[Congressional Record (Bound Edition), Volume 146 (2000), Part 10]
[Senate]
[Pages 14642-14645]
[From the U.S. Government Publishing Office, www.gpo.gov]



                    ELIMINATING THE MARRIAGE PENALTY

  Mr. ALLARD. Mr. President, I have come to the floor to support 
eliminating the marriage penalty. I think it is timely that we have 
some votes scheduled this evening, I understand about 6:15 p.m. By 
eliminating the marriage penalty, we eliminate one of the most 
egregious examples of unfairness and complexity in the Tax Code to 
date. Another example of that would be the death tax or the inheritance 
tax. We dealt with that issue last week. I am extremely excited that it 
has passed the House, passed the Senate, and is now going on to the 
President for his signature.
  Both these taxes are prominent concerns of my constituents, at a time 
when the tax burden is at record high levels in this country. When we 
are talking about eliminating the death tax, we are talking about the 
family business and what happens to a family business after an 
unexpected death without any estate planning, and how much the 
Government takes of that estate, forcing the sale. Many times it is a 
farm or a ranch that has been in the family for many, many generations.
  When we talk about the marriage penalty--we are eliminating that 
unfair burden--we are talking about the family. We are talking about 
reducing the tax burden. We are talking about fairness and Tax Code 
simplification.
  Just a brief description needs to be made of the marriage penalty. 
The marriage penalty exists when a married couple, filing a joint tax 
return, pays higher taxes than if the same couple were not married and 
were filing as

[[Page 14643]]

