79-03-B5
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Income Tax[edit]
Transcript[edit]It isn't too early to think about spring, that wonderful season of bluebirds, budding flowers and the income tax collector. I'll be right back. Up until a few years ago, single people had a legitimate beef about the income tax laws. They were grossly unfair to the unmarried. Then in 1969, Congress yielded to the growing pressure and took action to end this discrimination. Beginning in 1970, a single person was given a separate tax rate schedule so that no single would pay more than 20 percent above the married rate. But as so often happens with the government Congress didn't quit while they and the people were ahead. Instead, they carried on and made some drastic revisions in the rules for married couples. The option of husbands and wives to file as singles was eliminated. Couples filing separately were required to use the old higher rate schedule the Congress had just reduced for singles. And couples filing separately and claiming the standard deduction were given maximum allowances that are only half as large as for singles. With one half the wives in America now in the workforce, government is netting a tidy little bonus, two billion dollars last year and growing. A working wife is called a secondary earner and thus her tax rate is automatically the highest surtax bracket of their combined incomes. An example, hubby earns $20,000 and his wife is picking up 7,000 for a total combined income of 27,000. Her 7000 is taxed as a full 30 percent. Incidentally, they're both paying social security tax also. A couple with a combined income of 25,000 pays 535 dollars more income tax than a single. 785 more if their income is $30,000. If they're both pretty successful and have earnings of 50,000 between them, they pay $2439 more than a single with comparable earnings. A few years ago, some married couples developed a practice of flying to the Bahamas during the Christmas holidays, for a vacation in the sun and a quick divorce. After the New Year had come in, they would remarry and fly home. The trip was paid for by their tax savings. The practice was so widespread the IRS finally passed a rule refusing to recognize such divorces. Today, married couples with equal earnings get no benefit from income splitting and filing separate forms. There are special rules again, quite different from those for single persons and the married couple winds up usually paying a higher tax than if they filed a joint return. Take it to court you say? Well one couple did and the court, even though acknowledging that the tax laws encouraged living together out of wedlock, said there wasn't anything it could do about it. The Supreme Court refused to review the case. The administration, in submitting last year's tax bill, proposed no reform of this inequity, even though the president was on record as favoring one. The lame excuse was that they didn't want to further complicate the tax structure. I've only touched on the inequities, another one is that a married couple can only deduct half the capital loss two singles can deduct, and it goes on and on. I believe a congressional aide has given the real reason why there's been no change. He says the government just doesn't want to give up the revenue it gets from the marriage tax. This is Ronald Reagan. Thanks for listening. |
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