In this post we explore whether spouses have similar income characteristics. To examine this we analyzed DC income tax data for married couples and domestic partners who file a combined separate income tax return. This fling status allows us to compare the incomes of each filer separately and determine whether their incomes are similar.
We examined income differentials among couples/partners by computing the ratio of their respective incomes. We looked at three levels of income differentials, a 50 percent differential, a 25 percent differential and a 10 percent differential. For example, a couple where one spouse has income of $50,000 and the other has income of $100,000 would have a 50 percent differential, whereas a couple where one spouse has income of $90,000 and the other $100,000 would have a 10 percent differential.
Here is the data:
Source: Office of Revenue Analysis, DISTRICTMEASURED.COM
- The lowest income differential is for couples making between $100,000 and $200,000, who account for the majority of married filing combined separately filers. The figures were almost identical for those with aggregate income between $200,000 and $300,000.
- 61 percent report an income differential of less than 50 percent
- 36 percent report an income differential of 25 percent or lower.
- 21 percent report an income differential of 10 percent or lower.
- As expected, income differentials are largest among couples with high aggregate incomes- above $500,000.
- Only 28 percent of couples with incomes between $500,000 and $100,000 have an income differential lower than 50 percent.
- For millionaires, the comparable figure is 16 percent.
- We were surprised to see that even among millionaires, 9 percent have an income differential lower than 25 percent, and 5 percent report an income differential that is lower than 10 percent.
- We tested to see whether these results changed for couples who had dependents. The results were very similar for all income ranges except the lowest. This suggests that for low income couples the presence of a dependent could result in one of the spouses taking on a part-time job to take care of dependents. Conclusions regarding whether a spouse leaves the workforce altogether in the presence of a dependent cannot be drawn from this data. (See note in data section below)
- The only significant difference from the results shown in the table above occurred when we limited the results to seniors. We found that only 44 percent of seniors reported an income differential lower than 50 percent.
- The tax data does not provide information on the gender of the spouses. It merely identifies a primary and secondary filer. For the majority of filers, 63 percent, the primary filer had a higher income than the secondary filer.
Overall the data confirms that there are still significant income differences among spouses. About 50 percent of all couples report an income differential greater than 50 percent. The differential is less pronounced for spouses with aggregate income between $100,000 and $350,000. Still almost 40 percent of spouses in this income range report an income differential of more than 50 percent.
What exactly is the data?
Data is from the 2012 DC personal income tax filings and refers to taxable income for married and domestic partners filing combined separate. The income tax data has the benefit of including more filers than sample data from the American Community Survey which includes only about 8,000 overall households for all filing types. There are however some important limitations to the tax data. The analysis excludes married filers who file taxes jointly. These filers tend to be concentrated among lower-income married couples or couples where only one individual has income. Because couples who file jointly do not report their incomes separately we cannot compute their income differential. In the case of one-earner couples, the numbers shown in the table above would understate the income differential particularly for the lowest income range.