individuals. The penalty varies, depending on the tax bracket in which 
the couple may find themselves. The example that has been used before 
is based on an assumption that both spouses are each holding down 
separate jobs, each earning about $30,000, in 1999. It is determined 
they would pay about $7,655 in Federal income taxes. If these two 
individuals were not married and both earned the same amount of money, 
and had each filed a single tax return, they would pay only $6,892 in 
combined tax liability. There is a $763 difference in tax liability. 
This is what we refer to when we talk about the marriage tax penalty.
  According to the Congressional Budget Office, almost half of all 
married couples--it figures out to about 22 million--suffered from the 
marriage tax penalty last year. The average penalty paid by these 
couples was around $1,500. In the previous example, the marriage 
penalty was the result of a higher combined standard deduction for two 
workers filing as singles than for married couples, and the income tax 
bracket thresholds for married couples are less than twice the 
threshold for single taxpayers. We are trying to eliminate this 
problem.
  The best illustration of the real tax burden faced by families is to 
compare today's tax burden of an average family with the tax burden of 
a family with average income of four decades ago. The total tax burden 
for the family today is 39 percent of its income. That is up from 18 
percent in 1955. The Federal payroll taxes and State and local taxes 
have literally doubled the total tax burden faced by families. As a 
result, the middle-income family today has 25 percent less disposable 
income than a similar family in 1955.
  The bill we have been working on in the Senate, and which many of us 
support, addresses the standard deduction problem I alluded to, and it 
increases the standard deduction for married couples filing jointly to 
twice the standard deduction for single taxpayers. According to the 
Subcommittee on Taxation, this provision provides tax relief to 
approximately 25 million couples filing joint returns. Hopefully, it 
can be made effective after December 31, 2000. That is what we are 
talking about in this particular marriage penalty relief bill.
  It also raises the tax brackets. The bill expands, over a 6-year 
period--this is not happening all at once, it is gradually happening 
over a 6-year period--the 15-percent and 28-percent income tax brackets 
for a married couple filing a joint return to twice the size of the 
corresponding brackets for an individual filing a single return. This 
is a phase-in provision, ultimately providing relief to 21 million 
married couples, including 3 million senior citizens.
  We also try to address the earned-income credit. This bill increases 
the beginning and the end of the phase out of the earned-income credit 
for couples filing a joint return. Currently, for a couple with two or 
more children, the earned-income credit begins phasing out at $12,690 
and is eliminated for couples earning more than $31,152. Under this 
bill, the new range would be $2,500 higher. The maximum increase in the 
earned-income tax credit in this provision for an eligible couple is 
$526. As you recall, the earned-income tax credit was put in place to 
try to help low-income individuals so they would be encouraged to go 
out and get a job and to stay off welfare. Also, there is a provision 
preserving the family tax credits.
  The bill permanently extends the current temporary exemption from the 
individual alternative minimum tax for family-related tax credits. This 
is so that, once you grant tax deductions and credits, the alternative 
minimum tax doesn't come in and take that all away.
  One of the complaints I hear from my constituents is it seems as if 
Congress has been working on tax cuts, they pass tax cuts, they get 
signed by the President, but we don't seem to feel it when we are 
paying our taxes on April 15. One of the reasons that you do not feel 
it is because, in some cases, the alternative minimum tax kicks in, it 
takes effect, and that means the previous tax cuts that were applied to 
a particular taxpayer did not take effect because of the alternative 
minimum tax.
  Members of the Democratic Party have thwarted passage of any kind of 
relief for marriage, as far as the Tax Code is concerned, since 1995. 
In 1995, we had the marriage tax penalty bill passed by the Congress, 
sent to the President, a Democratic President. He vetoed it. In 1999, 
we sent a bill to the Democratic President and he vetoed it. Earlier 
this year, in April, there was a Democratic filibuster that prevented a 
marriage penalty bill from moving forward. We need to pass and the 
President needs to sign a marriage tax penalty provision to give relief 
to married couples.
  This year I have held town meetings in all 63 of Colorado's counties. 
At those meetings I heard from many of my constituents about how 
strongly they feel about tax relief. In Colorado, over 400,000 couples 
incur an additional tax burden simply because they are married.
  I have some numbers here, numbers from the Congressional Budget 
Office. I find them very disturbing. Almost half of all married 
couples, the 22 million couples I mentioned earlier, suffered from the 
marriage penalty provisions last year.
  Again, as in the rest of the country, many of these couples on 
average have suffered a $1,500 penalty where, if they had not been 
married, they would not have had to pay this amount.
  Cumulatively, the marriage tax penalty increases the taxes on 
affected couples throughout the United States by about $32 billion per 
year. That is money that families could use toward their own needs, 
rather than Washington trying to set the priorities for American 
families.
  This penalty is not a tax on the rich. The marriage tax penalty 
exists because of multiple tax brackets and the fact that the standard 
deductions for married couples are not twice those given to single 
people. This tax can be incurred by folks in every tax bracket. In 
fact, families with two wage earners are the hardest hit by the 
marriage penalty. There are more and more of these families in today's 
workforce. Many of these folks are in the lower to middle class--people 
working hard to provide for their children. Taxing these folks for 
being married is plain wrong.
  Another one of the groups implicitly taxed under the marriage penalty 
is the working poor. The earned-income tax credit is an effective tool 
in helping these low-income workers, but the EITC is phased out more 
quickly for married couples than for individuals. So the families incur 
a greater tax burden simply for being married.
  Some colleagues of mine call for more Government spending for 
education, health care, and housing. I believe if we simply allow the 
American family to keep more of their money, we permit them to better 
afford the things they need.
  In this time of a historic budget surplus, we still have nearly 
record high taxation. Hard-working American families deserve to keep 
some of this money. It is theirs in the first place, and I see it as 
the responsibility of Congress to return some of this money to the 
people.
  To permit the marriage tax penalty to continue is wrong. Allowing 
American families to keep this money is the right thing to do, and I 
believe it is time to do away with the marriage tax penalty.
  I yield the floor.
  The PRESIDING OFFICER. The Senator from Utah.
  Mr. HATCH. Mr. President, I rise today to express my strong support 
for the Marriage Tax Penalty Relief Act of 2000. This much-needed bill 
has had a long and difficult journey in getting to this point where we 
can pass it in the Senate. Passage will occur today; and, as we did in 
1999, the Congress will send legislation to help married couples being 
hurt by marriage tax penalties to the President.
  I congratulate my colleague, the chairman of the Finance Committee, 
Senator Roth, for his very effective leadership on this issue. I 
realize that this matter has not been an easy one for Chairman Roth 
this year, because he has been unfairly criticized by our colleagues on 
the other side of the aisle

