TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Saturday, July 22, 2017

Do Taxes Affect Marriage? Lessons From History

Edward G. Fox (NYU), Do Taxes Affect Marriage? Lessons from History:

This Article investigates the effect of taxes on marriage formation using a natural experiment generated by the income tax’s halting movement from individual taxation of married couples to joint taxation. The 1948 Revenue Act was the first to explicitly adopt joint taxation. Under the Act, married couples were taxed like two individuals, except each was assigned half of the couple’s joint income. This income splitting blunted the progressivity of the tax code, usually reducing the couple’s taxes. The 1948 Act, however, only affected common law states. Married couples in community property states in practice already enjoyed joint taxation with income splitting under Poe v. Seaborn (1930). The 1948 Act thus presents an unusually good opportunity to study the impact of taxes on marriage because it offers substantial exogenous state-by-state variation in tax incentives to marry.

Using census data, the Article shows that the 1948 Act increased marriage rates. Men affected by the Act married about 3 months sooner, showing surprising sensitivity to tax incentives given the social context. If anything, Americans are now likely more sensitive to taxes when deciding whether and when to marry, suggesting that joint taxation continues to meaningfully affect marriage decisions today.

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