Race, Ethnicity, and Taxation of the Family: The Many Shades of the Marriage Penalty/Bonus

Abstract

Recent events have increased the focus on racial justice. One aspect of this attention is the realization that race interacts in important — but often not fully understood — ways with taxation, including taxation of the family. In this paper, we quantify the racial disparity in the magnitude of the “marriage penalty” or “marriage bonus,” using individual micro-level data from the Current Population Survey for the years 1992–2019. We find that Black married couples nearly always face a higher averaged marriage penalty (or a smaller averaged marriage bonus) compared with white married couples, even when we compare couples with similar family earnings. This occurs primarily because the incomes of Black married couples tend to be more evenly split between spouses than the incomes of white married couples. The differences between white couples and Hispanic couples tend to be smaller, but nonetheless they are still present in many cases, with Hispanic couples also facing a marriage penalty. We conclude with suggestions for reform of the individual income tax that would reduce the disparate racial and ethnic treatments across families.