Marriage Discrimination? $3500 Pay Cut!

I investigated how much it would cost to add a domestic partner to my heath plan. If I were a straight man adding a wife, I could find the answer right in my employee handbook: $729.04 a year. And of course I wouldn’t have to pay taxes on that money, which eases the pain.

But a domestic partnership is more complex, because the law says I do have to pay federal income tax on it — and by “it” I don’t just mean my own contribution. The feds tax me on my employer’s contribution, too: $5876.52 a year. This appears on my W-2 as “imputed income.”

Add it up, and being gay means my taxable income would be $6605.56 greater than if I were straight. So, at my marginal tax rate, my federal taxes would be higher by $1849.56.

But there’s more. That’s $1849.56 in take-home pay. What kind of salary cut does that represent? Don’t forget, take-home pay is only a fraction of your actual salary. My employers sent me to this site for calculating that sort of thing. It turns out a take-home hit like that is equivalent to a $3500 salary cut.

That’s right. Adding a spouse to my health plan is like getting $3500 pay cut, compared to what would happen if I were straight.

And this is at a company with full domestic partner benefits.

Actually, that analysis is pretty limited. It only looks at medical and dental benefits, and only takes into account federal income taxes. My accountant would have to calculate my taxes in two different ways: once as a single man for federal income tax, and once as a domestically partnered man for state income tax. That extra effort costs extra money.

And then there’s the death-by-a-thousand-cuts. To find all this out, I had to research company policy, call HR, be transferred to Payroll, then back to HR, and then wait on hold while the rep went hunting this information down. After that, I had to go online and play with payroll calculators. Same-sex couples go through this sort of small hassle again and again. And sometimes the hassles aren’t so small. Don’t forget, the National Organization for Marriage doesn’t even want to give us the right to claim our partner’s body from the morgue unless we’ve had the foresight to fill out a special bureaucratic form — a requirement married couples don’t face. These many small burdens add up to a Kafka-esque nightmare, and our opponents are quite happy to send us there.

Speaking of NOM, what does its president, Maggie Gallagher, have to say about the insurance issue?

But when both adults are working (as in egalitarian relationships), both partners tend to sustain their own health insurance.

Wow. How many ways can one sentence be lame?

  • “Egalitarian relationships”? That’s an odd term to pull out. And it doesn’t even mean what she think it means. Egalitarian relationships are those in which partners share control and decision-making equally. Employment status has nothing to do with it.
  • Why is Maggie only concerned with situations in which both adults are working? This month’s unemployment rate is 10.6%.
  • “Both partners tend to sustain their own health insurance.” Tend to? What does that mean exactly? Way to obscure the issue with vague, undefined terms.

Here’s are some facts for Maggie.

  • One out of every five America workers is uninsured.
  • Even workers with insurance don’t necessarily get it from their employers. In my state, less than half of working adults get insurance through their jobs.
  • Do some basic analysis on that stat, and it suggests about half of all couples face a situation where one partner is insured through work and the other is not (that’s rudimentary analysis – don’t quote it as expert commentary, but it’s a statistical ballpark). That’s the fraction of couples in need of spousal benefits.
  • Even if both partners are insured through work, one partner’s employer might offer much better coverage, so tax-free spousal benefits would be a blessing.

Maggie, of course, ignores all that. Instead she just makes up stuff like:

But when both adults are working (as in egalitarian relationships), both partners tend to sustain their own health insurance.

And then she pretends she’s actually said something.

[Feel free to share the table/picture at the top of the post; please just link it back to me.]

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15 comments to Marriage Discrimination? $3500 Pay Cut!

  • 1
    tavdy79 says:

    There’s also another group of couples where one partner wouldn’t be working – those where one partner cannot work due to long-term illness or disability. Ironically, that is also exactly the kind of situation where partner health coverage is most needed. It’s also the kind of situation which is explicitly included in the traditional Christian marriage vows – “in sickness and in health“.

    My grandmother was unable to work from her early 30s onwards due to crippling rheumatoid arthritis throughout her entire body. She relied heavily on the NHS for most of her medical needs, but many of the most expensive ones – such as a home adapted to her needs – had to be paid for by my grandfather and aunt. My aunt lived with her parents until their deaths in order to give her father occasional relief from caring for his wife.

    It seems to me that Maggie Gallagher believes only those of economic value should receive healthcare, just like she believes that only those who meet specific criteria should be permitted to marry the person they love.

