Because married couples form a household and it allows them to share child care and work as they see fit.
If you tax individuals, you're encouraging both to earn the same amount of money.
If you tax couples, it encourages the higher earner to keep working, thus you have a higher overall productivity.
Thus you have freedom and higher overall productivity in favor of shared tax burden.
And by encouraging both to work, you'll get more total tax revenue.
Maybe it's a long term strategy? The tax you'll levy on the kid (as the kid and later as adult) is expected to be much more than what you can levy on one partner (during child rearing)?
CRA is even pretty careful about letting a spouse claim capital gains income; it's always attributed back to whoever earned the original principal (outside of inheritance). I think the only way around this is to formally "loan" the spouse their investment money, but you have to charge them interest and the interest is of course income to you.
A couple each home earns x, each gets taxed on x. Each gets the tax free allowance on the fist £12.5k of the annual income. Each gets the full basic rate slice before they hit higher bands etc.
If one of the couple earns 2x and the other zero, then only one can use their tax free allowance and they get one slice of the basic rate band etc.
They still have the same pre-tax income for the same household.
Personally I think people should be allowed to opt in to sharing taxable income.
What fraud?
> You will then get the argument of "why should I be taxed more because I'm single"?
You might, but its a dishonest argument. You are taxing households together. You are giving each individual the same amount of tax free income and the same amount in the lower bands.
It is already possible for self employed people to do this by making their spouses a partner or shareholder in the business or similar. This is just extending the same rights to employed people.
And as for not seeing how a tax cut based on 2 people living together could not be abused, you must be very short sighted.
its fairer
> It presumably would improve your personal standard of living
I am divorced and remain single so it would make no difference to me
> could see if you want to encourage families having tax benefits based on children
I want people to enjoy family life. Its the same reason I want family friendly working hours, decent paternity leave, a right to home educate and better schools etc.
> And as for not seeing how a tax cut based on 2 people living together could not be abused, you must be very short sighted.
And as for not seeing how a tax cut based on 2 people living together could not be abused, you must be very short sighted.
Please do explain . Also please find evidence it is abused where tax does work like that. Its not a cut either as many households would pay the same tax, and its likely rates would go up slightly to make it revenue neutral. Its also more consistent as benefits are based on household income in the UK, as are things like student loans and educational bursaries and the treatment of finances in divorce.
Student loans are not based on household income and many other benefits aren't either.
As for family life that is covered by basing tax cuts / benefits on children not merely the nebulous concept of a household.
Really? There are benefits and tax cuts that allow parents to spend more time with their children? Not that I know of.
Citation needed. Mine are.
Hypothetically if the household splits up due to a divorce its assets are divided 50:50 (this varies by jurisdiction). Usually (again depending on the jurisdiction) the lower-earning spouse also gets alimony to even up the difference in income resulting from the new situation, at least for a few years.
Clearly then the state believes assets owned and income earned by either one of the couple belong equally to both (something I agree with personally: it's called a partnership). If that's the case, how could it be wrong to tax the household as a single entity?
Specialization within the houshold? Because it's conducive to reproduction?
At a broad level, offering benefits for marriage solves political problem, married people tend to vote so need to be catered to. It also solves societal one, marriage tends to be better at extremely broad strokes for society. Married Couples live longer, commit less crime, kids in married households generally have better outcomes and so forth. So politicians in United States decided to incentive it.
Are you in a funky state with bad tax policy?
Portland, OR metro gives a $125k threshold to single and only $200k to married filing jointly for supportive housing taxes, which is a 1% tax on income above the threshold.
I have no idea why households that tend to demand less housing (married usually live together) are charged more than singles, who typically demand their own housing at that income level. It makes no sense!
By living in a single house, a married couple demands less housing, which reduces the cost of housing against a fixed supply. Why are we taxing the people making housing cheaper under the guise of "affordable housing"? Shouldn't we treat affordable housing taxes like the carpool lane and reduce the burden of those that are reducing the burden on the constrained supply?
While there's numerous places where MFJ < 2x Single due to various marriage penalties, and even more numerous places where 2x Single < MFJ due to the shared tax bracket space below the 37% bracket....
there are very very few places where MFS > MFJ. They exist, but you have to be in particular situations like one person having disproportionately more debt and on an income based repayment plan, or similar.
There are of course many situations where 2x Single = MFJ = MFS if it's just two similar income W2 employees with no edge cases going on.
(Once you're married, filing 2x Single is obviously not an option)
Due to progressive taxation, we tax two people who make $50,000 less than someone who makes $100,000 which is where the tax savings come from.
To put it another way, eliminating the marriage differential[1] in all cases requires giving up progressive marginal rates or community property.
Which one do you want to give up?
[1] The current US brackets and deductions taxes some married couples more than comparable pairs of individuals, taxes some less, and is basically a wash in other cases. It's easy to move couples between the first two groups and you can move some of each to the third, you can't move all of them.
Taxation is a strange, mixed-up world.
Try 500k both