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Taxing polygamy.


The tax law treats married and unmarried taxpayers differently in several respects. Married persons, for example, can file and pay their taxes as a unified taxpayer, with rates that are different than those that apply to unmarried taxpayers. This different treatment of married persons has elicited criticism over the years. Some of the more salient criticisms include that married persons do not necessarily function as an economic unit, that joint filing discourages women from working, and that the various exclusions from the joint filing regime--including gay couples--is unfair.

This Article looks at joint filing through the lens of polygamy. Polygamy stretches joint filing beyond what it can handle: while the current tax rates could accommodate same-sex couples without any substantive changes, applying the current married-filing-jointly tax brackets to polygamous taxpayers would have absurd--and often unjust--results. Polygamous marriage is not only quantitatively different than dyadic marriage--it is qualitatively different. These quantitative and qualitative differences render traditional joint filing an untenable fit. Ultimately, I conclude that changing from a joint filing system to a mandatory individual filing system that recognizes marriage for certain purposes would be the fairest and most administrable way to treat marriage. Because most commentators think, however, that eliminating joint filing will not happen in the foreseeable future, I also provide a second-best solution that would fit within the confines of the current joint filing regime.

     A.  Prelude to the Joint Return
     B.  Problems With Joint Filing
     A.  Non-Traditional Dyadic Taxpayers
     B.  Polygamous Taxpayers
     A.  DO AAA and Same-Sex Marriage
     B.  Polygamists and Tax Evasion
     A.  Refuse to Recognize Polygamous Marriage
     B.  Treat the Entire Polygamous Family as an Economic Unit..
     C.  Index Tax Brackets to Family Size
     D.  Balkanized Filing
     E.  Mandatory Individual Filing


Overwhelmingly, Americans find polygamy distasteful, if not immoral. (1) For some, such distaste seems almost visceral, a reaction to what they consider a barbaric and backward practice. (2) Others point to concrete harms polygamy allegedly causes. For example, polygamy's critics frequently highlight the sexual exploitation of underage girls and the general inequality and abuse women face in polygamous communities to underscore polygamy's immorality. (3) But critics do not end their list of polygamy's evils with the abuse of women and girls. As they dig deeper into the litany of evils perpetrated by polygamists, critics almost invariably mention a problem far less intuitive: tax evasion. (4)

Still, aside from a glancing mention of tax evasion, no scholarship has analyzed the tax environment polygamists face. Instead, nearly all academic discussion of polygamy focuses either on whether to decriminalize polygamy (5) or whether polygamists enjoy any level of constitutional protection. (6) Scholars have generally ignored analyzing the operation of other generally applicable laws to polygamous families. (7) Recently, however, Professor Adrienne Davis introduced a "different approach" to polygamy scholarship. (8) She proposes moving beyond questions of decriminalization and constitutional protections. In doing this, she challenges scholars to explore second-generation questions, including "whether and how polygamy might be effectively recognized and regulated ... " (9) Professor Davis goes on to propose that the default rules of polygamy could mimic commercial partnership law. (10)

In the spirit of Professor Davis's second-generation polygamy paradigm, this Article represents the first attempt to address polygamous families and the federal income tax. (11) Evaluating the appropriate tax treatment of polygamous families provides a necessary foundation for all scholars of polygamy who are interested in how polygamy in America should look. The legalization and regulation of polygamy remain relatively impractical unless we know how polygamists will file and pay their taxes; polygamists, like most Americans, must earn income. Furthermore, like most Americans, they will need to calculate and pay taxes on that income. The tax law, however, has no mechanism for dealing with polygamous taxpayers. Though changing the focus of the discussion from whether polygamy oppresses women to how polygamous families can file their taxes seems a descent from the sublime to the banal, paying federal income tax represents one of the few experiences common to nearly all Americans, irrespective of marital status. The tax system, then, represents one legal regime polygamists would need to navigate.

