Tax Day 2008: The Cost of Being Gay
By Lara Schwartz
State
and federal laws impose real dollar costs on real people. Call it “The
Cost of Being Gay.” Many of the most significant examples of this cost
occur in state and federal tax law. On tax day (April 15), Americans
file both state and federal tax returns. For GLBT couples, tax day is a
concrete reminder of the inequality that results from being denied
marriage rights and from the Defense of Marriage Act (DOMA), which
denies federal recognition of same-sex relationships for over one
thousand federal protections.
The Cost of Being Gay can have a
serious impact. Take social security: on tax day, all American workers
file tax returns that include, among other things, a statement of the
total amount of social security payroll taxes they paid. GLBT Americans
pay the same payroll taxes as everyone else, but are excluded from
spousal benefits and survivors’ benefits. In fact, even children raised
by same-sex couples are treated unfairly. A surviving child of a
deceased GLBT worker can lose out on benefits worth tens of thousands
of dollars over their childhood -- money that could pay for food,
clothing, and education.
At the state level, homes and savings
are subject to unfair taxation too. For example, when someone puts his
or her same-sex partner on the title to a home, it often constitutes a
transfer of 50% of the value of the home -- as if the two were
strangers -- and is taxed accordingly. Different-sex married couples do
not pay this tax. Inheritance taxes apply when a taxpayer dies and
leaves assets to another person. Different-sex spouses receive a
complete exemption from such inheritance taxes, but same-sex partners
do not (except in states with marriage, civil unions, domestic
partnership, or special tax exemptions for partners). Because
thresholds for state inheritance taxes are much lower than the federal
threshold, inheriting the couple’s common home (or even the half of it
that belonged to the deceased partner) can trigger inheritance tax.
Most
workers look to their employers for health insurance, but this
opportunity costs more for same-sex couples than other families. That’s
because although employer-provided health benefits for different-sex
couples are excluded from an employee’s gross income, domestic partner
benefits are taxed. This can result in a tax hit of over $1700
annually.
Federal employment is an attractive option for many
workers thanks to the diversity of opportunities and the competitive
benefits programs. The federal government does not provide equal
benefits for same-sex couples, however. A GLBT person who is a top
employee is compensated unequally -- her family is denied health
insurance, pension benefits, and even evacuation services for
foreign-service officers’ families. This not only denies GLBT people
access to good jobs -- it denies our government access to some of the
top talent.
If that weren’t bad enough, how about having to
choose between your job and caring for your family? The Family and
Medical Leave Act provides up to twelve weeks of unpaid leave to care
for a spouse or child, but same-sex couples are excluded.
The
law is designed to create incentives to do socially valuable actions
such as investing, buying a home, offering or making use of health
insurance benefits, and providing support and security to one’s family.
For same-sex couples, these incentives are turned on their head. It’s
bad policy. And it’s behind the times. Over 50% of Fortune 500
companies offer domestic partner benefits. The law needs to catch up.
That’s
why HRC is promoting the Family Matters legislative agenda: the
Domestic Partner Benefits and Obligations Act, which would provide
equal benefits to same-sex partners of federal civilian employees; the
Tax Equity for Health Plan Beneficiaries Act, which would end the tax
inequities that currently apply to employer-provided health insurance
for domestic partners; the Family and Medical Leave Inclusion Act, and
legislation currently in development on other family protections. %u2028
%u2028HRC also continues to work with the nation’s leading employers to
expand employee benefits programs, family and medical leave, and equal
retirement savings options. Over fifty major employers from every
region of the country support eliminating the taxation of these
benefits, and their numbers are growing.
Tax season is a great
time to get your financial house in order, and minimize the cost of
being gay.%u2028Information is available on the HRC website on what families
can do to secure the maximum protections while the law catches up --
including medical and financial directives, information about
partnership agreements, and more.
This tax day, consider the
unreasonable cost that our tax code and other laws impose upon GLBT
people and their children. As long as same-sex couples are given
unequal compensation and unequal protections for equal work and equal
commitment, we cannot truly call ourselves a land of opportunity.
1 comment on And these are 'special' rigths gays are asking for?? I don't think so!
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Another law HRC is supporting is the Uniting American Families Act, which will allow same-sex partners to petition for their foreign-born spouses to immigrate in the same way that heterosexual couples now do. This is another issue of particular concern to those of us in the foreign service, since many of us, like our straight counterparts, meet our partners while serving the country overseas. I cover many of these issues in my blog, http://lifeafterjerusalem.blogspot.com.
I have quoted and commented on your post here: http://lifeafterjerusalem.blogspot.com/2008/04/cost-of-being-gay.html