Terrance Heath

NYC "Gay Tax = $1

Filed By Terrance Heath | October 18, 2007 11:36 AM | comments

Filed in: Marriage Equality, Politics, Politics
Tags: marriage, money, New York

I've said it before and I'll say it again.

So, if you're gay, you pay more, wait longer, and get less. And what you get may turn out to be nothing, but you won't know that until you really need it. Nevermind that some states have tried to nullify even those few meager, shaky legal protections. Meanwhile, you keep contributing to Social Security, pensions, and health insurance your partner can't share or inherit; basically subsidizing heterosexuals who do get all the rights and protections of marriage, at a discount compared to what the "gay tax" gets you.

New York's "gay tax" is one dollar. At least, when it comes to registering a domestic partnership.

Mayor Michael Bloomberg's office has asked New York City's Law Department to reduce the fee for registering a domestic partnership from $36 to $35, the fee charged straight couples for a marriage license, the New York Times reported.

Though fewer rights are included, it costs a dollar more to register for domestic partnership in New York City than the marriage fee.

"It's ridiculous," said Alan Van Capelle, executive director of Empire State Pride Agenda. "You pay more for less rights.

That, in a nutshell is "the gay tax," except not only do you pay more for less rights, along the way you subsidize heterosexual couples who can access the benefits and protections of marriage. Essentially, you help buy for them what you and yours can't have at any price right now. But, all things considered, $1 isn't so bad when you take into consideration how much it costs in other states.

As discovered when performing a routine task of rolling over my 401Ks into one account, there are myriad ways in which routine tasks are different and decidedly more expensive for gay couples.

A gay or lesbian employee does not have the option available under many private pension plans (especially defined benefit plans) to select a “joint and survivor annuity,” which means that in exchange for taking a smaller amount during his or her life, the surviving partner would be able to still collect on the pension even after the worker has died. This is a matter of federal law.

… A same-sex partner does not have the ability to waive his or her partner’s receipt of a pension in a form other than a qualified joint and survivor annuity. For spouses, this is required under the Federal Employee Retirement Income Security Act (ERISA), which trumps all state laws in this regard. 24

An unmarried partner cannot “roll-over” his or her deceased partner’s retirement plan assets into an IRA in the surviving partner’s own name. This means that rather than being able to let the money continue growing tax free, the survivor, as the beneficiary, must begin to take distributions immediately (he or she can do so over a period of time based on his or her life expectancy). If the surviving partner is under age 59½, there is an early withdrawal penalty of 10% on the value of the IRA or 401(k).

A surviving same-sex partner who is the beneficiary of the deceased partner’s retirement plan cannot receive those tax-free. Instead, he or she is responsible for federal income taxes immediately on any distributions and there is no period in which those 401(k) assets can continue to grow tax-free. Massachusetts also taxes any gains from the IRA (the amount of the contribution itself is exempt from Massachusetts income tax).

Because those are rights that are granted only to legally married couples, so the cost of a domestic partnership or even a civil union gets you considerably less than the cost of a marriage license for those couple who can marry each other. And as Tim pointed out a Blue Oregon a while back, having the option to marry makes a big difference.

My brother just moved in with his girlfriend, a student at a culinary academy. The state they live in allows my brother to add his girlfriend to his health insurance as a cohabiting dependent, which is really good because the company he works for has great benefits and her lousy insurance costs a fortune. Now, there's a big drawback... since they are not married, the health insurance benefits that are paid for her to my brother are considered his taxable income. Essentially, he's gonna get dinged on his paycheck. The good news is that there's a solution... that extra withholding for that (her insurance benefits) is magically erased if they decide to get married, because tax law allows for tax free benefits to married couples.

So, the vast majority of gay couples in the same situation as my brother and his lovely girlfriend do not have this option, beacuse (this just in)... they can't get married in 49 of 50 states. This is not a hypothetical example... take a look at this Washington Post article. Basically, it's a gay tax. Now, I'm not inherently opposed to taxation, but it should be fairly implemented. The gay tax is not.

My brother and his girlfriend can choose to avoid this... they can get married. Since it's a choice that is available to them (unlike gay couples), I'm not up in arms over the higher taxes he will pay.

Oh, and that Washington Post article tells another story.

Early in 2004, after nearly two years in a committed relationship, Dan Jessup added his partner to his health insurance, as his employer, the big Wall Street firm J.P. Morgan, allows.

...But there was shock in store for the 39-year-old worker in Morgan's commercial banking division in Indianapolis: His taxes took a big jump.

