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Washington Law Review

Abstract

That taxation will continue and increase is an obvious truism. This accentuation will, however, have a peculiar interest to Washington taxpayers. A pronounced inequality exists in the application of the income tax to married persons similarly circumstanced but living in community property and non-community property states. The former much more frequently enjoy the privilege of the separate return, thereby avoiding higher surtax brackets, because their state has declared that the income of either, unless from separate property, belongs to both. Since the salary of the husband, for example, is community property, the Supreme Court has held that the spouses could each file separate returns on one-half of it. The Court looked at the Revenue Act, which states that the tax is to be "levied and collected . . . upon the net income of every individual", and decided that the "of" denoted ownership rather than procurement. The advantage enjoyed in community property states is easily perceived, and the unequal tax load on otherwise comparable families living in different states is evident. Upon looking deeper, however, a more general—and just as discriminatory—use of separate returns can be found. They are permissible whenever the wife has income which, under the law of the state of domicile, is separate. In most states, individual returns are used when the wife has her own income either from a salary or from her separate capital. In community property states, the privilege is more widely enjoyed because by law practically every wife has separate income, for example, one-half of her husband's salary.

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