So it’s tax time - as in time to file. This is our yearly financial reminder of just how inconsequential same-sex relationships are.
If you’re in Massachusetts or any of the states that recognize civil unions to the fullest extent of the law, you and your partner (if you’re in a relationship) can file your state taxes jointly. But none of us can file jointly with the IRS.
Right off the bat, if you use an accountant, that means you pay more for your tax prep. When our accountant does our taxes, he has to figure everything - charitable deductions, mortgage interest payments, and other legal deductions - twice to see who needs the deductions more to get a bigger refund.
Refunds aside, when you take a look at how we pay taxes as individuals versus how married heterosexuals pay taxes, we definitely lose out. We end up paying far more than our fair share - all because we can’t file jointly.
It makes you wonder if Leviticus, the culture wars, or the downfall of civilization really have nothing to do with the fight against marriage equality, but instead it all comes down to economics. Our community is a tax-generating cash cow, and the government knows it.
A 2005 study by the National Gay and Lesbian Task Force and Love Makes a Family of Connecticut (released before that state’s civil unions law came into effect) shows that same-sex couples pay more in taxes and receive less in benefits because we cannot legally marry.
The study, entitled “Economic Benefits of Marriage Under Federal and Connecticut Law,” specifically looked at the financial reality of lesbian and gay couples who live in Connecticut - what their state and federal liabilities and benefits were at that point in time, and what they would be if same-sex unions were legally recognized.
Why focus on this small New England state? Connecticut was just about to pass its civil unions law, and the study was used to make sure that the law provided the estimated 588 rights and privileges given to the state’s married couples. The study was successful in getting the point across. Lesbian and gay couples in Connecticut were afforded those rights and privileges - unlike their counterparts in Vermont and actual married lesbian and gay couples in Massachusetts, who had to sue to be treated equally across the board.
The benefits most of our parents took for granted - filing jointly, receiving Social Security death and survivor benefits, getting workers’ compensation, being able to gift one another money - are not available to us in our partnerships.
The study found that the economic disadvantages of our inability to marry are substantial. One of the couples profiled, Stephen Rinaldi and Andre Kreft, together earned approximately $75,000 a year. Both in their early 50s, they paid $2,689 more in state and federal income tax because of marriage inequality. Stephen works for the state. Before the Connecticut civil unions law, if he died as a result of a work injury, Andre would have received nothing. Now, with the law, Andre would receive a little over $34,000 per year in workers’ compensation benefits. Hopefully, he’ll never need to collect.
The study also estimates the aggregate lifetime economic liability we incur because we can’t marry. For Stephen and Andre, it amounted to $212,176 - and that’s just for income taxes and Social Security spousal and survivor benefits (the ones we don’t have access to).
There is one little bright spot, however. With the recent passage of the federal Pension Protection Act, Stephen’s holdings in a 401(k) retirement plan or an individual IRA could be left to Andre without him incurring a tremendous tax burden.
The act allows a retirement plan owner to name a nonspouse as a beneficiary, and that person would be treated as a legal spouse for tax purposes. In the past, we would have had to withdraw the amount as a lump sum and face immediate tax penalties. Now we get the money, but without the tax burden.
The bill also allows individuals who list their same-sex partner or other nonspouse as the beneficiary of their 401(k) plan to tap into their retirement funds if the beneficiary has certain medical or financial emergencies. Previously, only legal spouses or dependents could do this.
This change is just a drop in the proverbial bucket of inequality that lesbians and gays suffer at the hands of the IRS, the federal government, and most of the states. It’s time to kick over that bucket and empty out the dirty water
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Libby Post is the founding chair of the Empire State Pride Agenda and a political commentator on public radio, on the Web, and in print media. She can be reached at LesbianNotions@qsyndicate.com.