[Congressional Record (Bound Edition), Volume 146 (2000), Part 1]
[Senate]
[Pages 601-605]
[From the U.S. Government Publishing Office, www.gpo.gov]



                        THE MARRIAGE TAX PENALTY

  Mrs. HUTCHISON. Mr. President, today, for the next 30 minutes, we are 
going to talk about a subject that I think perhaps is the highest 
priority we have in Congress, and that is to correct a terrible 
inequity in the tax laws of our country--a penalty that we exact on 
married couples.
  You may ask, penalty on married couples? Are you serious? Well, the 
fact is, yes, I am serious. The Tax Code, over the years, has not kept 
up with what has happened in our country demographically, which is that 
over 64 percent of the married couples in this country today have two 
incomes; both spouses work outside the home, in addition to working 
inside the home. The Tax Code has not caught up to treating them fairly 
when they get married. In fact, what has happened is that we have not 
increased the standard deduction to be double for a two-income-earning 
couple; nor have we expanded the tax brackets for a two-income-earning 
couple. So if you take the example of a schoolteacher and a sheriff's 
deputy or a policeman, one of whom makes $27,000 a year, the other of 
whom makes $31,000 a year, they will pay an extra $717 in taxes just 
because they got married.
  Now, generally, this is a young couple who is getting married, who 
need the extra money now more than ever. It is a couple who want to buy 
their first home, want to have their first child, want to buy the extra 
car they will need to fulfill their responsibilities. But, in fact, we 
take money away from their ability to fulfill their hopes and dreams.
  Americans should not have to choose between love and money and, most 
certainly, the Government should not encourage this. We need to have 
policies that encourage marriage, encourage families.
  I read an interesting article recently pointing out that marriage is 
one of the key factors in determining poverty. One in three poor 
families is headed by an unmarried parent. In contrast, 1 in 20 married 
couples are considered to be in poverty. So being married is one of the 
factors in people being able to lift themselves out of poverty. So, of 
course, knowing this, we should be even more attuned to this inequity.
  The Congressional Budget Office estimated that 21 million married 
couples are paying this penalty; that is, 42 million Americans are 
paying a higher tax because they are married. This tax hits hardest 
those couples with two incomes. Two-thirds of those married couples, 
that have two incomes, will pay a tax penalty simply for being married. 
These couples are paying an average of $1,400 more; that is $29 billion 
in taxes being sent to Washington--money which our Treasury should not 
be receiving--$29 billion in money just because people are married and 
not single.
  Why are many people working? In many instances, it is because of the 
incredibly high tax burden. We have the highest tax burden since World 
War II on families in this country. Nearly 40 percent of the income 
families earn goes straight to the tax collector. How can we solve this 
problem? We can start by increasing the standard deduction for married 
couples from $7,200 to $8,600. This would make it exactly double what 
is available to single taxpayers.
  Senator Ashcroft, Senator Brownback, and myself have introduced 
legislation to do exactly this. That should be our very first step. In 
fact, that is exactly what the Congress passed last year and sent to 
the President, but he vetoed it. It was part of a balanced tax package 
that would have put $790 billion back in the pockets of the taxpayers 
of this country. But the President chose to veto that legislation.
  This same legislation was introduced this week by Congressman Archer, 
chairman of the Ways and Means Committee on the House side. His 
legislation would increase the standard deduction in 2001 for married 
couples to twice the rate applicable to singles.
  The second thing we can do is to widen the tax bracket for married 
couples so that it is twice the size of the corresponding bracket for 
singles.
  Let me give you an example.
  A married couple is taxed at the 15-percent rate up to $43,350 in 
income. But if two single people make the same salary, they could be 
taxed at 15 percent on income up to $50,700. That means $7,350 is taxed 
just because people are married.
  We need to change this policy. Senator Ashcroft, Senator Brownback, 
and myself have introduced a bill that would adjust every bracket so 
that married couples would not pay a penalty. They would not go into 
higher tax brackets just because they are married. If one person makes 
$20,000 a year, and another makes $55,000 a year, they should pay taxes 
on what they earned, not putting it together and penalizing them by 
making the entire $20,000 that is earned by one spouse to be taxed at 
the higher 28-percent bracket of the other spouse.
  This week, Congressman Archer introduced legislation that would widen 
the 15-percent bracket. This is clearly the right direction. But I also 
want to make sure we don't forget those people in the 28-percent 
bracket. They get hit hard by the marriage penalty as well. The people 
who move up to the 28-percent bracket when they are earning the

