After the 2000 Elections President George W. Bush and the Republicans in Congress with substantial help from Democrats succeeded in passing a tax relief package that included  "Marriage Penalty" tax relief. 

Previously the House and Senate had  passed the Marriage Tax Penalty Relief Reconciliation Act of 2000 in July, 2000. President Clinton vetoed it. Since tax cuts were a priority for President Bush and this cut had bipartisan support it was likely to pass sometime in 2001. 

Here is a selection of articles and documents that discuss and explain the issue taken from databases in the Business Library. 

References

ABI/INFORM
CCH Internet Tax Research Network
CHECKPOINT
Dow Jones Interactive
EBSCOhost Web
Lexis-Nexis
Quicken.com

What is the Marriage Penalty?

"Are you married? Do both you and your spouse work? Do each of you earn over $21,950 annually? If you answered yes to these questions, there is a good chance that you are paying more income tax filing as married or married filing separately than you would if both of you filed as single taxpayers. That's why it's called the marriage penalty.

"Our current tax rate system was created in the 1950s, when the percentage of married households with two incomes was much lower than the current 78%. Because our tax tables haven’t kept pace with the current reality of dual-income families, dual-income married couples pay more income tax than if they remained single. The disparity begins to kick in when income levels hit between $43,850 and $52,500."

[Source: "What is the 'Marriage Penalty'?" Quicken.com]

Postponed Relief

"After facing intense criticism for many years, Congress and the White House finally did take steps this year to ease the marriage penalty. Part of the income-tax rate reductions in the law enacted in June effectively ease the marriage penalty slightly for this year. But the most significant relief won't begin until the year 2005, and those steps won't be phased in fully for several years after that, says Mr. Nissenbaum. That's so far from now that it wouldn't be prudent to count on any of that relief.

Just for the record, the new law provides a higher standard deduction and a widening of the 15% tax bracket for married couples, both starting in 2005 and phasing in gradually over several years, according to a new Ernst & Young book. After 2010, the entire new law "sunsets," which means it expires and the relief disappears."

[Source: "Don't Expect to Receive Much Relief from 'Marriage Penalty' Right Away." By Tom Herman. Column: Tom Herman on Taxes. The Wall Street Journal October 30, 2001. In Dow Jones Interactive.]

Tax Cut Memorandum

"The across-the-board income tax cut proposed by President-elect Bush should be the first priority for Congress and be retroactive to Jan. 1, House Majority Leader Richard K. Armey (R-Tex.) said yesterday.

In a memo to GOP House members, Armey said the income tax cut should be paired with expansion of 401(k) plans and IRAs to simultaneously jolt the economy and improve savings. Other Republican leaders want to focus first on a bite-size repeal of estate taxes and relief from the income tax marriage penalty, a tactic with significant Democratic backing.

Senate Minority Leader Thomas A. Daschle (D-S.D.) said Armey's proposal runs counter to GOP promises to reach out for Democratic support."

["Washington in Brief. Washington Post. January 10, 2001. p. A5. In Lexis-Nexis]

The Republicans' Plan

"The two chambers' [House and Senate] versions both aim to eliminate a quirk of the tax code known as the "marriage penalty".  It causes some couples to pay more in income taxes when they marry than they would if they remained single. But both bills also would help those families who already earn a "bonus" from the code for marrying. In general, two-earner couples with similar incomes are hit by penalties that average $1,141, while one-earner couples often receive bonuses averaging $1,274. Eleven percent of couples see no tax difference."

[Source: "GOP Leaders' Tax Strategy Streamlines the Path for Marriage Penalty Relief Bill." CQ Weekly 6/17/2000 vol. 28, issue 25 p. 1450. In EBSCOhost Web]

The Liberal View

"How about eradicating the marriage penalty? Who, after all, is against marriage? But getting rid of the marriage penalty isn't so easy. For one thing, not all married couples pay a penalty (that is, not all married couples pay higher rates than they would pay as single taxpayers). About half actually get a marriage bonus. The reason stems from the arithmetic of a progressive tax system. If you want to tax the affluent more than the nonaffluent, and if you want to treat taxpayers of equal means the same way, somebody has to pay a penalty--either married people or single people. The current system represents a rough balance, arrived at after the last round of marriage tax reform in 1969. (The reforms were passed because the old system penalized widows.) You can tinker with the balance so that single taxpayers pay more and married taxpayers pay less. But that just moves the penalty; it doesn't get rid of it. If you want to change that fact, you have to do more than change the tax code; you have to repeal the laws of mathematics."

[Source: "Death and Taxes." The New Republic. Jan 1, 2001. In Lexis-Nexis.]

A Conservative View

"The rise in dual-income couples likely explains the popularity of repealing the so-called marriage penalty. It may also explain why some polls show that voters are unmoved by the highly publicized charges that Governor George W Bush's tax cut plan would deliver most of its benefits to the "richest" taxpayers. The fact is, that many of these dual-income couples have actually entered tax brackets that were once reserved only for the "rich."

The latest Internal Revenue Service data shows that the threshold for entering the top 25 percent of all taxpayers-who pay about 83 percent of all income taxes-is $50,607. Based on Bureau of Labor Statistics surveys of occupational earnings, an average-paid kindergarten teacher married to a entry-level firefighter would easily find themselves within the top 25 percent of taxpayers."

[Source: "Tax Law Meets Moore's Law." By Scott A. Hodge. Tax Foundation's Tax Features 44 (9) p. 7. In ABI/INFORM.]

Senate Bill
(July 2000)

"Senate Finance Committee Once Again Okays Marriage Penalty Relief Bill"

RIA Observation: The bill goes beyond marriage penalty relief. It would enhance the marriage "bonus" currently enjoyed by some married taxpayers claiming personal credits.

[Source: Federal Taxes Weekly Newsletter. 46(28) July 6, 2000. RIA. In CHECKPOINT.]

Taxing Marriage?

"The marriage tax penalty is pretty simple to understand. It forces married individuals to pay more in taxes than they would have to pay if they stayed single. So we should ask ourselves, is there any merit to taxing marriage? Is there an acceptable rationale to increasing taxes on individuals based solely on their marital status? Do we want the government to send a message that "You will pay a steep fee to get married, but you can avoid this financial burden if you just stay single and live with that significant other?"

[Source: Republican Representative Ms. Pryce (Ohio). House Debate on Conference Report for Marriage Tax Penalty Relief Reconciliation Act of 2000, HR 4810, on July 20, 2000. In CCH Internet Tax Research Network]

Bill Weighs In

"While I strongly support targeted marriage penalty relief, the marriage penalty bill promoted by Republicans in Congress is one part of a costly, poorly targeted, and regressive tax plan. This plan would risk our fiscal discipline and continued prosperity while giving more benefits to the top one percent of taxpayers than to the bottom 80 percent of all Americans. At the same time, the Congress has ignored tax cuts I have proposed for college tuition, long-term care, savings, and child care. This latest bill just passed by the Congress is even more costly than the earlier versions passed by the House and Senate. In the interest of fiscal responsibility, I will veto this and any subsequent legislation that threatens our ability to pay down the debt and strengthen Medicare and Social Security."

By William J. Clinton. July 22, 2000.

[Source: "Statement on Marriage Penalty Tax Legislation." Weekly Compilation of Presidential Documents. 7/31/2000 vol. 36, no. 30, p. 1665. In EBSCOhost Web]