Because married couples form a household and it allows them to share child care and work as they see fit.
If you tax individuals, you're encouraging both to earn the same amount of money.
If you tax couples, it encourages the higher earner to keep working, thus you have a higher overall productivity.
Thus you have freedom and higher overall productivity in favor of shared tax burden.
And by encouraging both to work, you'll get more total tax revenue.
Maybe it's a long term strategy? The tax you'll levy on the kid (as the kid and later as adult) is expected to be much more than what you can levy on one partner (during child rearing)?
A couple each home earns x, each gets taxed on x. Each gets the tax free allowance on the fist £12.5k of the annual income. Each gets the full basic rate slice before they hit higher bands etc.
If one of the couple earns 2x and the other zero, then only one can use their tax free allowance and they get one slice of the basic rate band etc.
They still have the same pre-tax income for the same household.
Personally I think people should be allowed to opt in to sharing taxable income.
What fraud?
> You will then get the argument of "why should I be taxed more because I'm single"?
You might, but its a dishonest argument. You are taxing households together. You are giving each individual the same amount of tax free income and the same amount in the lower bands.
It is already possible for self employed people to do this by making their spouses a partner or shareholder in the business or similar. This is just extending the same rights to employed people.
And as for not seeing how a tax cut based on 2 people living together could not be abused, you must be very short sighted.
Hypothetically if the household splits up due to a divorce its assets are divided 50:50 (this varies by jurisdiction). Usually (again depending on the jurisdiction) the lower-earning spouse also gets alimony to even up the difference in income resulting from the new situation, at least for a few years.
Clearly then the state believes assets owned and income earned by either one of the couple belong equally to both (something I agree with personally: it's called a partnership). If that's the case, how could it be wrong to tax the household as a single entity?
its fairer
> It presumably would improve your personal standard of living
I am divorced and remain single so it would make no difference to me
> could see if you want to encourage families having tax benefits based on children
I want people to enjoy family life. Its the same reason I want family friendly working hours, decent paternity leave, a right to home educate and better schools etc.
> And as for not seeing how a tax cut based on 2 people living together could not be abused, you must be very short sighted.
And as for not seeing how a tax cut based on 2 people living together could not be abused, you must be very short sighted.
Please do explain . Also please find evidence it is abused where tax does work like that. Its not a cut either as many households would pay the same tax, and its likely rates would go up slightly to make it revenue neutral. Its also more consistent as benefits are based on household income in the UK, as are things like student loans and educational bursaries and the treatment of finances in divorce.
Student loans are not based on household income and many other benefits aren't either.
As for family life that is covered by basing tax cuts / benefits on children not merely the nebulous concept of a household.
Really? There are benefits and tax cuts that allow parents to spend more time with their children? Not that I know of.
Citation needed. Mine are.
Specialization within the houshold? Because it's conducive to reproduction?
CRA is even pretty careful about letting a spouse claim capital gains income; it's always attributed back to whoever earned the original principal (outside of inheritance). I think the only way around this is to formally "loan" the spouse their investment money, but you have to charge them interest and the interest is of course income to you.
At a broad level, offering benefits for marriage solves political problem, married people tend to vote so need to be catered to. It also solves societal one, marriage tends to be better at extremely broad strokes for society. Married Couples live longer, commit less crime, kids in married households generally have better outcomes and so forth. So politicians in United States decided to incentive it.
To put it another way, eliminating the marriage differential[1] in all cases requires giving up progressive marginal rates or community property.
Which one do you want to give up?
[1] The current US brackets and deductions taxes some married couples more than comparable pairs of individuals, taxes some less, and is basically a wash in other cases. It's easy to move couples between the first two groups and you can move some of each to the third, you can't move all of them.
Are you in a funky state with bad tax policy?
Portland, OR metro gives a $125k threshold to single and only $200k to married filing jointly for supportive housing taxes, which is a 1% tax on income above the threshold.
I have no idea why households that tend to demand less housing (married usually live together) are charged more than singles, who typically demand their own housing at that income level. It makes no sense!
By living in a single house, a married couple demands less housing, which reduces the cost of housing against a fixed supply. Why are we taxing the people making housing cheaper under the guise of "affordable housing"? Shouldn't we treat affordable housing taxes like the carpool lane and reduce the burden of those that are reducing the burden on the constrained supply?
While there's numerous places where MFJ < 2x Single due to various marriage penalties, and even more numerous places where 2x Single < MFJ due to the shared tax bracket space below the 37% bracket....
there are very very few places where MFS > MFJ. They exist, but you have to be in particular situations like one person having disproportionately more debt and on an income based repayment plan, or similar.
There are of course many situations where 2x Single = MFJ = MFS if it's just two similar income W2 employees with no edge cases going on.
(Once you're married, filing 2x Single is obviously not an option)
Due to progressive taxation, we tax two people who make $50,000 less than someone who makes $100,000 which is where the tax savings come from.
Taxation is a strange, mixed-up world.
