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?
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.
Financial Samurai says
Congrats! Check out this post for more on the marriage penalty tax and credit:
this is sick that is very sexsit towards people.