Wednesday, January 2, 2013

The Marriage Penalty is Back -- Except for Same Sex Couples

With the fiscal cliff deal, the Marriage Penalty is back in a big way.  Two single people living together earning $400,000 each are subject to a top rate of 35% on the combined $800,000 of income.  Two married people earning $400,000 each are subject to a top rate of 35% on the first $450,000 of income and a 39.6% rate on the next $350,000 of income.  Cost of that marriage certificate?  $16,100.

If Congress is really in favor of encouraging the "defense of marriage", shouldn't they be more worried about penalizing people for getting married than they are about preventing loving same sex couples from getting married?

Side note:  This tax structure is a bonus for the stay-at-home spouse.  Marrying a spouse with a job brings a tax penalty; marrying a spouse who stays at home brings a tax bonus.

As much as I think the "Defense of Marriage Act" is wrong, it does defend same-sex marriage in a way that opposite-sex marriage is not defended:  A same sex couple married yesterday in Maryland and earning $400,000 each pays $16,100 LESS in tax than an opposite couple married yesterday in Maryland -- because federal law does not recognize same sex marriage.  So they get all of the benefits of marriage under state law without paying the substantial penalty for being married under federal tax law.  Not a result the authors of DOMA intended, but perhaps an accidental reparations  for the discrimination DOMA brings in other areas.