Something I’m just fully coming to understand now: there is a marriage tax penalty for many high earning individuals.
Most people do not care about this because most people do not make enough money for it to matter. But for those of us who plan and hope to be affluent, and have incomes that are basically equal to their partners, we’re getting screwed.
E.g. If you and your partner both make $200,000 a year, as a couple you will pay an additional $9,200 in taxes every year than you would if you had not been married. Really, you’re paying this penalty because you and your partner are equal earners. Under American law, you’d be much better off if one partner made $400,000 and the other made 0. In this case, by being married you actually save $12,000 a year.
So what is it? Is the federal government trying to encourage wealthy stay-at-home moms? Do they not like the idea of my spouse and I both doing well? Is it bad for the kids if we’re both working enough to make $200,000 (which is not that much money when, as a couple, you spent the previous 10 years working your butts off and slowly whittling away $200,000 in student loan debt and living in the most expensive metro area in the nation).
I’ve read that I can get his social security benefits if we’re married. But the vast majority of our retirement income will come from individually funded 401ks.
Maybe I’ll thank the government for the perks of marriage when he dies and I don’t have to pay taxes on his inheritance. Or, more likely, it’s a wash after all those years of higher tax payments. And at that point my husband is dead so…I’ll probably still be pretty pissed.
So, can anyone tell me, in this unique scenario outlined above, will a couple like us realize any material benefits from being married? Or is marriage becoming an outdated institution for the upper middle class as couples become more equal?
Ultimately, the marriage tax is not an issue for us now. Our tax burden will increase just a couple hundred dollars this year when we file jointly for the first time. But you can be damn sure I’m going to be thinking about this bull shit every time I get a raise and every time he gets a raise. Or maybe we’ll just pretend to get married 😬
America, be better. The tax code is a nightmare.