Congress poised to cut 'marriage penalty' tax

Both parties, Clinton eager to win favor of 2-income families

February 01, 2000|By Karen Hosler | Karen Hosler,SUN NATIONAL STAFF

WASHINGTON -- After years of trying, congressional Republicans seem likely this year to achieve their ambition of easing a tax quirk that discriminates against married couples, lawmakers in both parties say.

House Republican leaders unveiled a proposal yesterday to ease the "marriage penalty" for up to 25 million American families -- an idea that has also been endorsed in concept by President Clinton and congressional Democrats.

"The American people support this; representatives and senators from both parties support this," said Rep. Bill Archer, the Texas Republican who is chairman of the House Ways and Means Committee.

"There's no excuse why this shouldn't get done this year."

Negotiations will have to resolve substantial differences over the size and timing of the tax break.

The Republican plan is nearly four times as generous and thus far more costly than the proposal Clinton offered last week in his State of the Union address.

Rep. Charles B. Rangel of New York, the leading Democrat on Archer's committee, complained yesterday that such a large tax break should be not approved until its effect on the rest of the federal budget could be considered.

But the Republicans are upbeat because they say the president is moving toward their position, after having vetoed a sweeping tax cut bill that included relief from the marriage penalty, which affects many two-earner couples.

Valentine's Day target

"Now that he's endorsed the concept, I hope we can talk details, so that by Valentine's Day the nation's married couples will know that relief is on the way," said House Majority Leader Dick Armey.

Republicans have selected Feb. 14 for the House vote on their marriage penalty bill in hopes of capturing the romantic symbolism and to put pressure on Democrats to join them.

"How can anyone vote against this?" asked Rep. Jerry Weller, an Illinois Republican who has been a vocal advocate of removing the penalty. "It's the most inequitable part of the tax code."

The marriage penalty -- which averages about $1,400 per couple -- results from a feature of the progressive income tax that imposes a heavier burden on most dual wage earners if they are married than if they were single.

A married couple receives a smaller standard deduction than would two singles who file separately. Combining incomes also pushes the couple into a higher tax bracket than each would be in if filing individual returns.

This penalty falls most heavily on couples in which the top-earning spouse makes between $20,000 and $70,000 year and the family's second income is roughly equal.

20% of budget surplus

Archer is proposing to dedicate about 20 percent of the projected budget surplus for the next decade toward eliminating much of the marriage penalty. He proposes to do this without shifting the burden to single payers and without eliminating the "bonus" that goes to married couples in which only one partner earns all or most of the income.

The cost of the Republican plan -- $182 billion over 10 years -- seemed prohibitively high just a few years ago. But the budget surplus, excluding Social Security, is expected to reach nearly $1 trillion over the next decade -- even if current spending caps are breached, as expected.

By contrast, Clinton's proposal would cost $30 billion over the decade and provide relief to only about one-third as many families.

Both the president and Archer would achieve their goals, in part, by raising the standard deduction for married couples so that it equals the amount for two singles. The Republican plan would go much further to expand the lowest tax bracket -- now at 15 percent -- to double the deduction for married couples.

In 2000, the 15 percent bracket applies to singles with incomes of $26,250 and couples with a joint income of $43,850. If the Archer plan were fully in effect, the applicable income for married couples would rise to $52,500.

Unlike the Republicans, Clinton would offer no break to couples who itemize their deductions.

Even the Republicans would not eliminate the marriage penalty entirely. Doing so would involve costly adjustments to the higher tax brackets and other fixes throughout the tax code where couples are treated differently than singles.

Senate likely to amend

Though legislation to ease the marriage penalty seems likely to have a swift ride through the House, the Senate's embrace could potentially be smothering. Rules there make voting on a tax bill difficult without enduring many efforts to attach an array of amendments.

Clinton's endorsement of the concept last week buoyed confidence in both parties that some form of legislation to ease the marriage penalty will be enacted. But House Republican leaders had already decided to make a strong early push on the issue this year to score points with voters, regardless of how the Senate and the president reacted to it.

They were disappointed last year when their $792 billion tax cut bill failed to attract enough voter enthusiasm to dissuade Clinton from vetoing it.

Pollsters told Republican leaders that last year's measure was so broad, and included so many separate parts, that voters did not know what was in it.

Popularity is attraction

In this election year, when Republican control of the House hangs by a thread, Republicans simply want credit for passing a popular measure -- even if it dies in the Senate or is vetoed by Clinton.

But the presidential election is also playing a role that should help the bill, said Grover Norquist, of Americans for Tax Reform, who supports the Republican front-runner, Gov. George W. Bush of Texas, in the presidential race.

"If the Republicans send any kind of a bill to the White House that can be legitimately called relief from the marriage penalty, I don't see how Clinton acting on behalf of Vice President Gore has any choice but to sign it," Norquist said.

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