Tax Day Reminds Same-Sex Couples of Inequality

With Tax Day upon us, Americans across the country are signing checks made out to the IRS. For the married lesbian and gay couples in Massachusetts, Connecticut, and California (and soon for those in Iowa and Vermont), that check might bring a little sharper pain than they expected. They will learn that the federal government does not recognize them as married, no matter where they live. As a result, they will pay more in taxes and receive fewer benefits than do married different-sex couples.

Let's start with tax preparation. Differences in state and federal filing rules mean that married same-sex couples must calculate two sets of state tax returns. They can file their real state returns as a married couple. But since federal law prohibits them from filing their federal tax return as married, the forms require tax calculations from state returns completed as if they were single. That's more time spent on those returns and, for those using an accountant, more expense.

Another tax hit comes through employer-based health insurance benefits. Unlike coverage for different-sex spouses, benefits for same-sex partners, even legally married ones, are taxed as income to the employee. Let's consider Tricia and Megan, married last September in Connecticut. Tricia covers Megan on her employer's health plan. Tricia's sister works for the same company and covers her husband on the same plan. Because the federal government taxes the cost of Megan's coverage, the same health insurance plan costs Tricia $1,000 in additional taxes that her sister does not pay. A study at UCLA's Williams Institute found that this unequal treatment costs American families and their employers $235 million in additional income and payroll taxes.

Benjamin Franklin spoke of the certainty of both death and taxes. For same-sex couples, they can be certain of unwanted taxes that accompany death. Let's compare what would happen to Tricia and her sister if their spouses were to pass away. If Tricia's sister loses her husband, she inherits all of his assets and doesn't have to pay any taxes. Federal law allows married different-sex couples to transfer an unlimited amount of marital assets to the surviving spouse without incurring any estate tax. But if Megan dies and leaves Tricia with a big enough nest egg, Tricia is forced to pay a whopping 45% estate tax.

Even without the nest egg, Tricia will likely still fare worse than her grieving sister. When one spouse dies, the surviving spouse gets the higher of the pair's monthly Social Security benefit. Because the federal government does not recognize same-sex spouses, they do not receive this survivor benefit. Same-sex surviving spouses must rely on their own Social Security payments. Typical surviving same-sex spouses lose $5,700 per year that Social Security would have otherwise paid them if they were treated like their different-sex counterparts.

The federal government spends at least some of these extra lesbian and gay tax dollars conducting surveys like the US Census to understand the demographic characteristics of the US population. While the Census Bureau justifiably prides itself on the accuracy of its data, they aren't very accurate when it comes to counting married same-sex couples. The Bureau changes the responses of same-sex spouses and reports them as "unmarried partners". In Census 2010, legally married same-sex couples will have their marriages rendered invisible. Talk about taxation without representation.

As they file those last-minute returns, the 750,000 lesbian and gay couples in this country, including the more than 30,000 legally married couples, are reminded that equality still has a way to go. They pay more and get less for their tax dollars. Candidate Obama promised equality for same-sex couples under federal law. We encourage President Obama to fulfill that promise before 2010 tax returns come due.

Naomi G. Goldberg is the Peter J. Cooper Public Policy Fellow at the Williams Institute, UCLA School of Law.

Gary J. Gates is the Williams Distinguished Scholar at the Williams Institute, UCLA School of Law and author of The Gay and Lesbian Atlas.

Comments

[Rockerbabe]

Oh please! Now the GLBT group is concerned with taxes? Heaven forbid! Haven't you figured out yet, that single people get screwed daily on taxes? Is this just dawning on you? Single straight folks have the same problems. . .paying too many taxes in place of other people [mostly marrieds and business people] who get the breaks and deductions.

Marital status should not be the factor in tax rates, deductions or credits. For that matter, marital status should not matter in who gets a beneficiary for the Social Security Account or who is allowed to place other adults on their insurance policies either. Marital status should not be used when applying for credit, loans, or offering salary for new job hires. . .but it is! The travel industry, which admitted recently, that they charge up to 40% more for singles, should not be allowed to operate when they discriminate so blatantly against single people. The military also discriminates against single people, by paying them less for the same jobs that married folks do!

With single adults [ages 18-65; that is never married, divorced and widowed-not remarried] comprising between 47-49% of the adult population, the laws need to change so that ALL of us are treated fairly.

Maybe if the GLBT group would work for equal treatment for ALL people, then maybe there would be greater support for their quest for marriage rights.

[JohnBisceglia]

These tea-bagging whiners have a quibble about the politics of spending and they try to start a tax revolt? Our Gay Families & Children are legally SUB-American; we suffer NEEDLESSLY in times of
crisis, disease, and death due to our legal exclusion from FAMILY LAW, and we are NOT Revolting?!

I think these tea-bagging folks have just given all LGBTQ folk much MORE justification to stop paying their taxes until equal.

[Gidster]

That is the definition of taxation without representation........
The GLBT families just fall through the cracks, and it costs them more to receive less!

[johnbdonovan]

Thank goodness for certain kinds of inequality! Marriage was NEVER about equality -- ALWAYS about special privileges for those men and women willing to be mothers and fathers to their children, not leaving out one or the other. By analogy, I am a disabled veteran and I was able to bypass certain civil service rules and get a federal job. Was that equal? No. Is there a government rationale for that kind of thing? Yes. It's the same with supporting married couples that combine the masculine and the feminine because children don't often grow up well any other way.

[JohnBisceglia]

CORRECTION - "With Tax Day upon us, (some) Americans across the country are refusing to hand over checks to the IRS."

Thank you, johnbdonovan, for paying my taxes and the taxes of many of my Queer friends this year.

[Paulied]

Your closed mind is your true disability.

[johnbdonovan]

Our minds shouldn't be open to the point where our brains fall out and our families fall apart. "Let's open our minds to the fact that fathers are optional!" Sure, about like air and water are optional. The big problem with this type of open-mindedness is the tremendous suffering it has been causing, stunting the minds and the social development of enormous numbers of young people.

[howcome]

But being liberal you should relish and be grateful for paying more taxes ...... GRAB A TEA BAG ALREADY

[SD Indy]

You must not have heard, there are gay and lesbian conservatives. Why they would desire to associate with people like you is beyond me, but that is their choice. What is NOT their choice is their sexual orientation.

[Cynara89]

Shame on you for continuing the "estate tax" myth. How many people who will read this have an "Estate" worth over $1 million to leave to anyone, spouse or not?? And that's if the current tax rates are allowed to expire. In 2009, no taxes are owed until over $3.5 million of estate value.

As someone who paid my 50% of an estate, to the tune of well over $1 million dollars to Uncle Sam, I charge you to not propagate GOP ideology. You are making Karl Rove proud. Getting the 95% of poor and middle class Americans to fight for the fortunes of the top 4% and increase those fortunes is what the past 20 years have been about.

I am completely supportive of equal rights for ALL couples. Everyone should have the right to create a home and family with any other adult they wish. They should get all the benefit, privileges and costs. But do not tie these two issues together, especially in this economy. How many couples, same-sex or straight, have over $3.5 million or even $1 million???