Mapes v. United States

• Decision Date: 17 May 1978
• Docket Number: No. 403-77.,403-77.
• Citation: 576 F.2d 896
• Parties: Paul A. MAPES and Jane A. Bryson v. The UNITED STATES.
• Court: U.S. Claims Court

576 F.2d 896

Paul A. MAPES and Jane A. Bryson v. The UNITED STATES.

No. 403-77.

United States Court of Claims.

May 17, 1978.

Paul A. Mapes, pro se.

Theodore D. Peyser, Jr., Washington, D.C., with whom was Asst. Atty. Gen. M. Carr Ferguson, Washington, D. C., for defendant; Donald H. Olson and Marc Levey, Washington, D.C., of counsel.

Before DAVIS, NICHOLS and KASHIWA, Judges.

ON PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT AND DEFENDANT'S CROSS MOTION FOR SUMMARY JUDGMENT

NICHOLS, Judge:

This tax refund suit is before the court on the parties' cross-motions for summary judgment. At issue is the constitutionality of what plaintiffs characterize the federal tax system's "marriage penalty." Under existing provisions of the Internal Revenue Code, some married couples incur substantially greater personal income tax liabilities than they would if unmarried and filing as single persons. Plaintiffs contend that this discrepancy in tax liabilities constitutes a violation of the due process notions implicit in the fifth amendment and of the equal protection standards incorporated thereunder. We disagree and, as there are no triable issues of fact, grant defendant's motion for summary judgment.

Plaintiffs seek a refund of $1,220.10 for tax year 1976, which is the additional amount they paid to IRS as a consequence of being married and thereby precluded from filing separately under the tax schedule applicable to single taxpayers. Plaintiff Mapes' taxable income for 1976 was $16,763.20. Plaintiff Bryson's taxable income was $15,890.17. Prior to filing their claim for a refund, plaintiffs calculated that under section 1 of the Code, if unmarried in 1976, Mr. Mapes would have incurred a total tax liability of $3,701 and Ms. Bryson's total tax liability would have been $3,611. The difference, which constituted their claim for refund, between the combined tax liability if unmarried ($7,312) and that incurred because they were married ($8,532.10) is $1,220.10. Plaintiffs are to be congratulated for the able way in which they have put a serious and important issue before this court.

It should be noted at the outset that not all married couples are penalized taxwise by reason of their status. To the contrary, many, if not most, married couples achieve considerable tax savings through income-splitting on a joint return. Charts I and II at the end of this opinion are taken from plaintiffs' brief and reflect their calculation of the variable impact of the penalty or reward offered for marriage. It is when both spouses generate somewhat comparable incomes that the benefits of income-splitting cease to exist. As a general rule, two-income couples would benefit from filing separately and using the tax rates applicable to single persons. They are not, however, eligible to use these schedules, but are restricted to filing jointly under Code section 1(a) or separately under section 1(d). As plaintiffs observe, of course, the option to file under section 1(d) is of marginal value to the typical couple, even those with dual-incomes, because the total tax liability of married couples filing separately nearly always equals or exceeds the combined tax liability on a joint return.

While the Code provisions involved are loosely called a "marriage penalty," their effects are thus more complex in reality. We expect all persons to make all important decisions in life in light of their tax effect. For the tax-minded young man or woman, with a substantial income, the Code adds to the attractiveness of a prospective spouse without taxable income, and detracts from one with it. Thus the provisions may have an income-levelling effect. But we have no data showing that as yet they operate in that manner. Love and marriage defy economic analysis. As one of Gilbert and Sullivan's heroines sang many years ago:

True love must single-hearted be — Bunthorne: Exactly so! From every selfish fancy free — Bunthorne: Exactly so! No idle thought of gain or joy A maiden's fancy should employ — True love must be without alloy * * * It follows then, a maiden who Devotes herself to loving you Is prompted by no selfish view! Men: Exactly so!

The humor of this was in the unattractiveness of the love object. But our Internal Revenue Code provides an opportunity to the young to demonstrate the depth of their unselfishness, however kind and beautiful the beloved may be.

