News / USA

Gay Marriage Rights Could Mean Higher Taxes in US

Terry Gilbert, left, kisses his husband Paul Beppler after wedding at Seattle City Hall, becoming among the first gay couples to legally wed in the state, December 9, 2012.
Terry Gilbert, left, kisses his husband Paul Beppler after wedding at Seattle City Hall, becoming among the first gay couples to legally wed in the state, December 9, 2012.
Reuters
If the U.S. Supreme Court strikes down a federal law defining marriage as between a man and woman, the newfound rights for gay married couples may bear something not so welcome - a bigger tax burden.

That's because with equality, gay couples will face the same tax woes of many heterosexual couples with similar incomes, including the tax hit known in America as the marriage penalty.

Taxpayers filing as married couples may be forced to pay higher taxes as their collective income crosses into a higher tax bracket sooner than if they were filing separately.

Oral arguments on Wednesday gave gay marriage backers hope the court would overturn the 1996 Defense of Marriage Act (DOMA) after a majority of the nine justices raised concerns about the law's validity under the U.S. Constitution.

Taxes are at the very heart of the challenge to DOMA.

Plaintiff Edith Windsor of New York, speaks to reporters in Washington, March 27, 2013Plaintiff Edith Windsor of New York, speaks to reporters in Washington, March 27, 2013
x
Plaintiff Edith Windsor of New York, speaks to reporters in Washington, March 27, 2013
Plaintiff Edith Windsor of New York, speaks to reporters in Washington, March 27, 2013
The case involves Edith Windsor and Thea Spyer, a New York couple. When Spyer died in 2009, DOMA prevented Windsor from enjoying one of the biggest tax breaks enjoyed by heterosexual Americans - the exemption from federal estate tax on wealth passed from one spouse to another.

If the law is struck down, the ruling extending the exemption to gay and lesbian surviving spouses would also clear the way to more than 1,100 federal benefits, rights and burdens linked to marriage status.

Cynthia Leachmoore, a tax preparer in Soquel, California, has about 40 same-sex married couples as customers ranging from teachers to Silicon Valley workers. A handful of them have joint incomes that top $1 million.

They're facing $25,000 to $30,000 more in federal and state taxes if DOMA goes down and they file taxes jointly, she said.``Most of them don't care. They'd really like to be able to say that they were married'' on tax returns, Leachmoore said. "That's more important to them.''

Complications

Married gay couples would see other benefits, including a break in taxes now paid on health insurance and greater access to federal family and medical leave.

There are some 130,000 same-sex married couples in the United States as estimated by the Census Bureau, and nearly 650,000 same-sex couples, married and not, in total.

The Byzantine U.S. tax code's marriage definition is not consistent. In some sections, the marriage provisions are defined for a "husband and wife.'' Other places say "spouse.''

If the law is struck down, the Internal Revenue Service may need Congress to clarify the tax code, or the Obama administration may say same-sex married couples will be treated the same as opposite-sex marriages, said Annette Nellen, a tax professor at San Jose State University.

Good for tax coffers

The nonpartisan Congressional Budget Office in 2004 estimated that recognition of gay marriage would, on net, help the budget's bottom line by $1 billion a year over 10 years. The increased revenue would account for about 0.1 percent of total federal revenues at the time.

Supporters of gay marriage hold a banner as they rally in front of the Supreme Court in Washington, March 27, 2013.Supporters of gay marriage hold a banner as they rally in front of the Supreme Court in Washington, March 27, 2013.
x
Supporters of gay marriage hold a banner as they rally in front of the Supreme Court in Washington, March 27, 2013.
Supporters of gay marriage hold a banner as they rally in front of the Supreme Court in Washington, March 27, 2013.
​The Williams Institute, a unit of the University of California at Los Angeles School of Law, estimates that gay marriage may be good also for the fiscal health of states and localities that legalize it.

Of the 50 states, 31 have constitutional amendments banning gay marriage. It is legal in nine states and Washington, D.C. The remaining states' policies vary, with some recognizing marriage from other states, some providing some of the legal benefits of marriage and others denying marriage by state laws.
    
Williams Institute estimated that if Rhode Island legalized marriage, its coffers would gain $1.2 million in 2010 dollars over three years, largely due to lower spending on social welfare programs and increased income tax revenue and marriage license fees.

That is the small slice of the hundreds of millions in operating deficits Rhode Island is expected to be working under in the next five years, as estimated by a governor's report.

Because of differing state laws, it is unclear what the impact might be in states with laws disallowing gay marriage.

Brian Moulton, an attorney with the Human Rights Campaign, said that if he married legally in Washington, D.C., and moved to Oklahoma, where gay marriage is not legal, the federal government might still recognize the union.

But Todd Solomon, a partner at law firm McDermott Will & Emery and author of a book on domestic partner benefits, said he was not so sure that would be the case.

"It is an open question as to what happens in Oklahoma,'' he said. "Each state will still be allowed to legislate marriage.''

Income, estate, health taxes

Although the case was about the estate tax, only 3,600 estates owed the estate tax in 2012, according to government figures, and the wealthiest Americans pay most of it.
    
The end of DOMA might also save same-sex couples from having to pay some federal taxes on healthcare benefits they receive through a spouse's employer. Unmarried domestic partners on average owe an extra $1,000 annually in taxes on these benefits because they are now taxed, according to Williams.

"Everyone will get a benefit if they were carrying health insurance," said Nanette Lee Miller, head of non-traditional family practice at accounting firm Marcum LLP in San Francisco.

The impact on Social Security benefits will be mixed. DOMA prevents same sex couples from claiming the survivors benefits extended to married couples. But Social Security recipients might face greater taxes on their benefits because they will hit the level where the benefits begin to be taxed sooner if married.

