[Congressional Record Volume 144, Number 31 (Thursday, March 19, 1998)]
[Extensions of Remarks]
[Pages E429-E430]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 ANNOUNCING THE INTRODUCTION OF LEGISLATION TO REDUCE THE MARRIAGE TAX 
                         PENALTY MARCH 19, 1998

                                 ______
                                 

                           HON. JIM McDERMOTT

                             of washington

                    in the house of representatives

                        Thursday, March 19, 1998

  Mr. McDERMOTT. Mr. Speaker, today Representative Kleczka and I are 
introducing legislation to reduce the marriage tax penalty for most 
Americans.
  The marriage penalty reduction legislation I am introducing with 
Representative Kleczka (D-WI) simply would increase the standard 
deduction for joint filers so that it equals twice that of single 
filers. The standard deduction in tax year 1997 is $6,900 for joint 
returns and $4,150 for single returns. Two singles get a combined 
standard deduction of $8,300 compared to $6,900 for a couple--thus 
penalizing the couple for getting married. In my view, increasing the 
standard deduction for joint filers is the simplest, fairest, easiest, 
and most fiscally responsible way in which to address the structural 
marriage tax penalties within the code.
  As you can see from the attached charts to be inserted into the 
record, the fix I proposed last Congress would have eliminated 
virtually

[[Page E430]]

all marriage penalties, and, it even provides a modest bonus for one-
earner families.
  The McDermott-Kleczka plan is progressive: Since most high-income 
taxpayers do not use the standard deduction, the Congressional Budget 
Office (CBO) has found that only 36% of the benefits from this type of 
change goes to taxpayers earning $50,000 or more--meaning--64% of the 
benefits go to couples earning less than $50,000/year. CBO found that 
other leading repeal proposals direct at least 65% of the benefits to 
those taxpayers earning more than $50,000/year.
  The McDermott-Kleczka plan is affordable: CBO estimates that 
increasing the standard deduction for joint filers costs roughly $4 
billion/year. Estimates prepared by the Joint Committee on Taxation 
verify this finding. Meanwhile, CBO found other leading repeal 
proposals cost as much as $29 billion/year.
  The McDermott-Kleczka plan is family friendly: In addition to 
eliminating the marriage penalty, the standard deduction fix slightly 
increases the marriage bonus (see charts)--making it more affordable 
for the spouses of single earners who prefer to have a parent stay at 
home to care for their child or children. This bonus provides a small 
incentive without creating a new program and is not excessive so that 
it overly penalizes individuals for being unmarried.
  The McDermott-Kleczka plan is simple compared to the problems raised 
by other repeal proposals which will force taxpayers to do their taxes 
twice in order to figure out which is the best choice for their family.
  In 1997, repeal of the marriage penalty was pushed aside by the 
Republican Majority. Inexplicably, in the W&M Committee, where roughly 
20 members signed the Contract with America my amendment failed. Most 
likely, the Majority preferred cutting taxes for corporations (not 
mentioned in their contract). In my view, a tactical decision was made 
that it was more important to provide tax cuts preferred by the 
business community (such as reducing the corporate AMT and corporate 
capital gains tax cuts) than it was to address the marriage penalty.
  In fact, no legislation was introduced during the 105th Congress to 
repeal the marriage penalty until after the Budget Agreement passed 
Congress last August.
  Now that repeal of the marriage penalty is finally being addressed 
and if it sincerely is a priority of this Congress, I would urge my 
colleagues to take a second look at the McDermott-Kleczka proposal 
before they rush to advocate an alternative.

  STRUCTURAL MARRIAGE TAX PENALTIES AND BONUSES IN 1997 DOLLAR AND PERCENTAGE AMOUNTS BY WHICH JOINT INCOME TAX 
                                     LIABILITIES EXCEED THOSE OF TWO SINGLES                                    
                                    [Marriage tax bonus shown in parenthesis]                                   
----------------------------------------------------------------------------------------------------------------
                                Joint          50/50             60/40             70/30             100/0      
                                income  ------------------------------------------------------------------------
   Income levels  ($000s)        tax                                                                            
                              liability   Amount  Percent   Amount  Percent   Amount  Percent   Amount   Percent
----------------------------------------------------------------------------------------------------------------
20..........................    $1,170      $210       22     $345       42     $378       48    ($810)     (41)
25..........................     1,920       210       12      210       12      384       25     (810)     (30)
30..........................     2,670       210        9      210        9      269       11     (810)     (23)
35..........................     3,420       210        7      210        7      210        7   (1,272)     (27)
40..........................     4,170       210        5      210        5      210        5   (1,922)     (32)
50..........................     5,670       210        4      210        4    (252)      (4)   (3,222)     (36)
60..........................     8,028     1,068       15    1,476        6    (304)      (4)   (3,664)     (31)
75..........................    12,228     1,444       13    1,256       11      281        2   (3,918)     (24)
100.........................    19,228     1,444        8    1,444        8    1,152        6   (4,668)    (19) 
----------------------------------------------------------------------------------------------------------------
Source: CRS.                                                                                                    


 McDERMOTT-KLECZKA LEGISLATION CHANGES THE STRUCTURAL MARRIAGE TAX PENALTIES AND BONUSES: DOLLAR AND PERCENTAGE 
                    AMOUNTS BY WHICH JOINT INCOME TAX LIABILITIES EXCEED THOSE OF TWO SINGLES                   
                                    [Marriage tax bonus shown in parenthesis]                                   
----------------------------------------------------------------------------------------------------------------
                                Joint          50/50             60/40             70/30             100/0      
                                income  ------------------------------------------------------------------------
   Income levels  ($000s)        tax                                                                            
                              liability   Amount  Percent   Amount  Percent   Amount  Percent   Amount   Percent
----------------------------------------------------------------------------------------------------------------
20..........................      $960   .......  .......     $135       16     $108       13  ($1,020)     (52)
25..........................     1,710   .......  .......  .......  .......      174       11   (1,020)     (37)
30..........................     2,460   .......  .......  .......  .......       59        2   (1,020)     (29)
35..........................     3,210   .......  .......  .......  .......  .......  .......   (1,482)     (32)
40..........................     3,960   .......  .......  .......  .......  .......  .......   (2,132)     (35)
50..........................     5,460   .......  .......  .......  .......    (462)      (8)   (3,432)     (39)
60..........................     7,636      $676       10       84        1    (696)      (8)   (4,058)     (35)
75..........................    11,836     1,052       10      864        8    (111)      (1)   (4,310)     (27)
100.........................    18,836     1,052        6    1,052        6      760        4   (5,060)    (21) 
----------------------------------------------------------------------------------------------------------------
Source: CRS.                                                                                                    



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