Marriage or Money: New Evidence of the Disproportionate Influence of the Dual-Earner Marriage Tax Penalty

• In Event: Personal and Corporate Tax Issues

Abstract

Using household level data, we provide new evidence that the federal Dual-Earner Marriage Tax Penalty (DMTP) increases horizontal and vertical tax inequity. Taking advantage of the 2013 federal recognition of same-sex marriage, we use a robust difference-in-differences analysis to provide empirical evidence that the DMTP has an economically significant influence on couples’ marriage decisions. We find a 1% increase in the DMTP as a percentage of household income reduces the odds of marriage by 3%. Because we estimate a mean 2.1% DMTP, we estimate the mean penalty reduces the odds of marriage by 6%, creating horizontal inequity between married and unmarried couples. Because couples in the lowest income quartile face a greater DMTP percentage, mean of 3.9% up to 8.5%, we estimate that the DMTP reduces their odds marrying by 11%, up to 22%. Because upper quartile couples face a mean 1.7% penalty, the DMTP’s disproportionate impact contributes to vertical tax inequity.

Authors

• Amy J. N. Yurko, Duquesne University

• Christine Cheng, The University of Mississippi

• Donald Larry Crumbley, Louisiana State University