# Revisiting a History of Marriage in the Tax Code, Part 8

As we’ve discussed in prior parts, changes to the tax code in 1917 created inequality in tax liability between married couples living in common-law states vs. couples living in community property states. It took Congress more than 30 years to address this inequality.

Finally in 1948, Congress created filing statuses. The original filing statuses in 1948 were:

• Single
• Married Filing Jointly
• Married Filing Separately

There was still just one tax bracket, but the way in which married couples calculated their tax liability eliminated the disparity between common law and community property law.

The reform of 1948 gave couples two choices: they could file as married filing jointly, or as married filing separately. The tax calculation on a joint return applied community property concepts — for ALL married couples in all states.

A couple filing jointly would figure their joint taxable income, divide by 2, find the tax on that amount, and then multiply by 2.

Example:

In 1949, John has income of \$8,000 and Jane has income of \$4,000. They live in a common-law state and file a joint return showing taxable income of \$12,000. They calculate the tax on \$6,000 of income (1/2 of \$12,000), which is \$1,360. They multiply \$1,360 by two to arrive at their total tax, of \$2,720.

If they file separate returns: The tax on \$8,000 is \$1,960 and the tax on \$4,000 is \$840, resulting in total tax owed of \$2,800.

Now let’s say John and Jane live in a community property state:

John and: Jane have the same amount of income but live in a community property state. They can file a joint return in the same manner as Example 6, and owe \$2,720. Or they could file separate returns with each showing income of \$6,000. Either way, they arrive at \$2,720. There is now equality between common law and community property couples (unless our couple in Example 6 would for some reason choose to file separate returns).

The effect was that filing a joint return became the most convenient, and cost-effective, way for married couples everywhere to file tax returns. And the inequality between community property law and common law was eliminated from the tax code.

But not surprisingly, the fixes made in 1948 opened up inequalities elsewhere, which Congress would try to patch in the years to come, which would eventually lead to the “marriage penalty” that still exists to this day.