Statement of Charles A. Donovan,
Executive Vice President, Family Research Council

Testimony Before the House Committee on Ways and Means

Hearing on President's Tax Relief Proposals that Affect Individuals

March 21, 2001

Good Morning, I am Chuck Donovan, the Executive Vice President of the Family Research Council, an organization representing some 450,000 families across the United States. Thank you for taking the time to consider my statement today regarding the position of Family Research Council on the need for marriage tax penalty relief.

The heart of family, the foundation of civilization, is marriage. As the institution ordained by the Creator for the begetting and raising of children, marriage has had special protection within the law and the culture; it is indispensable to civilized life. American society cannot survive if marriage ceases to be the normative way to raise children. When families collapse, communities collapse. The wreckage is all around us. The institution of marriage deserves the highest protection under the law. There are many ways government can help. One way is to treat marriage and married childbearing properly and favorably in the tax code.

As a matter of family policy, structuring taxes and other incentives so that they are available only for dual-earner couples contributes to the undermining of martial arrangements that most couples prefer. By discriminating against single-earner families, our tax code effectively dismisses the sacrifice the stay-at-home spouse makes on behalf of the family and society. In choosing to have one spouse stay at home families are penalized by the government, and the labor of love that this arrangement represents is subjected to a punitive tax.

The tax proposal put forward by the White House is replete with admirable pro-family and pro-charitable provisions, which we wholeheartedly embrace. Nonetheless, the proposal moves in the wrong direction on marriage penalty relief, and marriage is the key to perfecting the other pro-family provisions in the plan. Those who want to help strengthen marriages and families must abide by the rule of non-discrimination: they cannot make family benefits contingent upon both parents' participation in the workforce. While the proposed tax package, overall, provides many benefits to working class American families, the fact remains that it will have a negative effect on marriage as an institution. The marriage penalty provision picks and chooses which families get relief and which families do not. From our perspective, it would be better to do nothing about the marriage penalty than to do this.

We have this on good authority, Vice President Cheney made the same case during the Vice Presidential debate last fall, when he defended stay-at-home moms against his opponent's tax plan, "they discriminate between stay-at-home moms with children that they take care of themselves, and those who go to work who have their kids taken care of outside the home. You, in effect, as a stay-at-home mom get no tax advantage under the Gore plan." And again: "if you live your life the way they want you to live your life, if you do, in fact, behave in a certain way, then you qualify for a tax credit and at that point you get some relief." (10/5/2000, Centre College, Danville, KY. www.c-span.org/campaign2000/transcript/debate_100500.asp, p. 7.)

I would argue that the proposal before your committee does the same thing that Vice President Cheney criticized his opponent for, that is, it provides incentives for certain behaviors. "it is a classic example of wanting to have a program, in this case a tax program, that will in fact direct people to live their lives in certain ways rather than empower them to make decisions for themselves." (10/5/2000, Centre College, Danville, KY. www.c-span.org/campaign2000/transcript/debate_100500.asp, p. 8.)

Is the purpose of fixing the marriage tax to accord long overdue socioeconomic respect for marriage as an institution fundamental to our society and to the raising of children? Or is the purpose to enable government to engage in national economic planning by using tax policy to influence human behavior?

Giving a tax cut only to two-earner couples would send the message that the government sees no value in a homemaker's work at home, that the role of a "non-working" wife and mother is less socially beneficial (or less worthy) than paid employment. In fact, these spouses, primarily women, have sacrificed all of their income during this period in their lives and in their children's lives. They have foregone a second income and all the material advantages they might have conferred on their offspring. It makes no sense to increase their taxes merely because they stay home with their children.

This debate is not about money. It is a matter of right and wrong. Marriage is good for this country, and it's wrong that our tax code penalizes it. This is not so much a tax cut as it is a tax correction and correcting the problem is not complex.

There are several ways to eliminate the marriage penalty properly, without undermining marriage as an institution. The essential idea is to treat married couples as a single economic unit, just like other legally recognized economic partnerships, permitting them to share their income for purposes of taxation. The bill passed by Congress last year espoused this idea; a pro-marriage solution is available. The Marriage Penalty Relief Act of 2000 incorporated the very important policy change of treating all married couples equitably, whether they earn one income or two.

