WASHINGTON WATCH: HIGHER TAXES: IS MARRIAGE WORTH IT?

This weekend I had the pleasure of attending two wedding showers for friends of mine from college. Both couples are wonderful matches, much in love, and eager to begin the rest of their lives together. As it should be, paying higher taxes for getting married was the least of their concerns. Yet, the joy that comes with marriage shouldn't keep us from asking: Is it right that our government taxes married couples more?

The problem, commonly called the marriage penalty, has been around for years, but it was exacerbated by the Clinton tax increase of 1993, which added more and higher tax categories. When two working people marry, their combined income typically propels them into a higher tax bracket than they were in when single. Thus: the marriage penalty. Because of the way the brackets are set up, even filing separately doesn't usually help. For example, two single people who each earn $40,000 pay $6,633 each in taxes. Once married, their tax liability leaps to $14,551, or $1,285 more than they had paid when single. If one or both brings children into the marriage, their taxes go up a couple thousand dollars more.According to a study published by the National Bureau of Economic Research, a private study group in Cambridge, Mass., the same arithmetic also bites at the other end of the income scale, especially for working single parents who receive an earned-income tax credit. The NBER study found that if a $10,000 earner with a child marries another $10,000 earner with a child, it could cost them $3,717.

In the Contract With America, the new Republican majority in the House of Representatives promised to clean up this tax discrepancy. "The American Dream Restoration Act provides up to $2 billion annually of marriage penalty relief," says the contract. "Each family currently subject to the tax penalty would be entitled to a credit determined by the U.S. Secretary of the Treasury." But last week their efforts ran up against the budget reality that a complete solution would cost too much. The result, included in the House Ways and Means Committee's tax bill, was a $145 tax credit for two-earner families that would be effective for 1996.

While $145 isn't insignificant, it isn't that much either, especially when the marriage penalty runs to several thousands dollars for some people. More importantly, this $145 figure illustrates why Republicans would be better to focus on budget cuts right now instead of tax cuts. They can do more good for American families by balancing the budget and bringing down interest rates than they can in tax relief. Once the budget is on a glide path to being balanced, then they should focus on tax fairness.

Investigation of Pena closed

In my column Friday I wrote about the Justice Department's decision to ask for a special counsel to investigate Henry Cisneros, secretary of Housing and Urban Development. In that piece I listed several Clinton Cabinet members with ethics clouds hanging over their heads, one of whom was Transportation Secretary Federico Pena. Today I am happy to report that Attorney General Janet Reno announced at the end of last week that the Justice Department found no credible evidence of any wrongdoing by Pena.

The Transportation secretary became the subject of a preliminary inquiry by Reno's office after the Los Angeles Times questioned how a company he founded, Denver-based Pena Investment Advisers, won a contract to manage $5 million in the Los Angeles transit system pension fund. The contract was awarded 19 days after Pena became head of the Transportation Department and within days of his approval of $187 million in additional federal funds for the project. Since he took office, Pena has committed nearly $2 billion in federal money to the metro project, one of the costliest federal projects in history.The Justice Department also looked into how Pena Investment Advisers was given $10 million to manage by US West, a Denver-based telecommunications company. US West contributed $200,000 to Pena campaigns when he ran for mayor of Denver and later won a $24 million contract from that city to put phones in the Denver International Airport.In a news release, Justice Department officials concluded: "The criminal division has found no specific and credible evidence of any violation of federal criminal law. Accordingly, the matter has been closed."For his part, Pena issued a brief statement, "I have always maintained the highest level of integrity in my life. I am pleased, but not surprised, that the Justice Department has found no evidence of wrongdoing in this matter. My focus has been and remains on serving the president and the American people as secretary of transportation."Jon K. Rust is a Washington-based writer for the Southeast Missourian.