Black couples still get unfair treatment, they pay higher marriage penalty tax

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Black couplesThe documents don’t mandate that persons engaged indicate their race in reference to federal tax filings in America

The tax code is frequently praised for being race-blind, but it doesn’t explicitly declare itself to be race-neutral.

Black couples continue to experience prejudice when it comes to marriage tax penalties in a world that is still seeking to leave behind certain antiquated attitudes.

The news

According to recent Tax Policy Center studies, Black couples often pay more marriage taxes than White couples.

As part of a growing body of studies, it shows how tax law either improves or worsens the income gaps among White and Black couples.

The study demonstrates that there are racial differences in the income tax advantages and disadvantages of marriage.

The likelihood of racial unfairness in the tax law is raised by the groundbreaking study of the following legal scholars, which is supported by this argument:

  • Dorothy Brown
  • Beverly Moran
  • William Whitford

Marriage penalties

Marriage penalties are more likely to be used when both spouses are employed than when there is only one source of income.

The penalties are more likely to be greater when the two spouses earn roughly the same amount of money.

Yet, families with children continue to have a higher likelihood of receiving penalties.

Economic facts

William Gale, a co-director and co-author of the Tax Policy Center’s most recent marriage study, contributed to the new findings.

He stressed that if a married Black couple’s financial information were identical to that of a married White pair, then their tax burdens would be the same.

Nonetheless, there are discrepancies between Black and White couples’ average economic statistics.

For instance, black couples are more likely to reside in a family with two income earners.

Both are more likely to be earning the same income as each other and have dependents.

“We find that Black couples are more likely than White couples to experience an income tax penalty from marriage and to face higher penalties,” the authors wrote in the study.

“We show that these patterns arise because, controlling for income, Black spouses have more equal earnings than White spouses… and because Black couples are more likely to have dependents.”

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Payment differences

According to researchers, married couples that are penalized must pay a variety of fees.

Black couples paid less money overall than White couples did, while spending more as a proportion of their income.

For instance, they only pay $1,804 instead of $2,091.

Nonetheless, Black couples contribute 1.8% of the income compared to White couples’ 1.4%.

Researchers focused on households with adjusted gross incomes between $50,000 and $100,000 in accordance with the tax rules from 2018.

They found that 59% of Black couples had marital sanctions, compared to 51% of White couples.

Black couples frequently spend $150 or more extra.

Similar to this, just a tiny portion of Black couples received a 33% incentive while White couples received a marriage bonus of 44%.

Typical marriage bonuses were above $170.

“Taken together, Block couples in this income group paid, on average, a net penalty of $358,” the report stated.

“White couples in this income received, on average, a net bonus of $61.”

Similar patterns were discovered by researchers with different socioeconomic categories.

Tax treatment change

The Tax Policy Center issued its analysis after the US Treasury’s data release on how to ascribe race and ethnicity to tax data.

In response to President Joe Biden’s executive order, which directed federal agencies to reform policies and advance racial equity, the effort was started.

However, the authors contend that because race is not explicitly mentioned in the tax statute, there is no straightforward mechanism to remedy racial disparities in the tax treatment of marriage.

Another option they mentioned was enabling married couples to register separately as “unmarried.”

Nevertheless, the proposal will just make taxes more complicated while expanding potential for tax fraud.

William Gale also emphasizes that it is too early to go into depth about how federal tax and other policies impact racial equity.

“We’re maybe in the second inning,” said Gale. “There is much work to be done.”

Image source: NBC Palm Springs