[[Page 602]]

15-percent bracket salaries should not pay that penalty. That is what 
we are trying to correct.
  Senator Ashcroft, Senator Brownback, and I have introduced this 
legislation for 3 straight years. We have tried to get the President to 
sign tax relief for our married taxpayers.
  Yesterday, the House Ways and Means Committee reported legislation 
out, and it will be considered on the House floor next week. This is a 
great step forward. It is a step in the right direction. I commend 
Chairman Archer for acting so quickly.
  I hope we can pass a balanced tax bill this year. I hope we can make 
the linchpin of that bill the marriage tax penalty relief.
  But that is not the only tax relief that our people in this country 
deserve, and the working families deserve. They also deserve tax 
credits for education expenses, and tax credits for caring for elderly 
parents, which is becoming a bigger problem--a bigger issue--as our 
population is aging.
  We want to make sure small businesses and farmers and ranches don't 
have to be broken up because of the inheritance tax.
  We want to try to make sure we have capital gains tax reductions so 
that people will be encouraged to invest in our country to help spur 
our economy forward.
  We have a lot of wage earners who will be coming into our economic 
system. We want to make sure we can absorb them. The way we can do this 
is by creating new jobs. The way you create new jobs is to invest in 
capital.
  I want a balanced, good tax cut bill. I want to say very clearly that 
we are not talking about taking the entire surplus and giving it back 
to the taxpayers of our country. We have bifurcated our surplus. We 
have said that trillion dollar plus in surplus funds that belongs to 
Social Security is going to stay in Social Security, so that will 
always be there. It will be part of a trust fund, and Social Security 
will be safe forever.
  What we are talking about is an income tax withholding surplus. This 
is the surplus that people have sent to Washington in income taxes--not 
Social Security taxes. We are talking about taking approximately one-
third of the income tax withholding surplus and giving it back to the 
people who sent it to Washington because it is very clear that if we 
don't give it back to the people who sent too much, it will sit here 
and it will eventually go away. There is nothing like the creativity of 
the Federal Government when it comes to spending more money.
  Mr. President, we want to give people the bonus they have sent to the 
Federal Government back. We want them to make the decisions for their 
children about how they are going to spend the money they earned that 
belongs to them. That is the bonus they deserve.
  We are going to make marriage tax penalty relief the linchpin of our 
balanced tax cut plan, and we are going to put in capital gains tax 
relief and inheritance tax relief and relief for people who are sending 
their children to college, or perhaps to a private school that has a 
huge tuition fee. That is very difficult for the family to absorb.
  Sometimes when I talk to my friends and people who I meet in airports 
and in cities I visit, the second spouse is working for education 
expenses for their children, or for the expense of caring for an 
elderly parent. We want to help them.
  I think we can get a balanced tax cut for the working people of this 
country that will give them the relief they deserve because they sent 
more money to Washington than we need for the services we must cover.
  I am very proud that I have two cosponsors who have worked so 
diligently with me to try to keep this issue in the forefront of issues 
the Senate will address. Senator Ashcroft from Missouri and Senator 
Brownback from Kansas have been cosponsors of my legislation every time 
we have tried to push it through. Last year, we won. But the President 
said no. We are coming back until we win this for the married couples 
of this country so they get the money they earned in their pocketbooks 
to decide what is best for their families--not somebody in Washington, 
