By Dolores Kong
The Boston Globe

DEDHAM - As Allison Hazen stood on a platform getting
fitted for her wedding gown, she and bridal shop owner
Rachelle Avola talked about love, finances, and the
so-called marriage tax.

"When filing jointly, you're definitely getting hit
hard with a higher tax rate," said Hazen, 29, an
attorney and budget director for a member of the state
Senate Ways and Means Committee, as Avola took up the
hem of her white jacquard gown.

The longstanding tax arose by historical accident and
now penalizes about 50 to 60 percent of married
couples, particularly those with both husband and wife
earning paychecks. Last month, Congress passed a bill
to reduce the tax, but last Saturday President Clinton
vetoed it as poorly targeted.

Like the millions of couples affected every year,
Hazen and her fiance, also a lawyer, aren't letting
the tax get in the way of love and romance; they're
walking down the aisle next month. And, like many
other soon-to-be married couples, they haven't taken
any special financial steps to minimize the impact of
the tax.

"If you know about budgets and know about the tax, and
you're not doing anything about it, I bet other young
people wouldn't, either," Avola told Hazen as she
trimmed and pinned the gown at her shop, Emma's of
Dedham, which has been in business under various
owners since the 1950s.

The debate over the marriage tax - which takes an
estimated $29 billion from about 20 million married
couples' pockets each year - has reached a feverish
pitch in Washington this presidential election year.

Despite Clinton's veto of the marriage tax cut bill,
Republicans say they will bring up the issue again
this year.

The quirk in the US tax code that now creates a
marriage penalty - income splitting between husband
and wife - first went on the books in 1948 and
actually served as a marriage subsidy for most couples
until 1969. Back when most couples had only one
breadwinner - the husband - splitting the income
between husband and wife meant being taxed in a lower

But since 1969, with changes in tax laws and the
growing number of women in the work force, married
couples have been increasingly penalized, with a
record proportion now having to pay hundreds to
thousands of dollars a year more than they would have,
had they stayed single.

"It does send a kind of odd message from the
government - `You should pay extra taxes if you get
married,' " said Daniel Feenberg, a research associate
for the Cambridge-based National Bureau of Economic
Research who has studied the marriage tax.

A 1997 Congressional Budget Office report on marriage
and the federal income tax found that between 1969 and
1995, the proportion of working-age married couples
with both spouses earning paychecks jumped from 48.4
percent to 71.8 percent.
Some married couples still get a subsidy today,
however - those in which only one spouse works, or
those with a big difference between the incomes of the
two spouses.

Why are some couples penalized while others are
subsidized? It has to do with the progressive nature
of the US tax rates. When two spouses work, their
combined incomes could kick them up into a higher
marginal tax bracket. When only one earns a paycheck,
the income is split, allowing more of the money to be
taxed at lower rates.

"People think progressivity is an important value and
marriage neutrality is an important value," said
research associate Feenberg. "All these things have to

And in a presidential election year, of course,
talking about a marriage tax cut wins out over
discussing the progressive tax system.

The Republicans say they will bring up the marriage
tax issue again when Congress returns from its August
recess. The Republicans probably won't have enough
votes to override Clinton's veto and would need to
revise their $292 billion marriage tax cut proposal.
Clinton and most Democrats objected to the bill as
benefiting higher-income families and couples already
getting a marriage subsidy, and have offered
alternatives. In his veto statement, Clinton also
criticized the Republican-controlled Congress for
failing to use the projected budget surplus to
strengthen Social Security and Medicare.

Knowing how government works, bride-to-be Hazen didn't
plan her wedding around the election-year marriage tax
debate or change her financial plans in other ways
because of the impending tax.

"I think there are steps you can take, like changing
the timing of your wedding," she said, and increasing
401(k) contributions or making a deductible Individual
Retirement Account contribution if you qualify.

Hazen said she and her fiance have also thought about
buying a house, which would give them a
mortgage-interest deduction that "definitely offsets
the higher tax rate."

Avola, of Emma's of Dedham, said business is strong
this year, with lots of couples taking their vows,
marriage tax or not. "It's the millennium bug and the
love bug," she said.

That bug will be in full force Wednesday at Filene's
Basement in Downtown Crossing, where hundreds of
brides-to-be will rush the store's annual 8 a.m.
bridal gown sale, marriage tax be damned.