Much of the scholarship that addresses polygamy also addresses samesex marriage. (12) Both opponents and proponents of polygamy point to growing legal and societal acceptance of homosexuality as paving the way toward legalized polygamy. (13) Same-sex marriage scholarship, moreover, has addressed issues of filing and paying taxes. (14) However, in this area, as in others, a polygamous marriage is not merely dyadic marriage plus. (15) Although some questions remain about who must file as married (16) after the Supreme Court's decision that Section 3 of the Defense of Marriage Act ("DOMA") is unconstitutional, (17) the tax law will treat opposite-sex and recognized same-sex marriages identically. Although scholars have debated whether marriage should affect tax filing and tax liability, (18) once there are special rules applicable to married couples, those rules can apply in the same manner to all dyadic marriages.

Polygamous marriage, though, differs from dyadic marriage both quantitatively and qualitatively. Taxing a polygamous family under the current regime would not provide for horizontal equity between dyadic and polygamous households. Instead, the current regime would in fact exacerbate marriage penalties and marriage bonuses. (19) Polygamy represents the cliched square peg to joint filing's round hole--to force polygamy into the current joint filing regime will necessarily damage polygamous families, the joint filing system, or both. Ultimately, this Article finds that polygamy constitutes the strongest justification to date for switching from joint filing to mandatory individual filing.

This Article proceeds in four parts. Part II discusses the provenance of joint tax filing in the United States, as well as the current criticisms and defenses of joint filing. Part III examines tax issues facing nontraditional dyadic families, including domestic partnerships, civil unions, same-sex marriages, and contrast those with the issues facing polygamous taxpayers. Part IV discusses how polygamy implicates the fairness of current tax law. Finally, Part V explores a series of approaches that the tax law could implement to accommodate polygamous taxpayers. It discusses the pros and cons of these several approaches, and gives two proposals that would make the tax law's treatment of dyadic and polygamous taxpayers more equitable. (20)


Implementing a fair and progressive tax regime is complicated. Trying to maintain that fairness and progressivity with respect to married couples increases that complexity exponentially. (21) Once it acknowledges marriage, a tax regime must determine whether to treat the married couple as a taxpaying unit or whether each individual spouse must pay taxes separately. A fair tax system should include marriage neutrality, income pooling, and progressive tax rates. (22) Unfortunately, as Professor Boris Bittker famously illustrated, these principles conflict with each other, leaving Congress with the weighty task of choosing among these goals in designing a marriage tax. (23)

A. Prelude to the Joint Return

Although the federal income tax currently treats married couples as an appropriate taxpaying unit, the federal income tax has throughout its history alternated between treating individuals and married couples as that unit. (24) When Congress originally enacted the federal income tax, it chose the individual as the appropriate taxable unit, (25) imposing tax on the "net income of every individual." (26) In spite of the plain language of the statute, the Bureau of Internal Revenue initially "took the position that the 1913 income tax ... taxed married couples as units." (27) The next year, though, the Treasury Department reversed itself, requiring husbands and wives to file separate returns. (28) A mere four years later, in 1918, the Treasury Department changed course again, providing taxpayers an optional joint return that allowed married couples to aggregate their incomes if they desired. (29)

In principle, the joint return simplified tax filing for married couples "whose combined income was below the amount that would trigger the surtax rate." (30) However, when rates significantly increased with the United States' entry into World War I, (31) filing joint returns became considerably less appealing to high-income taxpayers. (32) The higher rates caused high-income taxpayers to work harder, when possible, to shift a portion of their income to lower-taxed individuals. (33) For example, a taxpayer in the 35 percent tax bracket would owe taxes of $700 on an additional $2,000 of income, leaving her with $1,300 after taxes. If, however, she could shift half of her income to a taxpayer in the 10 percent tax bracket, she would pay $350 of taxes on the $1,000 she kept, while the second taxpayer would only pay $100 of taxes on his $1,000. Collectively, they would keep $1,550, reducing their aggregate tax bill by $250.

