my tax dollars should subsidize Susie’s and Johnny’s vacation home, or summer home, or any 2nd home for a married couple. But that’s just my opinion.
It’s also very common for people to pay less taxes when they get married. It just depends on how much you each make, and the difference between the two spouses’ incomes.
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