Most people don't like paying taxes, and do so reluctantly. However, one thing guaranteed to "steam" a taxpayer is to realize that another taxpayer, with the same income, is paying fewer taxes. Taxpayers have a strong desire to see "fairness" in the tax system, meaning those with similar incomes should pay a similar amount of taxes.

However, this isn't always the case. An example, perhaps surprisingly, involves marriage. Many couples find that when they get married, they'll pay more federal income taxes than they did combined as single. For example, suppose Jane and John each paid $5,000 in federal income taxes as single persons. However, when married, rather than paying $10,000 in taxes as a couple, they find their tax bill is $11,000!

This example isn't unusual. In fact, 21 million couples pay an average of $1,400 more in federal income taxes as married than they did combined as single individuals. Some have labeled this the "marriage penalty."

Further complicating matters is the fact that some married households actually pay less federal income taxes as a couple than they did combined as single. An estimated 25 million married couples pay an average of $1,300 less in federal income taxes than they did combined as single persons. Thus, these couples receive a "marriage bonus" in the tax code.

What "lucky" married couples get the marriage bonus, and what "unlucky" couples get the marriage penalty? In general, married couples where both individuals work and where both earn similar incomes will pay a tax penalty by being married. In contrast, married couples where only one individual works or where one person in the couple earns the vast majority of the couple's income will receive a marriage tax bonus.

Why does this happen? Is the government trying to punish certain married couples and reward others? Actually, there's no tax conspiracy. Rather, the existence of marriage tax penalties and bonuses is an unintended consequence of several elements of the federal income tax code. One of these elements is the multiple tax rates in the federal income tax system. Federal tax rates range from 15 to 40 percent. As a taxpayer's income rises, more of it is taxed at the higher rates. Furthermore, the income ranges for each tax rate differs for single persons and married couples.

When a couple gets married, their incomes are added together for tax purposes, effectively being stacked one on top of the other. For a couple where both individuals work and where each spouse earns approximately the same income, a marriage tax penalty can result from more of one spouse's income being taxed at higher rates, as compared to when that spouse was single.

However, for a married couple where one spouse earns all or the vast majority of the couple's income, a marriage tax bonus can result because the higher tax rates begin at greater income levels for married couples than for single persons. In this case, the spouse earning most of the couple's income would have been taxed at a higher rate as a single taxpayer.

If you don't like the existence of marriage tax penalties and bonuses, what can be done? Several options are available. A simple one is to allow married couples to compute their taxes as a married couple and as two single individuals, and to choose the method resulting in the lower amount. Obviously, this solution would eliminate marriage tax penalties and keep tax bonuses. It would cost the federal government about $30 billion in lower income tax revenues.

Another option is to have everyone file federal income taxes as individuals, rather than as households. This was actually the requirement before 1948. Adopting this solution would eliminate all marriage tax penalties, but would also end all marriage tax bonuses. Hence, there would be winners and losers.

Finally, marriage tax penalties and bonuses could be reduced, if not totally eliminated, if the current federal income tax system was scrapped and replaced with a new system. For example, a "flat" income tax system with one tax rate would eliminate much of the distortions caused by multiple tax rates. Alternatively, a federal sales tax would mean couples would pay higher or lower taxes after marriage only if their spending changed as a result of marriage.

So, both marriage tax penalties and bonuses exist in the tax code. Eliminating one or both could require relatively simple modification or complete overhaul of the federal income tax code.

You decide which way to go, if any!