In the most recent edition of the Advocate, there was an article written by financial planners Joe Kapp and Nick Burkholder, looking at some of the specific federal privileges married couples enjoy – over 1100 of them– that at present are unavailable to same-sex couples. They chose to focus on the five biggest inequalities, and offer ways to minimize the damage. I realize that my readers – both of you– are probably already firmly in the choir on this particular issue, but I found the article illuminating; much of it was news to me. The specific examples bring a concrete reality to the issues involved. Hearing the number 1138 may sound bad, but it doesn't have quite the same zing as these detailed descriptions. I also thought it might help to show what some of the privileges of marriage are for straight couples, since I think all too often the people who enjoy them do so in ignorance, albeit quite innocently. So I share the info with you, for the next time you’re faced with someone asking "so, why do gay people even WANT to get married?" (I’ve heard this question more than once, bet some of you have too.). It’s long, but I think it’s worth it. Stealing the format as well as the information from the article, I’ll explain the problem, show the solutions Kapp and Burkholder recommend, then I may add a translation or two if I see fit. I’ll try not to be too snotty.
Shut up, okay?
Taxation of Domestic-Partner benefits. I already knew same-sex couples weren’t allowed to file joint federal taxes (nor state taxes, except for a few places), but this was a new wrinkle I didn’t know about. More and more companies are choosing on their own to offer domestic partner benefits, i.e, they’re providing their gay employees with the same benefits their straight ones already enjoy. This is way cool, don’t misunderstand me, BUT... the IRS sees this as taxable income, when a same-sex couple is involved. Health insurance, long term care, all benefits the partner receives gets treated as income, subject to taxes. For straight married couples, it doesn’t. It's that simple.
Their solution. Kapp and Burkholder suggest that before you add your partner to your company’s benefit plan, you discuss the process with the HR department about the problem and ways to minimize it. They also encourage you to lobby for the Tax Equity for Health Plans Beneficiaries Act of 2007, which is pending in Congress.
Translation. There is only so much you can do, and you’re highly dependent on your HR’s knowledge, goodwill, and support in the matter. Or you had better learn all the ins and outs of the tax code yourself, before taking any steps. Lobbying is good though, and it’s nice to know something is in the works to address this problem. In the short term however, minimizing the damage is the best you can hope for.
No Federal Pension or Social Security Survivorship Benefits. You may have heard about this one in relation to the death of Gerry Studds, Congressman from Massachusetts. He was married under state law to his partner Dean Hara, but Hara will not see one penny of the $62,000-a-year he would have received if he were just female. Or if Studds had been female. Well, you know what I mean. So okay, some wealthy guys don’t get to partake of the Congressional gravy-train like their straight colleagues do, it may be hard to muster much sympathy for that. But social security benefits? Think of all those little old people who have nothing but that to live on into their golden years. Sure, it may only allow them to eat cat-food, but it’s a trickle of money coming in each month to some of the most vulnerable members of our society. Now take that away, and you have a whole lot more old folks out on the streets. Keep in mind too that gays and lesbians are statistically far less likely to have family to care for them in their old age, compared to straight folks.
Their solution. They recommend buying a live insurance policy to replace whatever you might have received from the government, if you were in a straight marriage.
Translation. there is no solution. Find other means of saving for retirement, this one won’t be there. (Obviously you will be able to receive your OWN social security benefits and government pensions, at least as long as SS is still in existence.)
No Unlimited Gift Giving Between Partners. Financial transfers between married straight couples is untaxed, no limit on amounts, nothing. It’s presumed that if you’re married, you share a household, you share expenses, you pool your income and other resources. Same-sex couples? Everybody now... it’s taxed. You can transfer funds up to $12,000 a year from one partner to the other, but after that, it’s taxed. What this means in practical terms is that if one partner spends more on something that is shared between the two of them, the IRS considers that a gift and taxes it accordingly.
Their solution. Equalize payments for household and living expenses. "Be cautious about jointly held accounts," because if one partner deposits a lot of money, and the other one uses it, it’s gonna get taxed.
Translation. Okay I may be wrong about some of these specifics... but one thing I see right off the bat is that same-sex couples can forget about the idea of one partner staying home to care for the kids, unless the couple makes sure that the stay-at-home parent never gets more than $12,000 a year. Frankly I think becoming involved with someone significantly outside your income range is going to be risky. "Be cautious about jointly-held accounts"? Seems to me you’d be better of not even trying to hold one, though I’d love to believe I’m overreacting with that. Still, their solution doesn’t seem to solve much, especially not for those couples with widely disparate incomes.
