How We Can End DOMA's Unfair Tax Burden on Same-Sex Couples

Apr 5, 2012

money-justice-scalesAs part of the 10 Ideas: Social Innovation to End Discrimination series, a proposal to adjust wages for same-sex couples to reduce inequity in the tax code and undermine DOMA.

While media reports characterize the United States as increasingly hospitable to lesbian, gay, bisexual, transgender, and queer (LGBTQ) people, lived experience clearly speaks to the discrimination, isolation, and dehumanization faced by queer folks. Unfortunately, LGBTQ people in the United States face discrimination on a regular basis, often in the workplace, in public spaces, or in relation to their own government. As the LGBTQ movement builds upon successes, it is important that it continues to ground itself in the personal experiences of queer people. A recurring trend in their stories is widespread discrimination under federal law, in many cases due to the Defense of Marriage Act (DOMA).

LGBTQ activists have understood the discriminatory nature of DOMA since President Clinton signed it into law in 1996. It contains a passage that defined marriage as "only a legal union between one man and one woman as husband and wife, [where] the word 'spouse' refers only to a person of the opposite sex who is a husband or wife," and an addendum that says individual states are not required to recognize same-sex marriages accepted in other states. As a result, DOMA has been a prominent target of state-led efforts to permit same-sex marriages in individual states, whether legislatively or judicially.

Yet LGBTQ activists have thus far ignored a major impact of DOMA on same-sex couples: Internal Revenue Service (IRS) policy whereby health care benefits transferred by employees to domestic partners (within those organizations that recognize domestic partnerships) are taxed as income. While the abolition of this practice may seem like a trivial point in the grand scheme of the LGBTQ movement, it holds promise as a way to gradually undermine DOMA as well as improve the lives of the conservative estimate of 901,997 U.S. same-sex couples by saving them, on average, $1,609 a year in comparison to identical heterosexual couples.

The most common way progressive organizations are combating this unjust tax is by "grossing up" the wages of employees in same-sex partnerships. This involves increasing employees' pre-tax salaries in order to account for the value of the tax on shared benefits as well as a possible shift in income bracket triggered by that practice.

Surprisingly, the bulk of action already taken to combat these inequitable practices has occurred within the corporate sphere. Tech start-ups and investment houses in particular, including Google, Facebook, Apple, Barclays, and Goldman Sachs, all gross up domestic partners' wages. Meanwhile, Bowdoin College, Syracuse University, Yale University, and Columbia University (as well as its affiliate Barnard College) are the only institutions of higher education to have adopted similar policies. In a promising move, the municipality of Cambridge, Massachusetts also now grosses up.

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Unfortunately, action by local, state, and federal government to mirror corporate practices lags far behind their private sector counterparts. There is a glimmer of hope, though, in a bill introduced by Senator Charles Schumer named The Tax Parity for Health Plan Beneficiaries Act of 2011 or Senate Bill 1171. However, despite being introduced July 1, 2011, the Congressional Research Service reports no action on the bill save for being referred to committee.

As states like Maryland, Washington, and New York continue to legalize same-sex marriage, we must remember that same-sex couples under federal law remain subject to the unfortunate impacts of the DOMA. Moreover, those organizations, universities, and corporations that provide domestic partner benefits for same-sex couples do not unilaterally "solve" the problem of unfair treatment experienced by LGBTQ people at the hands of their government.

By removing the unfair tax burden currently enforced by the IRS, LGBTQ activists can make using health care, filing tax returns, and pursuing employment that much easier for same-sex couples. Moreover, they can strategically undermine the strength of the DOMA. By highlighting the ways in which it financially isolates certain types of partnerships, queer advocates may be able to appeal to a wider political base and subsequently build power among fiscal voters.

Essentially, progressives across the United States ought to see the growing nongovernmental movement toward grossing up as a way to clarify their values in the national discourse. They can amplify the experiences of marginalized same-sex couples through listening tours and personal storytelling events. Using Senator Schumer's bill as a template, organizations that recognize domestic partnerships can join a coalition of at least 80 businesses committed to tax equity in order to place pressure on elected officials. Once this issue attracts more supporters -- particularly among employee LGBTQ affinity groups -- a critical mass will be able to force changes in Congress, change that (hopefully) will lead to the eventual repeal of DOMA.

Providing equitable tax structures for the transfer of health care benefits between domestic partners moves the cause forward, signals pragmatic solidarity between the queer and allied communities, and demonstrates the collective power of the progressive community. Additionally, it demonstrates that a wide body of people supports equity within the federal tax code over antiquated policy.

While the rhetoric around marriage equality has no doubt inspired wide swaths of the American public to support the struggle of LGBTQ folks, it's important that we express the meta-level concern that marriage is only one of the rights denied to queer people. Contextualizing same-sex marriage within a larger struggle for national nondiscrimination policies, visitation rights, care for homeless queer youth, anti-bullying work, as well as tax equity reflects the very real daily struggles of identifying (or being perceived as) LGBTQ in the United States.

Erik Lampmann is a Roosevelt Institute | Campus Network member and a sophomore at the University of Richmond studying philosophy, politics, economics, and law.

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