DC, they have never met making that decision for them.
  I am proud Senator Brownback is here to talk about how this affects 
families in Kansas, his home State. And later I am hoping Senator 
Ashcroft will be able to also come and talk about the legislation we 
have tried so hard to push through, and which I hope this year will be 
the one that we see the victory for the hard-working people of our 
country.
  Thank you, Mr. President.
  The PRESIDING OFFICER. The Senator from Kansas.
  Mr. BROWNBACK. Mr. President, thank you.
  Mr. President, I am delighted to join my colleague from Texas, 
Senator Hutchison, in this effort yet again. We are going to keep 
pushing this ball up the hill until we get it over. I think this is the 
year we will get that done--to finally do away with this marriage 
penalty that impacts nearly 21 million American families in a very 
adverse and a terrible way--and an awful signal it sends to the married 
couples: Well, if you are going to get married, that is fine, but we 
are going to tax you for it.
  I think if there is one thing we ought to try to figure out, it is 
how not to tax the institution of marriage, which is in so much 
trouble. And there is so much pressure in this country already. The 
last thing it needs is more pressure by the taxation system, the Tax 
Code.
  This is the year for us to be able to get this done.
  I hope at the end of the day we can put together the marriage penalty 
and the estate tax, which is another family tax--particularly in my 
State with family farmers and small businesses--and pass a family tax 
cut bill of those two items, send it through, pass it by the House, and 
put it on the President's desk and ask him: Mr. President, please sign 
this on behalf of the working families of this country to be able to 
maintain these businesses, farms, and these marriages--that all of us 
ought to be strongly supporting and working with.
  It is interesting that the marriage penalty currently affects almost 
50 percent of America's families. Fifty percent of America's families 
are impacted negatively by the marriage penalty today. On average--this 
is an old figure. People have heard this one but it is true, and it is 
so stark--they pay an additional $1,400 in taxes. You have 50 percent 
of married couples in America impacted by this tax and on average 
paying $1,400 a year more for the pleasure and the privilege in America 
to be married. It is a terrible signal and bad policy. This is the year 
to do away with it.
  It is critically important that during this second session of the 
106th Congress we take the steps finally to eliminate the marriage 
penalty and alleviate its impact on our working families in this 
country.
  I applaud the work of Chairman Archer over in the House in advance of 
his proposal to double the standard deduction and widen the 15-percent 
bracket and to adjust the earned-income tax credit in order to 
alleviate the impact of the marriage penalty for America's working 
families. His proposal is an important first step in our effort to rid 
our Tax Code of this onerous penalty to our families.
  The Congressional Budget Office has announced that the expected on-
budget surplus--I want to make this clear; it is the on-budget surplus; 
it is not Social Security--for this fiscal year is $233 billion. 
Clearly, we have the funds available on budget to do this tax cut and 
to start it this year. We need to begin by making an investment in 
America's families. Using the on-budget surplus to rid the Tax Code of 
this unfair tax is one way to make such an investment. We clearly have 
the funds to do this for both the marriage penalty and the estate tax, 
starting this year and phasing that out over a period of 5 years.
  The Government should not use the coercive power of the Tax Code to 
erode the foundation of our society--working families. We should quit 
incentivizing that erosion resulting from this taxation. Normally in 
the Tax Code we try to encourage work; we try to encourage families; we 
try to encourage good things. Yet these are two

