The 1996 Defense of Marriage Act ("DOMA") has two main parts. Section 2 of the act states that states need not recognize a relationship between persons of the same sex that is treated as a marriage under the laws of other states. This means that if I'm married in Massachusetts (as I am), Pennsylvania or North Dakota can treat me as unmarried. The law is broad enough to include civil union laws ("treated as a marriage") and provides no state-to-state protection for these, either.
This punitive law throws the usual rule relating to respect for the laws of other states under the bus, so to speak. The usual rule is that states must respect the laws (including marriage laws) of other states, under Article 4 of the U.S. Constitution. This is the "full faith and credit" provision, which states that "full faith and credit" shall be given in each state to the public acts (i.e., laws) of every other state.
Section 3 of DOMA says that for all federal law purposes, the word "marriage" means only a legal union between one man and one woman as spouses, and the word "spouse" refers only to a person of the opposite sex who is a husband or a wife. This means that for all federal law purposes (including taxes, social security and Medicare), people in same-sex marriages in states that allow them are treated as legal strangers.
I started to wonder what the effect of DOMA had on my life, took out my calculator, and found out the following:
Our Federal Income Taxes
I computed my federal income taxes for me and my spouse in two ways: as we had filed (single, i.e., as legal strangers), and as joint (married) filers. Because of the graduated tax rates, someone like me (a 65-year-old lawyer earning above-average income and working full time) pays at a higher marginal and blended tax than my spouse (66 years old and semi-retired, with modest income). Massachusetts tax income is irrelevant in this calculation, first because Massachusetts has a flat tax rate (5.3 percent for earned income), and second because as we are legally married in Massachusetts, we are permitted to file jointly for Massachusetts tax purposes.
The difference between our hypothetical federal joint filing ($22,413 in taxes) and our separate filings ($25,664) is an extra expense of $3,251 for the year.
Social Security Income
Because my lifetime earnings are higher than my spouse's, my social security income is two times what hers is. This is a situation similar to many opposite-sex couples, whether one spouse's (usually the husband's) lifetime earnings are significantly greater than the other spouse's.
But here's where we depart from the opposite sex couple.
If I die before my spouse, unlike the husband/wife couple, she would not be able to receive my social security payment instead of hers. (This problem will be eliminated if DOMA were repealed or invalidated as unconstitutional.)
In order to protect my spouse from financial problems if I die before her, I started a 20-year guaranteed level payment term life insurance policy when I was 61. If I die (before age 81), this policy will pay $250,000 to my spouse. This will replace the social security she would have received had DOMA not barred us from being married for federal law purposes.
The insurance costs $1,650 per year. (But if I die at age 81 or later, my spouse will not be protected.)
So far, our loss is $4,901 a year.
Medicare Means Testing
But there is another loss. Both Medicare Part B (Medical Insurance) and Part D (Prescription Drug Plan) have a means-tested penalty, called the Medicare Income-Related Monthly Adjustment Amount (IRMAA). This penalty depends on what your income is and whether you file jointly or separately. The penalty is much less for spouses of unequal income (like us) filing jointly than for individuals filing separately. But because DOMA prevents us from joint filing, we are again (and doubly) penalized.
Our separate filer monthly IRMAA totals $214.60. The penalty is all relating to my income as a "single filer." My spouse's IRMAA is $0. If we could file jointly for Federal tax purposes, our IRMAA would be $0, based on our joint income (i.e., like similarly situated married couples, we would not be penalized at all). The difference is $2,575 a year. This amount, when added to our previous loss of $4,901, brings the grand total to $7,476 a year.
How Much Of A Financial Loss Is This, Really?
The actual loss is much higher than the number indicates. In order to "pay" the $7,467 of extra cost, I must use dollars that have gone through the tax system. These are termed "after-tax" dollars. In order to have available the after-tax dollars it costs to pay the extra costs resulting from DOMA, I need to earn $10,371 a year ($7,467, grossed up at my marginal tax rate of 28 percent). Once I earn $10,371, I pay the tax on it, and get to $7,467 to pay my (our) personal DOMA penalty.
That means, at age 65, I need to earn $10,371 more a year than a similarly situated couple in a heterosexual marriage in order to pay for the DOMA loss. Our total social security income at full retirement age (66) will be about $3,300 a month. The DOMA loss is a huge expense, and one not needed to be paid by heterosexual couples.
Most people my age are not able to retire as early as the previous generation. But this extra DOMA-produced burden makes it even more difficult for me to even think about retiring, so I've put that decision on hold. Indefinitely.
Another Big Loss For Us Caused By DOMA
DOMA causes personal losses for us, also. Here's one:
My spouse and I have made the personal choice of not living in a state that does not acknowledge our marriage. But as we get older, we think about moving closer to family. Our close family members live in Maryland and Pennsylvania, two states that do not have equal marriage rights. So our ability to move freely and be near our loved ones as we age is impaired. That's a real loss for us and our family that goes beyond the monetary cost to us that DOMA poses.
© Laurie Israel 2011