Measuring the Effect of the EITC on Marriage Penalties and Bonuses

In 2000, the EITC will increase marriage penalties by at least $3.1 billion (10.4 percent) and reduce marriage bonuses by $439 million (1.5 percent). Over half of EITC-related marriage penalties will be attributable to couples who currently are ineligible for the EITC because their income is above $30,000. However, estimates of marriage penalties and bonuses are very sensitive to assumptions regarding a couple’s living arrangements and custody agreements if they do not file joint returns. Recent proposals to provide marriage penalty relief through the EITC are well-targeted to lower-income taxpayers but vary in their ability to reduce marriage penalties. Measuring the Effect of the EITC on Marriage Penalties and Bonuses According to the General Accounting Office (1996), there are 59 provisions in the income tax code that either penalize or reward marriage. 1