[[Page 603]]

areas where we are discouraging two of our greatest things. One is the 
creation of families--good, strong, healthy families that are 
absolutely critical for vibrant societies. The second is working 
families, so they do not have what they labor for stolen from them by 
the taxation system upon death, so they can pass it on to their heirs, 
so they can hold the farm together.
  Some years ago I was an extension specialist for Kansas State 
University, and I worked with farm couples who were facing two facts of 
life at that point in time. One I was hoping we could get rid of. One 
was that they were all going to die. The second was they were very 
fearful they would have to break the farm up, rather than being able to 
pass it on to a son or daughter to farm as an intact unit; they were 
going to have to break it up to pay a portion of the estate taxes.
  These were good, hard-working people who worked all of their lives. 
Because they were frugal and saved and poured the money back into the 
farm, bought farmland, bought equipment, didn't go out and live 
luxuriously and take lots of vacations--they stayed there and worked 
and saved, all of which are laudable things for which we should be 
applauding them--here were people I was working with, couple after 
couple, saying: We just really want to have our son be able to farm, or 
our daughter and son-in-law be able to farm, but if we break this farm 
up they are not going to be able to have an economical-size unit. They 
are going to have to work in town and subsidize the farm because 
farming is a very capital intensive operation; it takes a lot of 
capital and there is very little return on the investment. We are 
afraid we will have to break the farm up to pay the estate taxes, so 
our son or daughter will not be able to farm.
  They worked hard and saved and we are going to tax them so they have 
to break up the farm.
  I worked with a whole bunch of other family farmers who said they 
would organize around this estate tax. They would go and work setting 
up a trust, a limited partnership, starting a gifting program here. So 
we have organized five different units to be able to break the assets 
up so they could get it to the next generation with a minimal amount of 
tax.
  That is a very uneconomical thing to do. Lawyers make money; 
accountants make money doing that. For farming, it is a bad thing to do 
because you are breaking your economical unit up into five and trying 
to figure it out, focusing so much on avoiding taxes rather than the 
profitability of the farm. It is ridiculous but it is the policy of the 
United States.
  We now have people basically paying as much to get around paying 
estate taxes as they pay in estate taxes. But that is only the 
apparent, on-the-surface costs. It says nothing about the economic 
cost--what happens to that farm and small business by focusing so much 
time on tax reduction rather than how do I run this business. How do I 
try to remain profitable when we have wheat prices the way they are 
today? Instead, I am focusing on how do I hold my capital together.
  It is a very counterproductive tax. We have the opportunity, the 
resources, the wherewithal, and the will this year to do two things: 
eliminate the marriage penalty and eliminate the estate tax. We should 
put them together as a family tax cut package and get it done. It sends 
good signals to our families; they need a good signal. Marriage in 
America has enough difficulty without the penalty from the Federal 
Government.
  I wish to give you a statistic from Rutgers University, a study they 
did about marriage being in the state of decline it is today. From 1960 
to 1996, the annual number of marriages per 1,000 adult women declined 
by almost 43 percent, a precipitous falloff in the number of people 
getting married in a period of about 36 years. At the same time that 
fewer adults are getting married, far more young adults are cohabiting. 
In fact, between 1960 and 1998, virtually the same period, the number 
of unwed cohabiting couples increased by 1,000 percent. We gave them a 
tax subsidy for doing that. We taxed the married people. Is that the 
proper signal for Government to send?
  When marriage as an institution breaks down, children suffer. The 
past few decades have seen a huge increase in out-of-wedlock births--we 
are at nearly 30 percent of our population born to single mothers--and 
divorce, the combination of which has substantially undermined the 
well-being of children in virtually all areas of life: physical and 
psychological health, socialization, academic achievement, and even in 
the likelihood of suffering physical abuse.
  That is not to say some single parents do not struggle heroically to 
raise children. They do, and many get it done. It is simply to say it 
is far more difficult, and the numbers are bearing that out for us as a 
society that this is a very difficult thing to do, and has an enormous 
social cost in the aggregate associated with it.
  Study after study has shown that children do best when they grow up 
in a stable home, raised by two parents who are committed to each other 
through marriage. It should not take studies to tell us that. That is 
basic common sense and the experience we have. Newlyweds face enough 
challenges without paying punitive damages in the form of a marriage 
tax. Think of that. It really is basically punitive damages. If you get 
married, we are going to sock you with punitive damages in the amount 
of $1,400 a year. The last thing the Federal Government should do is 
penalize the institution that is the foundation of a civil society. We 
must eliminate the marriage penalty.
  The surging surplus is a result of nonpayroll tax receipts. In other 
words, the surplus is really a tax overpayment to the Government--
personal income and capital gains taxes. We must give the American 
people the growth rebate they deserve and return this overpayment in 
the form of the marriage penalty elimination and the estate tax 
elimination. We can. We should start now. I believe we must do it for a 
healthy society, for a healthy married society, for a healthy family 
society, for a healthy economical society, for small businesses and 
family farms. To rid the American people of the marriage tax penalty 
and the estate tax is something we can and we should do this year.
  I am delighted Senator Hutchison from Texas continues this fight; 
that Senator Ashcroft from Missouri has been one of the leaders in this 
fight. You can start to taste victory. It is going to be a tough fight. 
Clearly, there is not an excuse not to do it this year. We are starting 
early. We have the resources. The American people want us to do this. 
We need to send this signal to a society which is asking us: Where are 
the values in society? Where is the morality?
  We need to rebuild the civil society. These are enormously positive 
messages and notes we can send by doing this.
  With that, I call on my colleagues, all, to vote for these proposals. 
Do it together in a family tax cut and eliminate these two taxes.
  I yield the floor to my good friend and colleague from the State of 
Missouri. He has been a leader for many years on rebuilding civil 
society. Here is one more area and effort he is leading, in working for 
the elimination of this marriage penalty.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Missouri.
  Mr. ASHCROFT. Mr. President, I am delighted to have the opportunity 
to commend the House for beginning to move through its process, 
specifically the House Ways and Means Committee, the Marriage Tax 
Penalty Relief Act of the year 2000.
  I am delighted that my colleagues in the Senate, including Senator 
Brownback of Kansas and Senator Hutchison of Texas, have been so 
aggressive in talking about what this tax means to America.
  Almost all of us realize that if you tax something, you get less of 
it, and if you give something a subsidy, you get more of it. It occurs 
to me that we do not need less marriage, less family, and fewer intact 
households in America. We need strong, durable, lasting families