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for taking the approach on marriage tax penalty relief that is 
reflected in this bill. Let me explain.
  The Senate last year, led by Chairman Roth, passed a marriage penalty 
relief provision in the Taxpayer Refund Act, which used a different 
solution to the marriage penalty problem than the one included in the 
bill before us today. Last year's bill would have solved the marriage 
penalty problem by allowing married couples the option of filing as 
single taxpayers on a combined joint return. I supported that bill as 
did a majority of our colleagues. It was a good approach to solving a 
major tax problem for American families.
  Last year's bill was effective in relieving the marriage penalty. 
However, it left untouched another glaring family tax problem that I 
will call the single-earner penalty. I would like to illustrate this 
with a hypothetical example of three Utah families.
  Let's suppose we have three families, all neighbors living on the 
same street in Ogden, UT. These families are nearly identical, in that 
they each have three children and household incomes of $80,000 per 
year. The only differences in these three families are in the marital 
status of the parents and in who earns the income. In the first family, 
the Allen family, the parents are married and both work outside the 
home and earn $40,000 each for a total of $80,000. The second family, 
the Brown family, are also married but only the husband works outside 
the home, earning $80,000 per year. The third family, the Campbell-
Clark family, are unmarried parents and each of them earns $40,000 per 
year for a total of $80,000.
  As you can see from this chart, under current law, the Allen and the 
Brown families each pay about $9,200 in income tax each year. The 
Campbell-Clark family, however, because they can file as single 
taxpayers, pay only a combined $7,900. Because the Allens each earn 
one-half the family income, if they were to divorce and file as 
singles, they could reduce their combined tax bill down to $7,900, the 
same as the Campbell-Clarks. Therefore, the Allens suffer a marriage 
penalty of about $1,300 each year.
  The marriage penalty relief provision included in last year's tax 
bill would have eliminated this marriage penalty and reduced the tax 
bill of the Allen family down to the same level paid by the Campbell-
Clarks. However, by doing so it would have left behind the Brown 
family, who would still be paying income taxes of $9,200 per year.
  This is not fair. We must not, in the name of fairness, fix the 
marriage tax problems of one category of families, but not another 
category. It is true that the Browns do not suffer a marriage penalty, 
but why should they pay higher taxes simply because their family income 
is earned by one spouse and not two?
  There are approximately 210,000 couples in my home state of Utah, 
who, like the Allens, suffer a marriage penalty. However, there are 
also about 108,000 couples in Utah who are like the Browns, and would 
be left behind by marriage tax relief like we passed in 1999.
  This is why this year's marriage penalty bill is superior to last 
year's. The bill before us today lowers the tax burden of both the 
Allen family and the Brown family. It alleviates the marriage penalty 
and the one-earner penalty. It does not leave any family behind.
  In essence, the Internal Revenue Code results in marriage tax 
penalties and bonuses because it pursues three conflicting ideals or 
principles--marriage neutrality, equal treatment of married couples 
with the same household income, and progressive taxation.
  The ideal of marriage neutrality states that a couple's tax liability 
should not be determined based on their marital status. In other words, 
there should not be a tax incentive either to marry, to remain single, 
or to divorce. Under our example, current law does penalize the Allen 
family, because they would pay about $1,300 per year less if they were 
to divorce and live together. That is ridiculous. We want to encourage 
people to live together in marriage.
  The equally important principle of equal treatment holds that married 
couples with equal incomes should pay the same amount in taxes without 
regard to how much each spouse contributes to the couple's income. 
Under this principle, the Allens and the Browns should pay the same tax 
since they are both married with identical family incomes. Currently, 
they do pay the same, but this principle would be violated if we did 
not also lower the Browns' tax while fixing the Allens' marriage 
penalty.
  Progressive taxation is the principle that those with higher incomes 
should pay a higher percentage of their incomes in taxes than is 
required of those with lower incomes.
  It is mathematically impossible for the Tax Code to achieve all three 