While most people are like Hazen and don't take
tax-minimizing steps before they take their vows,
emerging economics research and anecdotal evidence
suggest there are some people who will go to lengths
to avoid or minimize the marriage tax.

One series of studies has found that some people will
delay or even forgo marriage because of the tax, while
others will divorce in part because of it.

"What we've tended to find in all this is that
economic incentives - including taxes - matter," said
James Alm, chairman of the economics department at
Georgia State's Andrew Young School of Policy Studies,
who has coauthored studies on the tax's impact on
marriage and divorce with Leslie Whittington of
Georgetown University.

"It's not a lot of people, it's not a big response,"
Alm said. For most people, "other things seem to
explain the marriage decision."

Joel Slemrod, director of the Office of Tax Policy
Research at the University of Michigan Business
School, said the research literature suggests even the
most tax-conscious people still will marry, although
they may wed in January instead of December to gain
another year penalty-free.

The literature shows similar timing decisions made by
the tax- conscious, said Slemrod, coauthor of the book
"Taxing Ourselves: A Citizen's Guide to the Great
Debate over Tax Reform." Such decisions encompass
everything from the best month to have a baby
(December, to get a full year's tax deduction), to the
best month to sell stock (depends on whether you're
realizing a loss or trying to hold on to a profitable
stock long enough for the lower, long-term capital
gains rate, among other factors).

Elizabeth Crannage, owner of Gowns by Elizabeth in
Stoneham, said she averages about half a dozen brides
a year who consciously marry in January rather than
December. Crannage, who makes and designs wedding
gowns, said many of her customers are lawyers and
other professionals who know about the tax impact.

"They talk a lot about taxes and about being married
and the financial consequences," said Crannage. "It
can cost quite a bit of money."

One of her clients, Maureen Burke, 34, said, "I
definitely wouldn't get married on Dec. 31. That would
definitely enter into my mind. For the sake of one
day, you'd get hit."

But Burke, who works in the financial services
industry, and her husband, who's in computer software,
didn't marry in January, either. Instead, they chose
to wed in autumn, six years ago.

Burke has friends who've said they didn't want to get
married because of the tax hit. "I've heard that more
than once," she said, although many have since wed.

The current marriage tax debate highlights such
ongoing tax policy considerations as whether taxation
should reflect social changes, be used in an attempt
to shape behavior, or be used to simply raise revenues
in as equitable a way as possible.
Sometimes, tax policy just comes down to politics.

Even in 1948, when the US tax code first allowed
income splitting, subsidizing most married couples in
those days, the change came not from the federal
government wanting husbands to work and wives to stay
at home. It came in response to some states adopting
community property laws that allowed income splitting,
according to tax historians.

Before 1948, individuals were separately taxed on
their own incomes, whether married or not. Some tax
policy specialists favor returning to that as a way to
address the current inequity of some married couples
getting a subsidy while other married couples and
singles don't.

If taxation were just about raising revenues and not
about making a social or political statement, the
federal government could take in between $300 million
to $1.3 billion more through the marriage tax if it
were to recognize gay and lesbian couples as legally
married, according to a study in the National Tax

Lee Badgett, assistant professor of economics at the
University of Massachusetts, Amherst, and coauthor of
the study with tax researchers Alm and Whittington,
became interested in this topic as a result of the
debate over same-sex marriages.

In their calling for legal recognition of same-sex
marriages, "Gay and lesbian people are wanting to have
access to more rights," such as the spousal health
benefits that heterosexual married couples receive,
Badgett said. But as her study shows, "There's a
financial downside to getting married."

A cut in the marriage tax "benefits me potentially, so
that's good," said Hazen, as she finished her wedding
gown fitting at Emma's of Dedham. But she also knows
there are other needs the federal government must
weigh in considering any tax cut.

For Hazen, who knows about the financial downside that
will come with her September marriage, the marriage
tax is worthy of debate.

For better or worse? While most couples pay more taxes
after marriage than when single, some get a tax
subsidy, particularly if only one spouse works. A bill
passed last month by Congress would have lowered the
marriage tax for most couples now facing a penalty,
but also would have given even more of a break to
those who already receive a subsidy. President Clinton
vetoed the bill Aug. 5, saying it was poorly targeted
and demanding that his alternatives be considered.
Republicans say they will bring the issue up again
when Congress returns from recess.