THE VIRGINIAN-PILOT  
              Copyright (c) 1994, Landmark Communications, Inc.

DATE: Monday, July 18, 1994                  TAG: 9407160024
SECTION: FRONT                    PAGE: A6   EDITION: FINAL  
TYPE: Editorial
                                             LENGTH: Medium:   62 lines

CORRECTION/CLARIFICATION: ***************************************************************** In Monday's editorial ``Anti-family tax code,'' the calculation of the amount of federal taxes paid by single people earning $50,000 and a married couple earning $100,000 was incorrect. The tax such a married couple pays is less than is stated in the editorial. Correction published Thursday, July 21, 1994, page A14. ***************************************************************** TAX CHANGES ANTI-FAMILY TAX CODE

President Clinton sold last year's tax increases on the basis that they would soak only the ``rich.'' Well, a lot of people who don't think of themselves as ``rich'' are paying more, and working families are getting hurt.

A recent study compiled by the National Bureau of Economic Research, a Cambridge, Mass., research organization, blames the tax changes for increasing the so-called ``marriage penalty''; that is, the extra taxes paid or tax refunds forfeited by people who choose to marry or stay married instead of remaining single or getting divorced.

For example, the NBER study calculates that under the new tax law, a ``working poor'' couple with two children and both parents earning $10,000 a year would get a tax refund of $359. If that couple were to divorce and each take custody of one child, however, the refund would leap to $2,038 each.

It's not like policymakers weren't warned. A May 1993 report by the Congressional Research Service, well before the new tax legislation was passed, said as much. It told the president and Congress that the changes, especially upping the progressivity of the code and the expansion of the Earned Income Tax Credit, would increase the marriage penalty for working couples. (The EITC is a tax refund for the poor, which was to mitigate the effect of higher energy taxes on those below the middle class.)

The tax code is now more anti-family than ever. In 1982, when similar marriage penalties were plaguing American families, a ``two-earner deduction'' was instituted to alleviate the situation. But that was eliminated by the 1986 tax reform when the number of tax brackets shrank to two. But with the Clinton changes, the marriage penalty is back, and ``the size of the marriage tax is now quite extraordinary,'' the NBER report concludes.

The progressivity of the new tax code penalizes working people who marry by knocking them into higher tax brackets. For example, two single people each earn $50,000 and each fall into the 28 percent income tax bracket, paying $28,000 in combined federal income taxes. If they marry, however, their combined income of $100,000 lands them in the 31 percent tax bracket. Their federal tax bill thus rises to $31,000.

Only a tiny percentage of people would avoid marriage for tax reasons, of course. But that is no justification for further burdening family formation. The increased marriage penalty, we suspect, is only one of the many perverse results likely to be noted from the Clinton folly of raising income-tax rates. by CNB