If signed into law, it would mean a savings of hundreds or even thousands of dollars on an individual worker's income tax—money that married heterosexuals are exempt from paying. The bill could be voted on as early as this fall.
The legislation would eliminate the double standard that currently exists where businesses are forced to treat benefits for same-sex partners in a different way under federal tax law, creating an additional tax burden for employers that provide equal compensation to their gay and lesbian employees.
Remedy Long Overdue
"It has been 25 years since domestic partner health benefits were first offered," says Jennifer Martin, who has become an evangelist in LGBT circles on the issue and who works as a human relations manager for the Best Buy Co. in Minnesota.
"For 25 years, we've also had the burden of this extra taxation of same-sex couples," Martin says. "Many people are not aware of it, much less that they get taxed as such a different rate than married couples."
To remedy this imbalance, U.S. Rep. Jim McDermott (D-Wash.) introduced the Tax Equity for Health Plan Beneficiaries in March 2007. He introduced a similar bill in 2003, but it died in committee. Sen. Gordon Smith (R-Ore.) introduced the Senate version of the bill in June 2007.
McDermott says in a statement, "This glaring inequity can add thousands of dollars to an employee's taxable income every year, and result in higher federal income taxes, when the only difference is one household includes a married couple and another household includes a domestic partnership—that's absolutely wrong."
According to the Human Rights Campaign, 266 of Fortune 500 companies, collectively employing more than 15 million people, offer healthcare benefits to their employees' same-sex partners. That fact alone, says HRC president Joe Solomonese, makes the tax equity act imperative.
"It is past time that our federal tax code is updated to reflect the reality of what is already happening in businesses across the country," he said when the bill was introduced.
A 2004 report from the Urban Institute pegs the total number of U.S. employers offering domestic partner benefits at 7,400. The number today is presumably higher.
Business Community Unites for Equality
More than 30 companies, mostly large ones, have banded together as the Business Coalition for Benefits Tax Equity to support the bill. They include Best Buy, Coors Brewing Company, Time Warner, JP Morgan Chase and Microsoft among others.
"These companies are to be commended for leading the way towards equitable treatment of all employees," says Justin Nelson, president and co-founder of NGLCC.
The bill has yet to face scrutiny in committee, although a House aide familiar with the bill says that he believes it will be more of a formality.
"This legislation has more momentum now than ever," says the aide. "I think it's a question not of 'if,' but 'when.'
"Most members on the [House Ways and Means] committee understand the issue and are favorably disposed to addressing it," he added. "The challenge right now is to find the right vehicle to attach it to."
The "vehicle" will most likely be a much larger tax bill to which the tax equity measure can be added, giving the measure a greater chance of being passed.
For now, Best Buy's Martin says the key to winning a legislative victory may be education, both for individuals and the businesses that employee them.
"I made it my mission to help educate not only the LGBT community but also the straight community since there are so many unmarried straight couples who are affected by these laws," says Martin. "Nobody knows they're unfairly paying this additional tax, but when they find out, they want to make a change."