of these tax policy ideals simultaneously.
  One of the three objectives must be sacrificed. If we continue to 
insist on a progressive tax system, we cannot solve both the marriage 
penalty and the one-earner penalty. Simply put, last year's marriage 
penalty relief provision did solve the marriage penalty, but it 
violated the one-earner penalty. The bill before us today does not 
totally solve the marriage penalty, but it greatly alleviates it for 
most families. And, it does not create a one-earner penalty. All in 
all, it represents the fairest approach for the most families in our 
country.
  As long as we have a progressive tax system, we will never achieve 
total family tax fairness. Therefore, no marriage tax penalty bill will 
be perfect. While making tremendous progress toward marriage penalty 
relief for most families, the bill before us leaves some serious 
marriage penalties in place.
  For example, the current-law student loan interest deduction 
provision penalizes married couples struggling to pay off student 
loans. In February, the Senate passed an amendment to the education tax 
bill that Senator Mack and I offered that would have eliminated this 
problem. I had hoped to add that provision to this bill, but it would 
not be germane under the reconciliation rules. I hope we can take care 
of that problem in another tax bill later this year.
  President Clinton has given strong indications he will veto this bill 
because it gives tax relief to families who do not suffer from marriage 
penalties. This is a shortsighted point of view that ignores the 
structure of our tax system and the needs of American families.
  In fact, it kind of makes me wonder whether President Clinton's real 
concern is the idea of cutting taxes. He has made no secret of his 
opposition to tax cuts. He has fought us every step of the way in our 
efforts to return a portion of the budget surplus to those hard-working 
Americans who produced it.
  But, I will be very sorry if a Presidential veto denies American 
families even this tax cut which is not being made for its own sake, 
but rather to correct a longstanding inequity in the Tax Code.
  I implore the President to reconsider that all American families need 
fair and substantial tax relief--those where both spouses work outside 
the home as well as those where one parent stays home. I hope he will 
sign this bill into law.
  And, allow me to say just a word about parents who forego outside 
income to remain at home. Everyone in this body knows that I believe we 
must have adequate child care for those families who need it. I have 
worked with my Republican colleagues and my Democratic colleagues 
across the aisle on child care legislation. But, I cannot say 
emphatically enough that the best child care is still provided by a 
parent. I have yet to hear a single Senator disagree with that. Yet, 
our Tax Code penalizes a family in which one parent makes this choice 
to stay at home with their children.
  I am glad that my wife stayed home with our children. She did work in 
the early years of our marriage as a grade school teacher, but she 
stayed home virtually all of the time our children were growing up, and 
I think it shows.
  It is high time we fix this problem. It is high time we correct the 
marriage penalty for both the Allens and the Browns in Utah, and 
families like them all over the country. Today, we have

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the means to do it. I say to my colleagues on the other side of the 
aisle: There are no more excuses.
  Again, I thank Chairman Roth for his insight and leadership on this 
important issue, and I urge my colleagues to support final passage of 
this bill. I urge President Clinton to sign it.
  One last thing, and that is, when you have a $4.3 trillion surplus in 
the budget, you know darn well somebody is being taxed too much. Why 
can't we at least solve these inequities that are literally calling out 
to us for a solution? Why can't we make it clear that being married 
should not be a disadvantage to couples? Why don't we make it clear 
that we are going to treat married couples just as well as those who 
live together and are not married, who don't pay as much in taxes 
today?
  These three families illustrate this as well as I think we can 
illustrate it. Why should the Allen family and the Brown family pay 
$9,222, while the Campbell-Clark family, just because they live 
together--each of them single, and each of them earning $40,000--why 
should they get a tax bill of $1,300 less than the other two families?
  I urge the President to sign this bill. I think it is the right thing 
to do.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. The Senator from Idaho.

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