Married Black couples often pay more in federal income tax than White married couples. And the racial disparity in California may exceed the national average.
A study by Washington’s nonpartisan Tax Policy Center found that nationally, 46% of Black married couples paid what amounts to a “marriage penalty,” while 43% of White couples paid one.
That cost Black couples an average of $148 more in federal income taxes. Just among Black couples with penalties, the average marriage tax was 1.8% of their income. In contrast, it was 1.4% for White couples who experienced marriage penalties.
The difference could be even more in California for higher-income married couples, thanks to the cap on deducting state and local property taxes. Under the 2017 tax cut law, deductions are limited to $10,000 for taxpayers who itemize.
So, a married couple would be able to take only as much as $10,000. Two people filing separately could each take $10,000. Hence a “marriage penalty.”
Prior to the 2017 law, taxpayers could usually deduct any amount they had paid in state or local taxes, a notable benefit to people in much of California, where property taxes tend to be higher.
In 2018, the average deduction for state and local taxes could have been: In El Dorado County, $19,344, Placer County, $19,246, Fresno County, $16,632, San Luis Obispo County, $16,536, Sacramento County, $14,338, San Joaquin County, $14,153, Merced County, $11,604 and Stanislaus County, $13,861. The data were compiled by the Tax Foundation, a Washington research group.
Congressional Democrats from urban areas have pushed hard to eliminate the limit on the deduction, but they’ve gotten nowhere. And with Republicans controlling the House, any effort will probably stall again.
Trying to ease the penalty for Black taxpayers would be nearly impossible.
“There’s no easy solution to the racial disparities in the tax treatment of marriage in a tax code that doesn’t explicitly refer to race,” the Tax Policy Center study says.
The penalty is created when two wage earners make roughly equal amounts of money as they file jointly, thus kicking them into a higher tax bracket. Rates increase as incomes go up.
“In Black families, both spouses are more likely to work than is the case with White couples,” the study said.
It also found that incomes tend to be more equal between Black spouses. For 6 in 10 Black couples, the lower income earner made at least 60% of what the higher earner made.
Among White couples, that percentage was around 45%.
While the state and local property tax deduction could boost taxes for wealthier Californians, Janet Holtzblatt, one of the study’s authors, was hesitant to draw broad conclusions about the penalty’s impact on state residents.
The amount of income affects marriage penalties, she told The Bee, but “the reasons vary depending on someone’s location on the income distribution.”
Lower-income workers, other than those with very little earnings, could incur marriage penalties due to the phase out of the earned income tax credit. The credit is aimed at providing a tax break to lower and middle income workers.
Very high-income taxpayers could incur marriage penalties because the very top tax bracket for joint filers and the alternative minimum tax threshold begin at less than twice the threshold for single filers.
About 59% of Black married couples with an adjusted gross income between $50,000 and $100,000 paid a marriage penalty, compared to 51% for White couples.
Marriage actually helped white couples in this instance. While Black couples in that income brackets paid on average a net penalty of $358, White couples gained $61.
