Measuring the Effect of the EITC on Marriage Penalties and Bonuses

Updated March 25, 2001 <p>A revised version of this paper appears as "Measuring the Effect of the EITC on Marriage Penalties and Bonuses." National Tax Journal 53(4) (part 2): 1107-1134. For more information see www.ntanet.org. <p>In 2000, the EITC will increase net marriage penalties by $3.6 billion. Nearly 60 percent of EITC-related new marriage penalties will be attributable to couples who currently do not receive the EITC because their income is above $30,000. However, both aggregate and relative estimates of marriage penalties and bonuses, attributable to the EITC, are very sensitive to assumptions regarding a couple's living arrangements and custody agreements if they do not file joint returns. Recent proposals to provide marriage penalty relief through the EITC are well-targeted to lower-income taxpayers, but vary in their ability to reduce marriage penalties.