Section of Taxation Publications
  VOL. 54
NO. 4
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 Note: The following is an excerpt from the introduction to the article as published in The Tax Lawyer. Author citations have been omitted for brevity. Tax Section members may read the article in its entirety in Adobe Acrobat format.
 The Earned Income Tax Credit and the Marriage Penalty: New Proposals in Light of the Economic Growth and Tax Relief Reconciliation Act of 2001
Frederick J. Bradshaw, IV*

* B.A. 1998, Washington University in St. Louis; J.D. 2001, University of
Richmond School of Law; 2002 Candidate for LL.M. Taxation, Georgetown
University Law Center. The author expresses his appreciation to his father
and to Professor Mary L. Heen for their comments and support in previous drafts
of this Article.


Historically, American society has venerated the institution of marriage for religious, moral, and cultural reasons. Much political rhetoric emphasizes the necessity of preserving family values. The present tax system, however, discourages marriage by levying a marriage penalty on nearly 22 million married couples. Although the marriage penalty affects taxpayers across the economic spectrum, it most severely affects low-income couples. Congress designed the Earned Income Tax Credit (EITC) to benefit the working poor, but both the EITC phase-out ranges and certain qualification rules generate a most egregious marriage penalty that still plagues low-income families today.

The Economic Growth and Tax Relief Reconciliation Act of 2001 (2001 Tax Relief Act) seeks, in part, to provide taxpayers with significant relief from all major forms of marriage penalties for the next ten years. Specifically, the 2001 Act: provides taxpayers filing joint returns with twice the standard deduction enjoyed by single taxpayers; expands the 15% tax bracket for taxpayers filing joint returns to twice the corresponding bracket for single taxpayers; and increases the phase-out ranges of the EITC by ten percent for married couples filing jointly. That notwithstanding, marriage penalty relief is limited by inherent deficiencies that suggest the need for a more comprehensive, long-term solution to the problem.

This article proposes two potential solutions to the disparate tax treatment still threatening millions of married and single taxpayers. The first entails a combination of reinstating the pre-1990 head of household requirements for the EITC and adjusting the EITC phase-out ranges for couples filing joint returns to double the value for single taxpayers. The second solution involves mandatory separate returns in conjunction with a legislative override of a 1930 Supreme Court case, Lucas v. Earl. In sections II and III, this article outlines the history of the marriage penalty, then traces the development of the EITC within the marriage penalty framework. In particular, section III addresses the primary problems with the EITC that continue to give rise to the marriage penalty. With the historical and conceptual foundations established, section IV evaluates two proposed tax reforms designed to combat the EITC marriage penalty. Section V concludes by suggesting more cogent alternative solutions to the 2001 Tax Relief Act that would entirely eliminate the marriage penalty generated by the earned income tax credit.


Published by
Section of Taxation, American Bar Association
With the Assistance of
Georgetown University Law Center


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