Try 500k both
* Covers regular federal income tax only. Does not cover any of the taxes on Schedule 2, nor any state/local taxes.
* Assumes both individuals take the federal standard deduction as Single (not Head of Household).
* Assumes no other credits or deductions.
As a result, this can potentially understate marriage penalties for dual-income couples with kids.
https://taxpolicycenter.org/briefing-book/what-are-marriage-...
Switching tax brackets is a categorical change which needs to occur before there is a difference.
I used to be able to declare my house, and my parents' house (I own it). Because of these two things, I have been able to itemize my deductions. In 2024, because I got married, the itemized 'threshold' to reach was higher so I had to take the standard deduction, which ended up costing me a lot more in taxes. It's making me ask questions like "is it worth $3000 every year forever to stay married?"
Your mileage may vary!
It makes me terribly sad each and every year. And each and every year I have to reconsume stories about the man that flew his plane into an IRS building, and the guy from NJ that threatened an IRS agent on a voicemail and then called back immediately and apologized but still got 12 months. Every year I make a decision to not throw my life away. And every year it's a really tough decision.
But I do give it serious thought, with the quandary normally being: do I have the capacity (and the willingness) to inflict such an impression that I can terrify people from choosing to work for the IRS?
Without a prenup, and most don't cover earnings during your marriage anyway (They're hard to keep updated yearly), you're giving away half in California, which can be over $1M if you're a diligent saver and investor. Then if your spouse is REALLY nasty, you'll owe her spousal support that can be thousands per month, depending on your income (and income POTENTIAL), for the rest of her life (after 10 years of marriage in CA).
Any cost savings are completely nullified by divorce if you're a high earner and almost never make sense. Don't get married for tax savings, marry for other reasons and have the most iron-clad prenup you can afford and get your partner to agree to. I promise you, your future self will thank you.
So despite "savings" from a MFJ filing status, when you go back to Single filer or HOH filer, you're penalized on the child support side.
[0] https://www.ncsl.org/research/human-services/guideline-model...
Also don't add sunset clauses because those are ticking time bombs. There is nothing worse than having a stable marriage only for a looming deadline to change the incentives towards instability.
Hard to value that though.
If people find this interesting, I will open-source and allow contributions to support other country's tax systems.
I have hatred for life.
(also the fact that biggest beneficiaries of SALT are states either high housing costs and these states tend to be Democrat leaning states made it easy for Trump to cap the SALT deduction in his 2018 tax cuts)
I’d like solid numbers of how much I’m overpaying to do the work the government refuses to (sheltering folks, ensuring nutritious foodstuffs).
I just found the idea of the ring being paid for by the IRS funny.
The most astute observation I've seen on the topic is that in a capitalistic system in which monetary value is assigned to everything, the value of children is deeply negative and therefore they are not desirable. By having children, most couples are putting their stability, wellbeing, and long-term prospects on the line. The opportunity cost is staggering. If more children is the desired outcome, that tradeoff must cease to exist, and a lousy $2k isn't anything remotely close to that.
$2K or even $20K is meaningless for a parent making $100K or more.
Kids have a negative value to a professional class member.
If you engage in agriculture or some similar activity, a child as old as 10 can be a helping hand in some way or the other. No surprises that Amish farmers have a high birth rate.
I think for many the desire is there, but sufficient de-risking is required for them to be comfortable with acting upon it.
Investments are so much better at earning money than working for wages, in my case the amount of retirement savings I have after 7 years is larger than my cumulative earnings during the same period, and I’ve been saving about 40% of my gross income. Part of my net worth is ESOP equity that I can’t monetize in any way so that’s part of the reason why my net worth is higher than my earnings over the same period.
I talk to lots of people in SV, heads of design, engineers, as well as folks from around the world that I work with, from San Diego to Argentina and Chile. So many 20-30 year-olds have told me they are never having kids. Life is too fun, and they want to see the world. But training the next generation is hard work, and it's easy to do a terrible job. We want to incentivize people to have kids and be great parents. But that requires voluntary sacrifice, which is a hard sell.
If I hadn't had kids, I could retire now. As it is, I'll be lucky to be able to work and get a job so I can earn for the next couple of decades so I have enough to retire.
There's not really a solution that doesn't involve heavy restructuring in one place or another.
That's how it always was. It used to be your kids were your retirement safety net.
What's different now than 100yr ago is that those working generations also have the state taking a 20-50% cut which used to be available to be sent home to help out mom and dad.
In the UK, for example, the retirement age was set to 60 for women and 65 for men, when life expectancy was substantially lower than today. On the current trajectory, a large number of "boomers" at death will have only "paid into" the system for half their lives, while extracting most of the economic reward of the last 70 years.
How's everyone enjoying their tariff rebate checks? Any servicemembers care to share how they spent their warrior dividend?
Currently the cost of raising children is privatized while the benefits are socialized.
Don't make me enter the number or click the button every time.
Just give me a slider for both incomes and show me the result right away.