Income-shifting created some risk for the high-income taxpayer, though. To the extent he shifted his income to another person, he risked losing control of that income and how it would be put to use. In order to maintain control over the income and benefit from it, a high-income taxpayer would need to shift the income to a person over whom he had some control or whom he justifiably trusted. Often, therefore, he shifted his income to his wife or to other family members. (34)

The courts attempted to hold the line against taxpayers unilaterally reducing their tax bills without reducing their income. In general, courts held that a taxpayer "who earns or is otherwise entitled to receive income cannot assign it, for tax purposes, to another taxpayer, even if the transfer is effective under state law." (35) Ultimately, though, two Supreme Court decisions dealing with intra-spousal income-shifting caused the tax treatment of married couples in common law states to differ significantly from the tax treatment of married couples in community property states. (36)

The first of those cases involved an agreement between Mr. and Mrs. Earl. In 1901, the couple entered into a contract stipulating that they owned all current and future property and income as joint tenants with a right of survivorship. (37) Because his wife had a contractual right to half of Mr. Earl's income, the Earls argued that he should only report and pay taxes on half of his income, while his wife should pay taxes on the other half. (38) The Supreme Court acknowledged both the validity of the contract and its effect under California law. (39) Nonetheless, the Court determined that the Revenue Act of 1918 could and did tax salaries "to those who earned them." (40) Fruit, in the Court's analogy, could not be "attributed to a different tree from that on which [it] grew." (41) Taxpayers could not contractually change their tax liability.

That same year, however, the Supreme Court weakened its fruit-from-the-tree analogy in a second case involving an attempt to shift income from the earner to his spouse. In 1927, H.G. Seaborn and his wife lived in Washington, a community property state. (42) That year, their income included his salary, dividends, interest, and gains on the sale of property, including real estate that was held solely in his name. (43) They filed separate returns for their 1927 taxable year, each reporting half of the collective income and claiming half of the deductions. While technically the law vested Mrs. Seaborn with half of the property, the Commissioner of Internal Revenue argued that Mr. Seaborn had so much control over the property that, as long as the marriage lasted, all of the income belonged to him. (44) As a result, the Commissioner claimed Mr. Seaborn should have declared all of his income on his return. (45) Rejecting the Commissioner's contention, the Supreme Court held that because the state law treated the Seaborn's income as belonging to the couple as a community, the couple was correct to file separate returns, each declaring half of their total income. (46)

The Seaborn decision created a rift between states. Married couples in community property states could file separate returns, splitting their income and potentially paying less in taxes than similarly-situated married couples in common law states. Moreover, as a result of the Earl decision, couples in common-law states had no way to replicate this intra-spousal income-shifting. As a result of this split, a married couple's tax bill differed depending on the state in which they lived.

In 1941, after an unsuccessful attempt at preventing income-shifting by itself, the Treasury Department convinced the House Ways and Means Committee to recommend that Congress enact a mandatory joint return for married couples. (47) As part of the Revenue Act of 1941, a married couple would have paid taxes on their consolidated income at the rate of a single person with the same amount of income. (48) The reaction to the mandatory joint return threatened to defeat the entire Revenue Act, and President Roosevelt withdrew the provision. (49) Although the Treasury tried again in 1942--this time with protection for wives' wages--the provision met the same demise as its predecessor did. (50)

While the federal government tried unsuccessfully to eliminate the disparity between common law and community property states, the states themselves worked to exploit the difference for the benefit of their residents. Oklahoma and Oregon enacted legislation allowing married couples to elect into a newly created community property regime in an attempt to give their residents the ability to split their income for federal income tax purposes. (51) However, the Supreme Court refused to allow these elective laws to alter the tax treatment of married couples, saying that, at best, "the present policy of Oklahoma is to permit spouses, by contract, to alter the status which they would otherwise have under the prevailing property system in the State." (52) The Court held that the Oklahoma statute functioned in essentially the same manner as the contract in Earl, and that such an elective property regime could not prevent the government from taxing the person who earned the income. (53)

In reaction to the Supreme Court's decision, Oklahoma and Oregon amended their community property statutes, making them mandatory. (54) Hawaii, Pennsylvania, Michigan, and Nebraska soon followed and, by 1948, New York and Massachusetts were considering community property laws. (55) The states did not necessarily desire to change to community property law--a study in New York warned of significant difficulties in the transition--but without a federal solution, they saw this self-help as necessary. (56) Still, in spite of their importance to married taxpayers, these moves from common law to community property caused "upheaval and uncertainty." (57) Skeptics argued that the laws had been passed too quickly and that they would upset individuals' earlier plans. (58) Moreover, it was not always clear how the community property laws could be grafted onto a state's existing common law foundation. (59)

