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bonus, and to single taxpayers. As a result, the cost of the legislation is highly
inflated. It would cost $248 billion over the next ten years.
And, as with most Republican tax breaks, the overwhelming majority of the
tax benefits would go to the wealthiest taxpayers. This bill is designed to give
more than 78 percent of the total tax savings to the wealthiest 20 percent of
taxpayers. It is, in reality, the latest ploy in the Republican scheme to spend the
entire surplus on tax cuts which would disproportionately benefit the richest
taxpayers. That is not what the American people mean when they ask for relief
from the marriage penalty. With this bill, the Republicans have deliberately
distorted the legitimate concern of married couples for tax fairness. . . .
. . . A plan that would eliminate the marriage penalty for married couples
could easily be designed at a much lower cost. The House Democrats offered
such a plan when they debated this issue in February. The Senate Democrats
are offering such an alternative plan today. If the real purpose of the legislation
is to eliminate the marriage penalty for those working families who actually
pay a penalty under current law, it can be accomplished at a reasonable cost.
The key to drafting an affordable plan to eliminate the marriage penalty is to
focus the tax relief on those couples who actually pay the penalty under current
law. The Republican proposal fails to do this, and, as a result, it actually perpet-
uates the marriage penalty despite the expenditure of $248 billion on new tax
cuts. Under the Democratic plan, the tax relief actually goes to those currently
64 The Politics of Income Inequality in the United States
paying a marriage penalty. It is also essential to target the tax benefits to the
middle income working families who need tax relief the most. The Democratic
plan focuses the tax benefits on those two earner families with incomes less
than $150,000. By contrast, major portions of the tax benefits in the Republi-
can plan would go to much wealthier taxpayers at the expense of those families
with more modest incomes. As a result, the Democratic proposal would cost
$11 billion a year less, when fully implemented, than the Republican plan, yet
provide more marriage penalty tax relief to middle income families.
The Republican response to these lines of argument brought the
marriage penalty tax debate squarely into the category of a classic
partisan debate over taxes. Republicans argued that their more costly
plan was appropriate because taxes should always be reduced in a
climate of budget surpluses. They also argued that marriage bonuses
are a misnomer and giving tax relief to single-earner couples not pay-
ing a marriage penalty is wholly appropriate. Finally, they argued that
targeting tax cuts away from the top of the income distribution is inap-
propriate. Senator Roth (R-DE) summarized the Republican argument
as follows (Congressional Record S6802, S7105):
According to the Congressional Budget Office, in 1999, there were about 7.5
million joint returns with an adjusted gross income greater than $100,000.
And 56 percent of that group, or 4.2 million couples, suffered from a marriage
penalty. The total amount of marriage penalty suffered by those couples is
almost $12 billion, which is more than one-third of all the marriage penalties
caused by our Tax Code.
The average marriage penalty faced by each one of these families is about
$2,800. Yet despite these significant marriage penalties encountered by these
couples and they claim that this is a targeted tax bill to eliminate the marriage
tax this substitute amendment [the Democratic alternative] turns its back on
those taxpayers. The amendment tells these folks they make too much money
and should not receive complete relief . . . .
. . . I would ask those who oppose this family tax relief: Just how big will
America s budget surplus have to get before America s families deserve to
receive some of their tax dollars back? If not now, when? If eight percent
of just the overpayment is too big a refund, how little should it be? How long
do they have to wait? How hard do they have to work? How large an overpay-
ment do they have to make? This bill is fair. We have addressed the three largest
sources of marriage tax penalties in the tax code the standard deduction, the
rate brackets, and the Earned Income Credit. And we have done so in a way
that does not create any new penalties any new disincentives in the tax code.
Political Conflict over Who Gets What? 65
We have ensured that a family with one stay-at-home parent is not treated
worse for tax purposes than a family where both parents work outside the
home. This is an important principle because these are important families . . . .
. . . Families across America are waiting for us to make good on our promise.
They are waiting for us to return some of this record surplus to them. Let s
approve the Marriage Tax Relief Reconciliation Act of 2000 and let s divorce
the marriage tax penalty from the tax code once and for all.
In the end, the Democratic plan was defeated on a nearly straight
party vote, with one Republican (Lincoln Chafee, RI) joining with
the Democrats (Record Vote 200). With the Democratic alternative
defeated, the Republican proposal then passed the Senate (Record Vote
215) with weak support from Democrats. There were, however, some
differences between the House and Senate version of the legislation
that had to be reconciled in conference. The main differences between
the two versions were that the Senate version expanded the 28 percent
bracket while the House bill expanded only the 15 percent bracket and
the Senate version phased in the tax cuts more quickly than the House
version. The conference agreement discarded the 28 percent bracket
expansion but phased the cuts in more quickly than the original House
version. The conference version of the legislation passed the House on
July 20, 2005 (Roll No. 418) and the Senate on July 27, 2005 (Record
Vote 226), both with moderate bipartisan support.
The legislation was forwarded to President Clinton, but the pres-
ident vetoed the legislation (by pocket veto), and in his remarks
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