BIZ Online NGLCC

A bill pending in Congress would eliminate the sizable tax that gay and lesbian Americans have to pay if their partner or dependents receive health insurance from their same-sex partners' employer.

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."