As common law states turned to self-help to achieve tax benefits for their residents, some demanded that the federal law change. In reaction to this lobbying--and buoyed by significant surpluses--Congress enacted the Revenue Act of 1948. (60) The Revenue Act of 1948 permitted married couples to file jointly and to enjoy a marginal tax bracket twice as large as the bracket applicable to an unmarried taxpayer. (61) Congress intended for this new joint filing option to equalize the taxation of married couples between common law and community property states and, as a result, eliminate the incentive for common law states to enact community property statutes. (62)

As long as the tax brackets for married couples filing jointly were twice the size of the brackets that applied to individuals, a married couple never paid more in taxes than two unmarried taxpayers with the same income. (63) More than two decades later, finally recognizing the unfairness toward unmarried taxpayers, Congress enacted a new rate schedule for married couples in 1969; a married couple's marginal brackets under the new schedule remained wider than, but not twice as wide as, the brackets of single taxpayers.

B. Problems With Joint Filing

Though Congress introduced joint filing to solve the problem of taxing couples differently based on their state of residence, joint filing threw a wrench into the design of the tax system. A tax system that includes joint filing cannot have progressive tax rates and achieve both marriage and couples neutrality--all reasonable goals of a just tax system. (65) As long as married couples can file joint returns, then, lawmakers must choose whether to discard progressivity, marriage neutrality, or couples neutrality.

The tax system will not sacrifice progressivity. Even advocates of a flat tax recognize the need for some degree of progressive rates to protect the poorest taxpayers. (66) A progressive income tax applies increasingly higher rates of tax as a taxpayer's income increases. (67) And to the extent that marriage changes the taxpaying unit, a progressive tax cannot escape treating taxpayers differently depending on their marital status. (68)

Moreover, joint filing causes three significant departures from marriage and couples neutrality: the singles penalty, the marriage penalty, and the marriage bonus. Each of these departures violates the tax norm of horizontal equity, which holds that taxpayers with similar income should pay a similar amount of taxes. (69) To better understand the degree to which each of these departs from the principle of horizontal equity, it is useful to see how each operates in real terms.

The singles penalty applies when an unmarried individual has the same income as a married couple. (70) For example, compare Susan, an unmarried individual who has taxable income of $ 100,000, with Scott and Stacy, a married couple who each earn $50,000. In 2013, Susan would owe $21,293 in federal income taxes. (71) Scott and Stacy, on the other hand, would owe just $16,858 in taxes, significantly less than Susan. (72)

A married couple faces the marriage penalty when the couple pays more taxes than two unmarried individuals with the same taxable income. (73) The marriage penalty generally comes into play when both spouses earn approximately the same income. (74) John and Jane, for example, each has $85,000 in taxable income. In 2013, if John and Jane are married and file a joint return, their combined income puts them in the 28-percent tax bracket, and they owe $35,066. (75) If, however, John and Jane had chosen not to marry, each would be in the 25-percent tax bracket. (76) Both John and Jane would owe $17,179 in taxes, for a combined tax liability of $34,358. Marriage costs John and Jane an additional $708 in taxes.

Where spouses' income differs significantly, on the other hand, a married couple may benefit from the marriage bonus. (77) Imagine Mary, who has taxable income of $170,000, and Mark, with no income. In 2013, if Mary and Mark are married, they would be in the 28-percent tax bracket, and would face a tax liability of $35,066, the same amount as the married John and Jane. If, however, Mary and Mark were not married, Mark, with no income, would owe no taxes. Mary would still be in the 28-percent tax bracket. But, because the tax brackets for unmarried individuals differ from those that apply to married couples, she would owe $40,893 in taxes. (78) In this case, marriage reduces Mary and Mark's collective tax bill by $5,827.