You May Like

Analyst: Joint-Arab Military Force Poses Perilous Challenge

Although international forces are desperately needed to counter the threat of the Islamic State group, analysts say conflicting alliances could escalate fighting More

Asia’s Middle Class Changes Demand for Wheat Grain Exporters

Changes in tastes and diets are boon for wheat exporters such as Australia and the United States More

S. African Comedian Taking Over Popular TV Show

Mixed-race comedian Trevor Noah, who is loved for his edgy jibes about race and language, is taking the helm from Jon Stewart at The Daily Show in US More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Film Tells Story of Musicians in Mali Threatened by Jihadistsi
X
Greg Flakus
March 30, 2015 6:48 PM
At this year's annual South by Southwest film and music festival in Austin, Texas, some musicians from Mali were on hand to promote a film about how their lives were upturned by jihadists who destroyed ancient treasures in the city of Timbuktu and prohibited anyone from playing music under threat of death. As VOA’s Greg Flakus reports from Austin, some are afraid to return to their hometowns even though the jihadists are no longer in control there.
Video

Video Film Tells Story of Musicians in Mali Threatened by Jihadists

At this year's annual South by Southwest film and music festival in Austin, Texas, some musicians from Mali were on hand to promote a film about how their lives were upturned by jihadists who destroyed ancient treasures in the city of Timbuktu and prohibited anyone from playing music under threat of death. As VOA’s Greg Flakus reports from Austin, some are afraid to return to their hometowns even though the jihadists are no longer in control there.
Video

Video With Coalition Airstrikes, Iraq Entering 'Last Page' of IS Battle

American warplanes joined Iraq's battle against the so-called 'Islamic State' in northern Iraq late Wednesday, as Iraqi ground troops launched a massive assault on Tikrit. Analysts say the offensive could take the coalition a step further towards Mosul, the largest city held by Islamic State forces. Others say it could also deepen already-dangerous sectarian tensions in the region. VOA's Heather Murdock has more from Cairo.
Video

Video Philippines Wants Tourists Spending Money at New Casinos

Tourism is a multi-billion dollar industry in the Philippines. Close to five million foreign visitors traveled there last year, perhaps lured by the country’s tropical beaches. But Jason Strother reports from Manila that the country hopes to entice more travelers to stay indoors and spend money inside new casinos.
Video

Video Civilian Casualties Push Men to Join Rebels in Ukraine

The continued fighting in eastern Ukraine and the shelling of civilian neighborhoods seem to be pushing more men to join the separatist fighters. Many of the new recruits are residents of Ukraine made bitter by new grievances, as well as old. VOA's Patrick Wells reports.
Video

Video Islamic State Prisoners Talk of Curiosity, God, Regret

Islamic State fighter, a prisoner of Kurdish YPG forces, asked his family asking for forgiveness: "I destroyed myself and I destroyed them along with me." The Syrian youth was one of two detainees who spoke to VOA’s Kurdish Service about the path they chose; their names have been changed and identifying details obscured. VOA's Zana Omer reports.
Video

Video Germanwings Findings Raise Issue of Psychological Testing for Pilots

More is being discovered about the co-pilot in the crash of Germanwings Flight 9525 in the French Alps. Investigators say he was hiding a medical condition, raising questions about the mental qualifications of pilots. VOA's Carolyn Presutti reports.
Video

Video Hi-tech Motorbike Helmet's Goal: Improve Road Safety

In cities with heavily congested traffic, people can get around much faster on a motorcycle than in a car. But a rider who is not sure of his route may have to stop to look at the map or consult a GPS. A Russian start-up company is working to make navigation easier for motorcyclists. Designers at Moscow-based LiveMap are developing a smart helmet with a built-in navigation system, head-mounted display and voice recognition. Zlatica Hoke has more.
Video

Video DOJ: Illinois National Guard Soldier Tried to Join ISIS

U.S. federal law enforcement agents arrested two suburban Chicago men accused of trying to join ISIS overseas, while also plotting attacks in the United States. As VOA’s Kane Farabaugh reports from the Midwest state of Illinois, one of those arrested is a soldier of the Illinois National Guard.
Video

Video New Wheelchair Is Easier to Use, Increases Mobility

Traditional push-rim wheelchairs create a lot of stress for arm, shoulder and neck muscles and joints. A redesigned chair, based on readily available bicycle technology, radically increases mobility while reducing the physical effort. VOA’s George Putic reports.
Video

Video Liberia's Almost Last Ebola Patient Grateful but Still Grieving

Beatrice Yardolo was to make history as Liberia’s last Ebola patient. Liberians recently started counting down 42 days, the period that has to go by without a single new infection until the World Health Organization can declare a country Ebola-free. That countdown stopped on March 20 when there was another new case of Ebola, making Yardolo’s story a reminder that Ebola is far from over. Benno Muchler reports from Monrovia.
Video

Video Cambodian Land Grabs Threaten Traditional Communities

Indigenous communities in Cambodia's Ratanakiri province say the government’s economic land concession policy is taking away their land and traditional way of life, making many fear that their identity will soon be lost. Local authorities, though, have denied this is the case. VOA's Say Mony went to investigate and filed this report, narrated by Colin Lovett.
Video

Video Space Program Status Disappoints 'Last Man on the Moon'

One of the films that drew big crowds last week at the annual South by Southwest festival in Austin, Texas, tells the story of the last human being to stand on the moon, U.S. astronaut Eugene Cernan. It has been 42 years since Cernan returned from the moon and he laments that no one else has gone there since. VOA’s Greg Flakus reports.

VOA Blogs

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More