This committee now has the same -- indeed an even better -- opportunity to provide substantial relief to millions of American families, while recognizing and supporting the vital contribution marriage makes to the betterment of society. Will your proposal treat all married couples and their multitude of work and family arrangements alike? It should. It is unfair to reject marriage tax relief for families who decide to have one spouse stay at home because they have decided to care for their children themselves, or because one spouse is unable to work, or because one spouse is pursuing higher education.

The current proposal for reducing the marriage penalty is modest, in purely economic terms. But in terms of family tax policy, it reinforces a policy denigrates some of the most important benefits marriage confers on society and the economy. More broadly, by moving toward an individual basis for taxation, instead of a family basis, the policy discourages the economic and personal interdependence that lie at the heart of marriage.

While there are 66 provisions in the tax code that produce marriage penalties, according to the American Institute of Certified Public Accountants, the standard deduction and the graduated rate structure combined cause 55.6 percent of extra marriage taxes. Because the standard deduction amount for joint filers is not twice that for those claiming single or head of household status, a married couple can deduct less money from their income than can an unmarried couple with the same combined income. The income thresholds that push taxpayers into higher brackets for joint filers are less than twice what they are for those claiming single or head of household status. This means that a married couple can be forced into a higher tax bracket than an unmarried couple earning the same combined income.

Since the marriage penalty is largely the result of inequities in the rate structure, the marriage tax penalty would be substantially reduced for all married couples by placing each bracket breakpoint for married couples at precisely twice the level for single filers. Expanding the standard deduction for married couples to twice the amount for singles would eliminate the marriage penalty for lower income couples and provide at least some tax relief for one-income families. This approach was taken last year and, according to the Congressional Budget Office (CBO), doubling the standard deduction alone would affect approximately 21 million married couples. Implementing these proposals would help to ensure that "no married couple is left behind."

Family Research Council strongly believes that a policy of tax fairness is no less important than the dollar figure attached to it. Any marriage penalty relief should apply equally to all married couples and all work arrangements. This principle of equity was tested in 1995 when Senators Kay Bailey Hutchison and Barbara Mikulski advocated legislation allowing homemakers to contribute the same amount to an IRA as working spouses, thus treating working and "non-working" spouses equally. At that time, the limit had been $2,000 for a working spouse and $250 for a homemaker. Relying upon that same principle of equity, Congress should provide equal marriage penalty relief to single - and dual-earner couples. Tax fairness requires that relief from the marriage penalty apply equally to all married couples.

Most of you already know the history of the battle to eliminate the marriage tax penalty, but let me state for the record the work and the commitment of Congress on this issue.

In 1995, the House and Senate both passed measures to relieve the marriage penalty. The final version, doubling the standard deduction for joint filers to twice the amount single filers enjoyed, was included in a tax package which was vetoed by President Clinton.

In 1998, the House of Representatives passed reductions in the marriage penalty but the measure died in the Senate.

In 1999, Congress voted to reduce the "marriage penalty" by increasing the standard deduction for married couples to twice that for singles, and doubling the 15% bracket breakpoint for married couples to twice that of singles, this too was vetoed by President Clinton as part of a larger tax reduction package.

Last year, the House and the Senate passed, by overwhelming margins, marriage penalty relief, which included a doubling of the standard deduction and bracket adjustments to ensure that all married couples received marriage penalty relief. President Clinton vetoed this legislation. The bill passed by Congress last year, HR 6, serves as a good starting point for meaningful reform of the unfair marriage tax penalty. This approach has the support of the Family Research Council.

I urge the Ways and Means Committee to seize the opportunity before it. This is not the time for debate and competition among married couples who arrange their work and family time in an astonishing variety of ways. Congress passed the right marriage penalty relief in the recent past when the President's veto pen was at the ready. A new era is upon us, the revenue to do justice is at hand, and the ink in that pen has now run dry. It is time to act on behalf of marriage and to turn the tax code toward home.