In addition to the inequities imposed by the joint filing regime, the different rules applicable to married persons filing jointly increase the complexity of the tax law. The tax law necessarily includes a "multiplicity of rules regarding who is (or is not) married for tax purposes." (79) And once a couple has passed this threshold, they "use different tax tables, have a different standard deduction, and are entitled to double the maximum exclusion from gain on the sale of a principal residence." (80)

As a result of the inequities and complexity that follow joint filing, a number of commentators argue for a return to the individual as the appropriate taxpaying unit. Few developed countries other than the United States still permit married couples to file joint tax returns. (81) Moreover, "the joint return was enacted not as a result of reasoned tax policy analysis, but rather out of political expediency." (82) As a result of the lack of policy undergirding the joint return, combined with the trends in the rest of the world, commentators conclude that the United States should replace its joint filing with individual filing for all taxpayers. (83)

Proponents of an individual filing system also argue that marriage does not inherently equate to income-pooling. Although a married couple can act as an economic unit, most states do not require it to do so. (84) And some scholars argue that a significant percentage of married couples do not pool their incomes. (85) To the extent that the tax law permits joint filing to accurately reflect the income of married couples who share their incomes, evidence that married couples do not share their income argues against the necessity and sensibility of a joint return. The fact that the joint return increases the tax law's complexity and inequity strengthens this argument even more.

In addition, these commentators argue that joint filing hurts women. Under the U.S. federal income tax, a taxpayer pays a progressively higher rate of tax on income as her income increases. In 2013, an unmarried taxpayer pays ten percent of her first $8,925 of taxable income, then fifteen percent of her next $26,000; ultimately, she pays 39.6 percent of her income in excess of $400,000.86 Two individual taxpayers each pay taxes on a portion of their income at the lower tax rates. A married couple, however, can take advantage of the lower rates only once. As a result, the secondary earner (traditionally the wife) feels like she pays the same percentage of taxes on her first dollar of income as her husband did on his last dollar of income. (87) She may decide, in light of her lower after-tax income, that such income is not worth the effort and expense of working and, therefore, stay out of the paid workforce. (88)

Proponents of individual filing also argue that joint filing creates significant inequities between taxpayers. For example, while a married couple may pay higher or lower taxes than an unmarried couple with the same aggregate taxable income, the married couple will always pay less than a single person with the same amount of taxable income. (89) Moreover, the tax law treats a heterosexual married couple differently than an unmarried couple, even if that unmarried couple pools all of its income and expenses. And this different treatment cannot be justified purely on administrability grounds: couples in state-sanctioned civil unions or domestic partnership with the same rights and responsibilities as married couples cannot file a joint return. (90) Besides the unfairness of treating similarly situated taxpayers differently, this different treatment imposes real costs on taxpayers. (91)

Given the controversy and complexity of the joint return, it is worth inquiring whether there is any reason the tax law should take account of marital--or other familial--relationships. Notwithstanding the arguments against the joint return, some scholars argue that the tax law should continue to permit married couples to file joint returns. For example, although not all married couples pool all of their income, the extant studies demonstrate high levels of income pooling by married couples. (92) Moreover, some argue, even if joint returns cause some inequities, shifting to individual returns would create administrative and other difficulties that would ultimately result in deadweight loss. (93)

Moreover, as Professor Stephanie Hunter McMahon points out, the fact that other countries have switched from joint filing to individual filing provides an example of the costs and benefits of the switch. (94) She concludes that the change provided both benefits and detriments to women in the United Kingdom. Married women appear to own more investment property than they did before the change. (95) But there is no clear evidence that the change increased the number of British women who entered the workforce. (96) Professor McMahon concludes that eliminating the joint return will benefit some taxpayers while harming others. Ultimately, though, any tax system will create distortions, and these distortions need to be weighed as part of the debate over the future of joint filing. (97)

Another argument in continuing to recognize marriage for tax purposes is that marriage plays an important role in American life. It "has enormous value to Americans as an institution that makes social unity possible, even in a world in which individuality has been fully cultivated." (98) Even commentators who do not particularly like the institution of marriage recognize that it is "a dominant and normative institution, with life-altering formal and informal benefits." (99) The Internal Revenue Code reflects this primacy of marriage in the United States, with many special rules aimed at marital or other familial relationships. (100) Among other things, these special rules may take into account the fact that people act altruistically in certain circumstances, (101) or they may provide married couples with a "zone of privacy" protected from I.R.S. inquiry. (102)


