This post is part of a long-term project I’ve been working on regarding the history of marriage in the tax code.
As I finish sections of the research paper I’m working on, I’ll post them here. This is a big project, one that will likely take years, literally, to finish, so I can’t guarantee when the next post on this topic will appear.
As detailed in Part 3, the tax code changed in 1917 and drew millions more people into the tax system. But one thing that didn’t change for most married couples was the way they filed tax returns.
There were still no filing statuses and there was still just one tax bracket that applied to everyone. Married couples received no preferential treatment.
But just as in 1913, most married couples continued to file joint tax returns. Indeed, the percentage of joint returns filed in 1920 was actually slightly higher that the percentage of joint returns filed in 1913 (98.0% in 1920; 97.6% in 1913). By 1923, the percentage of joint returns had decreased (to 96.4%) but joint returns were still the overwhelming choice for most married couples. (Source: a memo by a “Ms. Coyle” at the IRS in 1941: http://taxhistory.tax.org/Civilization/Documents/marriage/hst28695/28695-1.htm)
There are two explanations why joint returns were so common even after the changes from 1917-1919:
- There were fewer women in the workplace and thus more one-income married couples. According to the U.S. Department of Labor, women made up just 21% of the labor force in 1920, compared to 47% in 2010. By default, a tax return filed by a one-income married person was counted as a “joint” return.
- Even though the tax rates after 1917 were different from what the tax rates were in 1913, many taxpayers still fell within the first range of the tax bracket and thus out of the higher “surtax” range. The 4% tax bracket applied to the first $4,000 of taxable income. There was a $2,000 exemption amount for married couples, and an additional $200 exemption for each dependent. So a family of four could have combined gross income of $6,400 (the equivalent of about $73,000 today) and still fall in the 4% range.
I’ll give some examples in Part 5.