[[Page 604]]

that reflect the kind of commitments for which marriage really stands.
  It is possible for people to be committed to each other without the 
formal institution of marriage, but the data indicates that possibility 
does not find its way into reality very often. Marriage is not 
something that is against the interests of America. Marriage is 
something that is advancing the interests of America because it is in 
our homes and in our durable, lasting, persistent relationships, loving 
relationships, that we teach the fundamental values so important to 
this culture--values of responsibility, values of work and, yes, values 
of caring. We learn that we have responsibility and duty to each other. 
If someone in our family is in trouble, our first turn is not outside 
the family to get help; we first turn toward each other to help. One of 
the greatest values any culture can have is learning how to care one 
for another, and it happens in our families.
  I plan to talk for a few minutes today about a real problem we have 
in this country, and that is that our Tax Code is at war with some of 
the fundamental values and attributes and characteristics in our 
culture. I think it is wrong for our Government to be attacking the 
very institution in society which provides the best support for what we 
otherwise achieve governmentally. Someone far more wise than I said it 
first when they said the family is the best department of social 
services, the family is the best department of education, the family is 
the best department of health and welfare. One would think if the 
family were doing this job and doing it well and relieving Government 
of its backstopping responsibility in these places, we would want to 
encourage the family; we would want to support it; we would want to 
sustain it; we would want to provide incentives for it rather than a 
penalty.
  That is the thing that confounds us--that we are providing a penalty. 
Some great industrialist once said: Your system is perfectly designed 
to give you what you are getting, basically saying if you are not 
getting what you want, you should change your system.
  Senator Brownback eloquently cited the data. We are not getting what 
we want. We are getting fewer marriages instead of more marriages. We 
are getting less durability in these relationships instead of more. 
Look at the reason for the family breakups we have, and almost every 
sociological study says at the heart of it is the financial stress in 
the family.
  What is Government doing in regard to marriage and stress that 
financially threatens and sometimes disrupts those marriages? It is 
adding to the stress instead of relieving the stress. Forty-two percent 
of all married couples suffer a marriage penalty, meaning the 
Government taxes them more for being married than they would be paying 
if they were not married.
  We have already heard the data, and I do not think it is important to 
have the data, but it is there: About $1,400 per couple per year on 
average for the 21 million couples who suffer this $29 billion a year 
disadvantage imposed by Government against the very institution that 
should carry us into this next century.
  When the House Ways and Means Committee marked up the Marriage Tax 
Penalty Relief Act, they were simply saying it is time for us to start 
peace negotiations; stop the war between Government and families; let's 
start having incentives for helping families. At least let us have a 
neutral environment so we do not have a situation where families are 
discriminated against by the Tax Code of the United States.
  In my home State of Missouri, there are 1 million potential marriage 
tax victims because of family standing. According to the Treasury 
Department, 42 percent--over 4 out of every 10 married couples--pay a 
penalty for being married. I find that to be a tragedy.
  According to the Tax Foundation, an American family spends more of 
its family budget on taxes than on health care, food, clothing, and 
shelter combined. When you say this is the kind of tax bite the 
American family is paying--it pays more for Government than health 
care, food, clothing, and shelter combined--Government is taking a big 
bite. It is taking a big bite from every citizen. Then add to that a 
Government penalty, a financial stigma imposed, saying we are going to 
tax you more because you are married than you would pay otherwise. This 
is wrong. It is simply that we have found a way, unfortunately, to get 
additional resources for Government at the expense of resources to the 
family.