A. Non-Traditional Dyadic Taxpayers

Notwithstanding the controversy surrounding joint filing, few--even those who prefer individual filing--believe that the United States will switch to a mandatory individual filing system, at least in the near future. (103) As a result of the joint return's apparent future, these commentators have focused on making joint filing fairer and more broadly available. (104) They provide a number of suggestions for how to accomplish these goals. They argued, prior to Windsor, that same-sex married couples should be permitted to file joint returns. (105) In addition to same-sex married couples, some argue that the tax law could permit anybody in a legally-recognized relationship (e.g., marriage, civil union, domestic partnership) to file a joint return. (106) Congress could expand the availability of joint filing to virtually any couple that demonstrates that they pool their incomes (while possibly excluding married couples who do not pool their incomes). (107) The ability to file joint returns could even be based on ownership of income and assets. (108)

None of these proposed expansions, however, requires any fundamental restructuring of the tax system. We know exactly how the current tax regime will treat married gay couples who can file jointly; moreover, we know how it would treat domestic partners and couples in a civil union if the tax law recognized their relationship. The current marginal rates applicable to a married couple filing jointly would work equally well for any of these couples. For that matter, ignoring problems surrounding the issue of which dyadic couples should be allowed to file joint returns, the current marginal rate structure could apply to any two-person taxpaying unit. (109) Actually implementing the change may require a minor legislative or administrative action; references to "husband and wife" (110) would need to become gender-neutral, for example. But such a change need not be burdensome or complicated: already under the Code, "words importing the masculine gender include the feminine as well." (111) A similar definitional provision could provide that "husband and wife" referred to any person in a specified relationship.

A tax regime that required individual filing would clearly reduce the inequities between heterosexual married taxpayers and other taxpayers in dyadic relationships, whether or not they pool their incomes. But the fact that the structure of the current tax system could permit other taxpayers in dyadic relationships to file jointly without adding complexity to the tax law suggests that perhaps expanding joint filing can similarly solve the fairness question. And if we assume that mandatory individual filing is currently a political nonstarter, it is worth noting that same-sex marriage does not challenge the structure or administration of the tax system as currently constituted.

B. Polygamous Taxpayers

Tens of thousands of polygamists live in the United States. Experts estimate that between 20,000 and 100,000 fundamentalist Mormons (112) living in the Western United States belong to polygamous households. (113) In addition to Mormon polygamists, an estimated 50,000 polygamist Muslims live in the United States. (114) Moreover, several thousand polygamous Hmong live in the United States. (115)

Though their experiences with polygamy undoubtedly differ in many ways, all polygamists share one common experience: by virtue of their polygamy, they violate the law. In 1862, Congress criminalized polygamy in U.S territories. (116) In response to a constitutional challenge to the law, the Supreme Court asserted that "civilized nations" had always considered polygamy "odious." (117) An "offence [sic] against society," polygamy was compatible only with despotic, rather than republican, government. (118) As a result, the Supreme Court determined that anti-polygamy laws did not violate the constitutional right to free exercise of religion. (119) Today, every state has laws prohibiting polygamy. (120)

Although historically Americans have recoiled from polygamy, treating it as a primitive, inferior custom, (121) polygamy has recently started to emerge as less alien and more sympathetic. In no small part, HBO's Big Love, a television series chronicling a polygamous family in Utah, and TLC's Sister Wives, a reality television show following a polygamous family in Utah, may lie behind this change in attitude. (122) By exposing Americans to polygamous families, real or fictional, polygamy arguably loses some of its otherness and danger. (123) Moreover, in the wake of Texas's mishandled raid of the polygamous Yearning for Zion Ranch, polygamists began to look less like scary, despotic usurpers (124) and more like scared victims of democratically elected governments. (125) In addition, changes in the law may also make polygamy more visible in the future. As recently as 2011, polygamists cited the Supreme Court's decision in Lawrence v. Texas, (126) which held unconstitutional a Texas anti-sodomy law, (127) to argue that criminalizing polygamy also violates the Constitution. (128)

