Why do we confer tax benefits to married couples?
We don’t. The seeming tax benefits (or detriments for certain couples) are a product of two aspects of our tax system: • We have a progressive structure, with higher marginal tax rates on higher incomes • We allow households to aggregate their income and file as one unit [1] Together, this would mean that a two-income family that earns, say, $100,000 would pay more in taxes than they would as two single filers each earning $50,000. One way around this problem is to just double the size of the tax brackets for married couples [2] – this treats the family in the above example the same. But this now creates a very strong incentive for a single filer making $100,000 to marry someone without any income, which isn’t ideal either. The current married tax brackets are simply a compromise between these two considerations. It’s not perfect, of course, but given points (1) and (2), it’s impossible to create a tax structure that would be perfect. — [1] An obvious solution to this problem might be
The married, filing jointly status exists because some states consider married couples to be co-owners of all of their property. In this situation, it can be difficult or impossible for each partner to file an individual return. The IRS decided to offer this filing status to residents of all states rather than just community property states. As to whether there’s really a tax benefit, Ani Ravi is correct in saying that there often isn’t one. It depends on total income, how much of the income comes from each partner, and what deductions the couple is able to take.
We as a nation encourage people to marry, using tax and other incentives, because doing so when they are raising children appears to reduce poverty and crime and improve kids’ educational outcomes and men’s job performance. The tax advantage goes primarily to those couples with one member taking time off from working or cutting back on hours to raise the kids. We offer Social Security incentives to those who stay married ten years or more, because longtime married couples take a big load off the medical and social costs of caring for our elderly. States offer death tax benefits to the married because they help keep the surviving spouse and kids together, which has all the benefits of the other two. The same advantages to society seem to come with same-sex marriages, too, and some states and other nations are coming around to encouraging these couples to marry, too.
