One of the provisions of the Bush tax plan was to eliminate the so-called marriage penalty … the tax rules and rates that had a husband & wife pay more income taxes if they were married than if they stayed single.
I’ve been bemused that in all of the chatter about Obama’s obsession with jacking rates, I haven’t heard anything about the resurrection of the marriage penalty … at least for evil rich people.
Here’s the rub: Obama’s tax hikes apply to individuals earning more than $200,000 and families earning more than $250,000.
Let’s do a simple example: Sally and Bob – single and living together – each earn $200,000.
So, Obama doesn’t touch their wallets.
But, if Sally & Bob get married … then BAM !
Their income taxes go up about $6,000.
Huh?
Of their $400,000 combined income, the first $250,000 is immunized from Obama’s tax hikes.
But, the $150,000 over the $250,000 ceiling on fair earnings … gets hit with the roughly 4% increase in the upper bracket marginal tax rates (from 35% to 39.6%).
Simple arithmetic: $150,000 times 4% = $6,000.
Back to the key point: tying the knot costs Bob & Sally about $6,000 annually in added taxes.
On average, that accumulates to about $250,000 in added taxes over their expected lifetimes … just because they got married.
Is that fair?
Note: polls consistently say that singles lean more towards Obama than do married folks.
It’s called economic rationality.
The Homa Files 