Even as polygamy transitions in the public mind from an odious and uncivilized practice to an acceptable, if unusual, practice by a minority group, polygamists will necessarily interact with legal regimes differently than do dyadic couples. Although polygamy, like same-sex marriage, domestic partnerships, and civil unions, represents an alternative to the traditional American family, it presents unique challenges in designing a tax regime. (129) Unlike dyadic same-sex marriage, polygamy presents a significant challenge to a tax filing system designed to treat married persons as an economic unit, where it assumes that an economic unit consists of two people. Specifically, legalized polygamy would challenge the design of the marginal tax brackets. The tax law includes four sets of marginal tax brackets, applying respectively to married persons filing jointly and surviving spouses, heads of household, unmarried individuals, and married persons filing separately. (130) Treasury adjusts the size of the brackets annually for inflation. (131) Currently, the tax brackets for married persons filing jointly range from twice the size of the brackets for unmarried individuals at the lower income levels to identical at the highest income levels. (132)

The current marginal tax brackets do not provide any assistance in determining the appropriate marginal tax brackets that would apply to polygamous families. In a world of legalized polygamy that treated spouses as an appropriate taxable unit, polygamous taxpayers would still encounter potentially significant marriage penalties in comparison to both four unmarried taxpayers and two dyadic couples. (133)

Take, for example, the polygynous Henrickson family portrayed in HBO's Big Love that consists of Bill and his three wives, Barbara, Nicki, and Margene. (134) In 2013, each earns $25,000. If the tax law permitted polygamous spouses to file jointly, but required them to use the current marginal tax brackets, the Henricksons would face a significant marriage penalty. Their collective income would put them in the 25-percent tax bracket, and they would owe taxes of $16,858. (135) By contrast, four unmarried individuals with $25,000 of taxable income would each be in the 15-percent tax bracket and would each pay taxes of $3,304. Collectively, the four would pay a total of $13,216. (136) As a result of being in a higher bracket, the Hendricksons would pay over $3,500 more than the four unmarried counterparts in this scenario, despite the fact that the two groups' collective income is exactly the same.

In addition to the marriage penalty applicable to polygamous taxpayers, applying the current brackets would accentuate the disincentive for the secondary (and, in the case of polygamous families, tertiary, etc.) earner to work. For a dyadic married couple, the secondary earner's income is stacked on top of the primary earner's income. (137) In a polygamous marriage, using current marginal tax brackets, the secondary earner's income would be stacked on top of the primary earner's, and then the tertiary earner's income would be stacked on top of both the primary and the secondary earner's. Each subsequent earner would potentially pay taxes on her first dollar of income at the highest marginal rate of the prior earner. Because each subsequent worker would enjoy progressively less after-tax income, work would become even less appealing for each additional plural spouse. Although increasing a family's size may increase the need for additional spouses to work, (138) the joint filing system discourages those additional individuals from working.

To ameliorate these heightened marriage penalty and secondary earner problems, Congress could create alternative brackets applicable to polygamous taxpayers. But creating such individualized tax brackets would create administrative burdens as Congress and the Treasury Department tried to determine how to design those brackets. (139)

In many cases, polygamous families' income lags behind that of the surrounding communities. (140) And yet, if the tax law continues to refuse to recognize polygamous marriage, polygamous families will pay higher taxes than dyadic married couples. (141) In spite of polygamous spouses' potentially pooling their assets--either informally or as a result of community property laws--the tax law would treat such polygamous taxpayers as economically independent. In cases where only one spouse worked, polygamous families forced to file as unmarried individuals would pay the same amount as unmarried individuals, and more than dyadic married couples with similar income. This higher tax bill could potentially prejudice low-income polygamous families with a single earner.


