For love or money? The impact of income taxes on marriage

There is a large empirical literature that demonstrates the importance of e conomic factors in the decision to marry. Taxes, however, have been largely overlooked as a determinant of marriage, even though the tax system in the United States is not marriage-neutral; that is, when two individuals marry , their marital income tax burden is typically different-sometimes higher, sometimes lower-than their combined single income tax obligations. In this paper we explore the impact of the federal individual income tax, as well a s other economic and demographic variables, on the marriage decisions of in dividuals. Using longitudinal data from the Panel Study on Income Dynamics for the period 1968-92, we estimate a discrete-time hazard model of the tim e to first marriage. We find that the probability of marriage is significan tly affected by a range of economic and demographic variables. Importantly, we find that an increase in total income taxes paid by married versus sing le women has a negative effect on the likelihood of marriage, and that the change in the marginal tax rate is also a significant determinant of marria ge in some cases; in contrast, the tax effects are rarely significant in de termining marriage probabilities among men, although there are some differe ntial responses by race. In general, the impacts of the income tax variable s, even when statistically significant, are small.