Love, Money, and the IRS: Family, Income Sharing, and the Joint Income Tax Return

This Article explores the premise that married couples share or pool their income. It surveys the changing concept and reality of 'family' and examines several empirical studies, including the author’s, that address the issue of the allocation of financial resources between members of a couple living together. This focus on 'pooling' sheds new light on the more commonly asked questions about the joint return: Does it promote family values? Should it (and the tax system generally) promote family values? Is it justified by other concerns such as economic ones? Part I of this Article briefly describes the social and legal realities of family living arrangements that contrast with the one-earner, heterosexual married couple model upon which the joint return is based. Part II probes the concept of pooling from a practical standpoint by examining several empirical studies that address the allocation of financial resources by a couple. Part III summarizes the theory and history of the taxable unit and the taxable unit as it exists today. Part IV concludes that the income tax system ought to use the individual rather than the married couple as the taxable unit. Separate taxation is not the perfect solution to the taxable unit issue, but no perfect solution exists. It is, however, the better solution because taxation based on the individual comports better with reality, social policies promoting families, tax theory, and economic considerations than the joint return.