"Something I didn't understand at the time was how much the taxes would be. I was very surprised when I started doing my taxes" this spring, he said.

As an increasing number of employers make health care coverage available, unmarried workers are finding that as one barrier falls, another remains standing: taxes.

Whether in same-sex or heterosexual unmarried unions, employees who take advantage of health care coverage for their partners are stuck with tax bills for the benefits.

...Opposite-sex couples, of course, have the option of getting married. Except in Massachusetts, same-sex couples do not. Even if they did, it wouldn't help with the tax treatment.

The Defense of Marriage Act, passed by Congress and signed by President Bill Clinton in 1996, defines marriage for the purposes of federal law as "a legal union between one man and one woman as husband and wife."

It also stipulates that "spouse" refers "only to a person of the opposite sex who is a husband or a wife." The law requires that both these definitions be used "in determining the meaning of any Act of Congress."

Thus, same-sex couples, no matter what the states do, will remain unable to get federal-tax-free health insurance for one partner through the other's employer.

Tell me again Hillary, how necessary DOMA was, and how you'd rather only repeal part of it, given how much you support equality.

And it's not just that, as I've pointed out before, the cost of a marriage license in my state is about $55. That and a short wait will get you all the But if you're a gay couple in Maryland, you can't get married because you can't make babies. Not only does that mean that any children you happen to be raising -- whether you conceived them or not -- will lack the benefit of having legally married parents, but the few protections you may try to secure legally will cost several times more than a marriage license, take longer to get, and may not actually work for you when you need them.

Mikki (center), 30, is an applications analyst for XM Satellite Radio. Lisa (left), 38, is a teacher with the Prince George’s County public school system. They live in Riverdale in Prince George’s County and have been together for over four years. Lisa gave birth to a boy in September 2004 and a girl in December 2005. They are also raising together a 16-year-old son from Lisa’s former marriage.



Marriage is important to Mikki and Lisa, not just for its legal protections and benefits, but also so their children can appreciate the value of family and commitment: “We want our boys to understand that marriage can be the foundation for a stable home and the love of two parents,” Lisa says. “We want our boys to feel accepted by society. We want them to know there is nothing unworthy at all about our family, and that having two mommies dote on them is the same as having a mommy and daddy. We just want to be able to marry and have the same benefits and protections as any other parents.”

Lisa Kebreau and Mikki Mozelle shelled out $6,000 to secure a few rights they could have had for $55, and in a much shorter time, had they been heterosexual.

And before you start in on "legal documents," remember Lisa Kebreau and Mikolle Mozelle spent $6,000 on legal documents to give them just a few of the rights that heterosexuals can get for the cost of a marriage license and a short wait. The cost of a marriage license is $55 in my area of Maryland, and the wait is about three days. That and a blood test gets you about 1,040 federal rights and protections in addition to whatever you get from the state. And those rights, the federal ones at least, will follow you anywhere you go. Marry in Maryland, and you're married in Mississippi, Montana, Mexico, and Moldavia. And no matter what happens, you don't even have to draw up so much as a will, because your spouse will automatically inherit a portion of your estate. (Business licenses in your name are inheritable too, as part of those 1,040+ rights and protections you got for $55 and a 3-day waiting period.)

By contrast Kebreau and Mozelle spent something like 109 times the cost of a marriage license, for legal documents that get them a tenuous hold on maybe three of the 1000+ benefits and protections of marriage, and the process of drawing up their documents probably took more than three days. And even then there's no guarantee those documents will be recognized or honored when presented at the hospital, as happened to Bill Flanigan. And the few rights you may secure at a much higher price, you must leave at the state line if you so much as take an overnight trip or a vacation, because you can't take them with you. So, if you're gay, you pay more, wait longer, and get less. And what you get may turn out to be nothing, but you won't know that until you really need it. Nevermind that some states have tried to nullify even those few meager, shaky legal protections. Meanwhile, you keep contributing to Social Security, pensions, and health insurance your partner can't share or inherit; basically subsidizing heterosexuals who do get all the rights and protections of marriage, at a discount compared to what the "gay tax" gets you.

So, I hope gay couples in New York City get are spared the $1 more they currently pay for fewer rights than heterosexual couples get for just a bit less. The reality is, some of them may need that dollar later, and in the worst way. Because they're gay.

Crossposted from the Republic of T.


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Brynn Craffey Brynn Craffey | October 18, 2007 1:41 PM

The inequality of it all makes my blood boil!! And as I understand it, the MSM designates any Democratic candidate who supports same-sex marriage--as opposed to domestic partnership--to be too "fringe" for serious consideration.

Great post, Terrance!