Tax Day 2008: The Cost of Being Gay
BY Lara Schwartz
April 10 2008 12:00 AM ET
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
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,
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.
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
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