Once a state legalizes polygamy, the federal government will need to determine how to deal with polygamous taxpayers. Until recently, of course, the federal treatment of polygamy was clearly moot: DOMA prevented the federal government from recognizing any marriage other than dyadic opposite-sex marriages, including polygamous marriage. (142) On July 26, 2013, the Supreme Court held Section 3 of DOMA unconstitutional. (143)

Looking at the effects of DOMA on same-sex marriages continues to be instructive, however, in spite of the Supreme Court's decision. In the first instance, DOMA may still apply to polygamous marriage. Justice Kennedy, in his majority opinion, explicitly limits the scope of the holding to "those lawful marriages." (144) The predicate to "those" appears to be "persons who are joined in same-sex marriages made lawful by the State." (145) Though the opinion never refers to polygamy, if it only applies to lawful same-sex marriage, DOMA may still apply to a future legal polygamous marriage.

Even if the Windsor decision entirely eliminates Section 3 of DOMA, though, it leaves room for the government to pass a DOMA-like statute preventing the federal recognition of polygamous marriage. One significant reason the Court finds DOMA unconstitutional is because "[t]he principal purpose is to impose inequality, not for other reasons like governmental efficiency." (146) Though the Court does not say as much, it implies that, if the government had a legitimate purpose, it could refuse to recognize state-sanctioned marriages. And, given the complications polygamy would create in a system designed with dyadic marriage in mind, the government could likely show efficiency reasons to refuse to recognize polygamous marriages. (147)

Even though Congress arguably could refuse to recognize polygamy for federal purposes, if polygamy becomes legal in one or more states, Congress should not attempt to use the tax law to show its disapproval of polygamy. Already the tax law's refusal to recognize same-sex marriage has led to harms, both to gay taxpayers and to the tax system, and its systematic refusal to recognize polygamous marriage would result in similar harms.

Special treatment of certain groups of taxpayers will inevitably disadvantage other taxpayers. (148) This implicit discrimination may be justified in certain circumstances. (149) Still, the principal purpose of the tax law is to raise revenue for the government in a fair manner. (150) Without a compelling tax justification, the tax law should avoid discrimination and, instead, strive to treat similarly situated taxpayers alike. (151)

One legitimate reason for tax discrimination is to prevent and to punish undesirable activities. For example, the tax law can explicitly prevent taxpayers from reducing their incomes in certain ways; (152) alternatively, it can create an unfavorable result in the hopes of discouraging revenue reducing actions. (153) In addition, the tax law can penalize those who decide to engage in disfavored acts. It penalizes taxpayers who underreport their income, (154) who fail to file returns, (155) and even those who bounce their checks when they pay their taxes. (156) Taxpayers who engage in tax shelter transactions intended to illegally evade taxes must disclose their participation and, if they fail to disclose, face stiff penalties. (157)

Most of the undesirable activities that the tax law prevents or discourages relate to the tax law's revenue-raising provisions. But in certain cases, Congress has used the tax law to discourage behaviors not related to tax. The tax law may be uniquely situated to address certain non-revenue-related harms; for example, the tax law can discourage certain activities that create negative externalities by forcing a taxpayer to internalize the costs of those activities. (158)

Accordingly, absent the requisite negative externality worthy of internalizing or a tax evasion predicate, the tax law should not penalize a taxpayer's family structure. The tax law should minimize the ways in which it treats people differently. (159) But using it to disapprove of certain types of marriage--including same-sex marriage and polygamy--serves no revenue-related purposes. (160) Because a taxpayer's marriage does not implicate tax evasion, the tax law's disapproval of same-sex and polygamous marriage does not discourage tax-evasive behavior.

Moreover, alternative family structures do not create externalities that impose costs on other taxpayers. (161)

Penalizing these alternative family structures using the income tax is, therefore, unfair. And unfairness may irreparably harm the tax system, as taxpayers begin to lose faith in it. (162) To the extent it refuses to recognize certain families, though, the tax law unfairly causes real harm to them. The harms to taxpayers include the psychic harms of feeling excluded, devalued, or even discriminated against by the larger society, (163) in addition to the expense and administrative costs of paying taxes. (164)
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Title Annotation:Introduction through IV. Tax Discrimination and Fairness, p. 113-138
Author:Brunson, Samuel D.
Publication:Washington University Law Review
Date:Dec 1, 2013
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