ABSTRACT
The adoption of income splitting in the United States arose out of the historical accident that eight states had community property laws, which treated income as if divided equally between husband and wife. By virtue of several Supreme Court decisions, married couples residing in these eight states had been splitting their incomes and filing separate federal returns. Shortly after the Second World War, a number of other states enacted community property laws for the express purpose of obtaining the same advantage for their residents, and other states threatened to follow suit. In an effort to restore geographic tax equality and to prevent wholesale disruption of local property laws and procedures, Congress universalised income splitting in 1948.