  In some measure, this really calls upon us to ask ourselves where our 
faith is for the future of America. What do we believe will sustain 
America in the future? Is it going to be big Government or will it be 
strong families? Will it be a culture that teaches responsibility, 
duty, compassion, and caring, one for another, or will it be a massive 
Government? If we really believe families are irrelevant, we should 
take more and more of their money and pour it into the bureaucracy. But 
I do not believe bureaucracies are the hope of America or of the world 
tomorrow.
  Responsible citizenship, the kinds of values that are engendered in 
families, these are the elements of America's future. These are the 
bright lights that allow us to believe the best is yet to come, and we 
should stop eroding the funding for families by giving it all to 
Government.
  If our faith is in families, we should help families. How do we help 
families? The first thing we do is let them keep some of the money they 
earn. Penalizing families is the wrong way to go about that. 
Unfortunately, Treasury Secretary Larry Summers announced on Tuesday 
that he will advise the President to oppose the House bill, less than 1 
week after the President announced his support for marriage penalty tax 
relief.
  The marriage penalty may actually contribute to one of society's most 
serious and enduring problems. There are now twice as many single-
parent households in America as there were when this penalty was first 
enacted. I cannot say it is a cause, but it is hard to believe it is 
not a contributor. In our Government policies, we should not be 
intensifying the problems; we should be eliminating the problems and 
mitigate the damages they cause.
  Our Government should uphold the basic values that give strength and 
vitality to our communities and to our culture. Sound families do that, 
and the science which supports that proposition is sound and complete 
and uncontradicted. Marriage and family are a cornerstone of who we are 
and what we stand for as a civilization, but the heavy hand of 
Government which imposes a penalty against marriage distorts the system 
and lacks the fairness we want in the tax system, and, frankly, it 
undermines our potential for the kind of future that good families, 
allowed to reserve some of their resources for their own use and 
development, could provide.
  It is with that in mind that I commend the House for its action, and 
I look forward to the day when we in the Senate can do what we almost 
got done last year. We did it in the Senate. We had a major tax relief 
for the American family through the abolition or mitigation of the 
marriage penalty tax, sponsored by Senator Hutchison of Texas, Senator 
Brownback of Kansas, and I was privileged to be a cosponsor. It went to 
the President and was vetoed in the overall tax package.
  This concept the President has endorsed, which I think America 
understands, to bring parity to families so they are not discriminated 
against, because they are a part of the enduring, lasting, persistent, 
valuable relationship of marriage, is a concept whose time has come.
  I am grateful for the action taken by the House and look forward to 
the opportunity of implementing, otherwise enhancing, that relief for 
American families in the Senate.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Texas.
  Mrs. HUTCHISON. Mr. President, I thank the distinguished Senator from 
Missouri and the distinguished Senator from Kansas for joining me today 
to talk about this very important issue.
  The House is getting ready to take action. We have spoken once on 
this

[[Page 605]]

issue. We have taken the lead to give relief to the hard-working 
taxpayers of our country. We do not think people should have to choose 
between having the money they earn to spend for their families or 
sending it to Washington, when it is already in excess because we have 
income tax withholding surpluses.
  I appreciate the leadership of Senators Ashcroft and Brownback on 
this issue. We will not give up. We will not walk away from this issue. 
Before we leave the Senate, the married people of this country will be 
treated equally by the IRS Code across the board. It is our 
responsibility, and we will not walk away from it.
  Mr. President, I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER (Mr. Gregg). The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. HARKIN. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER (Mr. Bunning). Without objection, it is so 
ordered.

                          ____________________