Bill to End Tax Inequity Same-Sex Couples Face in Health Benefits Part of Wider Tax Reform?

The Washington Blade reports that Rep. Jim McDermott (D-Wash.) is eying coming tax reform legislation to move his own tax bill that would help tackle the inequity same-sex couples face in employer-provided health benefits.

The legislation, “The Tax Parity for Health Plan Beneficiaries Act” (H.R. 2088), could be added to wider tax reform legislation, McDermott is quoted as saying. He confirms that it probably will not be moved as a stand-alone measure.

From The Washington Blade:

A McDermott staffer, who spoke on condition of anonymity, said his boss could amend the larger tax reform legislation with the Tax Parity for Health Plan Beneficiaries Act when it comes before the committee, but said it “depends on the process the Republicans take.”

McDermott’s legislation rectifies an inequity faced by LGBT couples under current law, which exempts employer-provided health coverage for opposite-sex spouses from an employee’s gross income, but makes domestic partner benefits and coverage for same-sex spouses subject to taxation.

Consequently, employees seeking to cover their same-sex partners or spouses pay more income and payroll tax than a straight employee with an opposite-sex spouse.

This inequity also burdens employers who want to extend their health benefits to the partners of their gay employees. Companies that offer suc benefits have the administrative burden of calculating taxes separately and have to pay additional payroll taxes.

[Read more, including statements from the HRC over at The Washington Blade.]

The bill has languished in Congress since 2001 though it enjoys bipartisan support, and while the rather hostile Republican-controlled House may present a problem, Rep McDermott has remained committed to the legislation as a “matter of basic fairness” for all couples in a registered union that currently suffer this disparity. 

Upon introducing the legislation on June 3, congressman McDermott said:

“It’s wrong to punish American companies for doing the right thing — more than 80% of America’s 100 most successful companies are recognizing employee diversity and providing more inclusive health plans, and they shouldn’t be penalized for this. As things stand, a company has to pay higher payroll taxes and the employee is hit with a huge tax penalty that their married co-workers are exempt from. This legislation would not only end unfair tax treatment of employees, but also help keep American businesses competitive.”

According to McDermott’s press release, the bill is also supported by a coalition of 77 American businesses, which includes Alaska Airlines, Microsoft, Boeing and others. They reportedly sent a letter in support of McDermott’s legislation, which states:

“Companies like ours in increasing numbers have made the business decision to provide health benefits to such beneficiaries, such as the domestic partners, adult children, certain grandchildren, etc. of our employees…[This coverage] helps corporations attract and retain qualified employees and provides employees with health security on an equitable basis. Unfortunately, federal tax law has not kept pace with businesses in this area, and…imposes a significant financial hardship on families and is simply unfair.”

In what is reportedly a national first, the city of Cambridge, Massachusetts, will as of July begin granting a quarterly stipend to city employees in same-sex marriages that are currently not able to access the same benefits as fellow married heterosexual workers due to the 1996 Defense of Marriage Act. Click here to read more.

Photo used under the Morguefile License, with thanks to imelenchon.


Bruce S.
Bruce S6 years ago

"Hope S. says
Way over due in passing. Why does anyone believe this would detrimentally affect Social Security?"

Are you kidding? If this bill was to pass, apart from costing emaployers more for health coverage now, once these "couples" retire they will want to collect Social Security and receive Medicare benefits the same as married men & women. If you were familiar with how these programs work you would understand what I'm saying.

Tami Kennedy
Tami Kennedy6 years ago

Hang in there Rep. McDermott.

Hope S.
Hope Sellers6 years ago

Way over due in passing. Why does anyone believe this would detrimentally affect Social Security?

Only ones against this are the religous right who base their stance on a false premise. Get
religion out of politics.

Bernadette P.
berny p6 years ago

Cant really see this happening!

Jon Hoy
Jonjon Hoy6 years ago

Things with a price tag never come with fairness for the people. Where do we stand?

Bruce S.
Bruce S6 years ago

A bill like this could never pass without considering its impact on Social Security & Medicare at some point.

Since this something that was NEVER anticipated when the Social Security Act was passed and Social Security is already in trouble, this will be a real obstacle. As for Medicare, they can't even figure out how to fix it for the people it was originally intended for.

Jane W.
Jane Warren6 years ago

When I was in university, in Canada - 20-some years ago? - this "matter of basic fairness"was being struggled with.

Danuta W.
Danuta W6 years ago