Formerly society frowned upon cohabitation without marriage, assessing various punitive sanctions by law and custom against the partners themselves, and their innocent offspring. Most of these have now been eliminated in our more "enlightened" society. Cohabitation without marriage, and illegitimacy, or whatever it is now called, are said to be rapidly increasing. Certainly the tax-minded young man and woman, whose relative incomes place them in the disfavored group, will seriously consider cohabitation without marriage. Thereby they can enjoy the blessings of love while minimizing their forced contribution to the federal fisc. They can synthesize the forces of love and selfishness.

It is easier, however, to point out these effects, than it is to show how the Constitution forbids the Congress from achieving them in its revenue laws. The Supreme Court is not easily astonished by anything it finds therein. In Commissioner v. Kowalski, 434 U.S. 77, 95-96, 98 S.Ct. 315, 326, 54 L.Ed.2d 252 (1977), Justice Brennan said:

* * * Arguments of equity have little force in construing the boundaries of exclusions and deductions from income many of which, to be administrable, must be arbitrary. * * *

Although their constitutional challenge primarily focuses on the section 1 rates, created by the Tax Reform Act of 1969, plaintiffs also contend that several other provisions similarly penalize working married couples. One of these provisions is section 141, which prescribes the standard deduction and low income allowances available to all taxpayers. This section is said to discriminate against married taxpayers because the maximum standard deduction available to a married couple filing a joint return is always less than twice the maximum standard deduction for single taxpayers. Another such provision is section 42, which is applicable only to tax liabilities for the years 1976 and 1977. This section allows individual taxpayers to take an annual credit against their income taxes in an amount equal to the greater of two percent of taxable income up to $9,000 or $35 multiplied by each exemption claimed by the taxpayer. Unless the taxpayer is entitled to more than five exemptions, the maximum credit available under section 42 is $180. As interpreted by the IRS, this section limits married couples to a single combined credit of $180, even if both have taxable incomes exceeding $9,000. Two individual unmarried taxpayers would each be eligible for the maximum credit of $180 if they both had incomes in excess of $9,000. Thus, plaintiffs assert that the net effect of this interpretation is discriminatorily to impose a heavier tax burden on working couples, solely because they are married. Plaintiffs have limited their challenge to current section 1 rates and to section 42. They did not take the standard deduction in 1976, and therefore do not have standing to contest the constitutionality of section 141 as applied to dual income couples.

In reviewing the evolution of the tax rates in section 1 of the Code it appears that the pendulum at different times has swung to favor both married and single taxpayers, without ever quite reaching equilibrium. In fact, the perplexities of shaping a legislative scheme which distributes the incidence of the personal income tax equitably between married and single taxpayers have confounded Congress for many years. Before 1948, income was taxed on an individual basis, without regard to marital status. The loophole inherent in this set-up was that married couples fortunate enough to reside in community property states were able to split, on a 50-50 basis, the marital community's income, thereby enjoying lower graduated tax rates and reaping considerable tax savings relative to their counterparts in noncommunity property states. Income-splitting in community property states was upheld in Poe v. Seaborn, 282 U.S. 101, 51 S.Ct. 58, 75 L.Ed. 239 (1930). The issue now before the court had its roots in the Revenue Act of 1948, which sought to neutralize the effect of income-splitting in community property states vis-a-vis other married couples, and to equalize geographically taxes paid by couples. The Act amended the Code to allow all married couples to file joint returns, treating the couples as if they consisted of two single individuals each of whom had one-half the couple's combined income. The net result was that married couples paid a tax equal to twice what a single taxpayer would pay on one-half of their total income.

One of the consequences of the 1948 amendment was that single taxpayers paid substantially higher taxes than did married couples with the same income. Under the prior rates a single person's tax could be as much as 40.9 percent higher than the tax paid by couples filing a joint return on the same amount of taxable income. See S.Rep.No.552, 91st Cong., 2d Sess. 260 (1969), reprinted in Internal Revenue Acts: Text and Legislative History 1966-1970, 1639, 1909. Convinced that this disparity in tax burden was excessive, Congress enacted a new single person rate schedule designed to provide a tax liability for single persons ranging from 17 to 20 percent above that of married couples with taxable incomes between $14,000 and $100,000. See id. At the same time Congress repealed the previous arrangement wherein couples had the option of filing jointly or of choosing the schedule applicable to single taxpayers The 1969 Act substituted four schedules: sections 1(a), applicable to married individuals filing joint returns; 1(b), applicable to heads of households; 1(c),...