The Marriage Tax

The design of tax laws is difficult because we have conflicting goals concerning our tax system. Policy makers often struggle to meet the demands of various groups without knowing exactly what tradeoffs are logically possible or impossible. The relative taxation of married couples and single persons is one area where tax design is difficult. This paper proves that it is impossible to have a tax system that simultaneously (1) is marriage neutral, (2) pools incomes within a married couple, and (3) maintains a nonlinear tax function. The paper explores the logical implications of abandoning any one of these three principles.