No Unlimited Marital Deduction for Gay Couple’s Estates. I knew this one oddly enough, but that didn’t lessen the outrage. With straight couples, the deceased spouse’s assets will pass to the surviving spouse without being taxed by the feds. For same sex couples, any amount over $2 million can be taxed up to 45%. When I read this, I thought, poor babies, two million isn’t enough, but the authors say it’s a surprisingly easy amount to exceed because all assets, including "life insurance, retirement funds, investments, and business assets" just to name a few, get included in the count.
Their solution. Here again, the best they can offer is to minimize the damage, don’t expect to avoid it. They advise you to get expert advice and "properly structure all assets to pass from one partner to the other on death."
Translation. Pay someone else a lot of money to see to it that you lose just part of what you would have lost without the help. Ignore the seething rage you feel about the fact that straight couples won’t think about this shit at all, it won’t even occur to them, and they’ll still get to keep more than you.
Inheritance Taxes on the State Level. Obviously this varies from state to state, but in many cases, what the feds don’t get, the state governments will. In many places, if you’re not legally family, an inheritance tax will accrue. The authors provide the examples of Maryland (10%) and Pennsylvania (15%). And as the authors say, "this is yet another area where heterosexual married couples have less or nothing to worry about."
Their solution. When you retire, move someplace that doesn’t impose these sorts of taxes. Okay, cool, you could actually avoid it all together. Two places they mention are Florida or South Dakota. Probably not an exhaustive list. At least I hope to god it’s not.
Translation: I have no major snarky response to add to this. Sure, having to move just to avoid taxes is a pain, and not everyone wants to move upon retirement, preferring to stay near their community, and familiar surroundings, but plenty of people do move (undoubtedly this is partly why Florida is someplace that doesn’t impose this tax.)
It will come as no surprise to you that the subject of same-sex marriage is a hot button issue even within the queer communities. Some folks say being queer is freedom from the straight hegemony, so why would we want to saddle ourselves with an institution that is obviously falling apart even for its intended population (more than 50% of all marriages end in divorce in this country). I find this objection a little silly. No one is going to MAKE you get married if you don’t want to. If being a sexual outlaw is so important to you, trust me, wear your assless chaps in public and you’ll get just the reaction you were looking for. Besides, plenty of straight people go into some wild terrain when it comes to sex; few, if any fetishes are exclusive to any one group. The option to marry hasn’t prevented Jack Nicholson from running around pantsless when the urge strikes. I don’t think this concern is legitimate.
Other queer communities say this is a concern that has eaten up way too much time and resources of all the major organizations, and is merely an attempt of rich white (male) queers to get the one final little privilege they are lacking. I understand this accusation, and certainly looking at the problems listed above, it could easily be interpreted as a whole lot of privileged folks (they HAVE health benefits? More than $2 mil in assets? Are able to share over $12,000 a year?) complaining that they’re not getting everything coming to their straight friends and colleagues. I understand this feeling, but I think it’s short-sighted. Okay, so maybe if Biff is unable to leave his beloved Denny the estate without Denny having to give up the Summer home in the Hamptons, it’s hard to feel sorry for him. But these laws were designed to protect couples, and above all, families, and and I think they're often quite effective. Let’s imagine a Latina couple who have been together for twenty years, own a small house, are raising children together, and struggle each month to stretch their two incomes to meet their bills. One of them dies unexpectedly. The survivor, in the midst of her grief, now is also faced with wondering how she is going to replace the income her partner provided. Without that income, she could lose the house, just for starters. Had she married a man, she'd be getting his pension, and would have inherited the house and estate tax-free. The lack of these privileges could easily mean she and her kids end up on the streets.
I know this is a really long post, and hell, I didn’t even do most of the writing, I just stole it from someone else, but I think this information deserves to be disseminated as widely as possible. Marriage is not just weddings, it’s not just some moony-eyed declaration of undying love (with or without divine aid). It’s a legal arrangement with very real privileges that have consequences for people. And yes, the word is privileges, not rights. Sure the g/l/b/t communities are still struggling for lots of rights as well. But protecting relationships and families would go a long way to helping in that fight.
The Advocate Report
Your Money: Top five Financial Inequalities for Gay CouplesThe Advocate, June 19th, 2007, p. 20