    It also seems to me that the current US law excludes other kinds of relationships unfairly. What about situations where a wage-earner is supporting & caring for a sibling or close friend who is unable to work? Should people in that kind of situation have to pay extra tax on healthcare? Or to put it differently, since tax can be reclaimed on one form of altruism (charitable donations) why should another form of altruism be taxed?

    [Webmaster's note: Tavdy, for the record, if you can claim your domestic partner as a dependent on your income tax, then you would be able to deduct the health care costs from your income taxes. But the requirements for calling someone a dependent are much stricter. This, of course, is something opposite-sex married couples don't need to worry about.]

  • 2
    Kenny says:

    My partner and I have four children – two in college and twins that are three. I gave up a lucrative career to stay home and parent our children. Thus, I can’t obtain health insurance through my job because I don’t work outside the home anymore. I know many other LGBT families in the same situation – where one partner stays home. And, remember, many of these same folks arguing against gay marriage are the same ones who will tell you that one parent should stay home with the children. Enduring this unfair tax treatment is our only option so that I can have health insurance. So, not only am I being punished for being gay, but I’m being punished because I opted to stay home and raise a family. Apparently, staying home to raise a family isn’t a family value.

    [Webmaster's note: One good thing -- if your partner is responsible for more than 50% of your financial support, he can probably claim you as a dependent and therefore won't have to pay taxes on your domestic partner benefits. Assuming his company offers domestic partner benefits. Again, though, those two conditions are something opposite-sex married couples don't have to worry about. Hell, if you're an opposite-sex married couple you don't even have to live together -- or ever plan to -- and you can still get tax-free benefits.]

  • 3
    Kenny says:

    By the way, I recently discovered your blog after seeing your “Protect the Children” video on another website. You’ve got a great blog – interesting, entertaining, and informative.

  • 4
    Gianpiero says:

    I’ve found that this is something that even many of our strongest straight allies and supporters (and many of our gay ones, for that matter) have never even heard about. In fact, I’ve had the experience of straight colleagues believing we’ve had more success than we’ve actually had–for example, stating that they’ve presumed that my partner and I have been paying joint federal taxes for years. When we take the time explain these implicit pay cuts, or the chore of doing three sets of taxes every year, or the potential for being taxed on inheriting jointly owned property–we’re putting the burdens of inequality in terms they understand. Literally, I’ve seen eyes get wide and mouths drop open. And when you explain that because of DOMA, these inequalities remain even for those same sex couples who have married, they’re even more shocked (“You mean, you’re married like me, but you’re still treated differently?”). We have to do a better job of including these real impacts as part of our discussion–and, of course, your explanation is a great step in that direction. Thanks, Rob.

  • 5
    Dave W says:

    I just did my taxes, and thanks for the reminder of my overpayment. (I spent hours on the phone with payroll to get them to adjust my income for massachusetts…they were imputing income for fedeal and state).

    Sometimes I wonder if our opponents are just greedy. they have marriage, they have these tax advantages, they don’t have to hire lawyers, create trusts or constantly explain the differences. They have what they want, who cares about the rest.

    I honestly think that the incredible selfishness of American culture vs. elswhere is part of this. “No, I don’t want to discriminate, but who is going to pay for these deductions?” I see the same issue with the death tax. Sure, repealling it only helps certain families but it is just incredibly unfair, selfish and un-American to tax income twice! I think if people were less selfish they’d be able to see it. I won’t inherit an estate over $7MM but I have a sense of fairness and the death tax disgusts me just like my imputed income does.

  • 6
    Erik says:

    Hi. I work in the health and welfare industry and on occassion I talk with gay participants about this and the best way to get this information is to contact the IRS directly. I conferenced the participant with the IRS and stayed on the call to give the IRS some insurance and dependent information. Also, you should keep in mind that just because your company offers domestic partner insurance, it doesn’t mean that the IRS will allow you to claim the dependent unless the state you live in (sometimes the county too) recognizes your relationship as a legally recognized partnership. The one participant I helped with his imputed income questions with the IRS was shocked to find out that while the federal government would help him, since he lived in Texas, he was locked out with the state. So yea, this is important on a state level as well as the federal level.

  • 7
    jeremy says:

    I am oddly caught in the middle of this issue. My domestic partner and I are not same sex and we could marry if we wanted to. So far the only thing I see as a benefit to getting married is this tax issue. Not much of a reason to comply to ‘traditional Christian values’ if you ask me. We have actually talked about only getting married when everyone in Illinois or even on a federal level is allowed to! At any rate… I am taking a $4400 pay cut to not be married but still be able to get insurance for my partner. I have options… I could get married… I’m outraged at this on behalf of people who aren’t able to make that decision on their own because the government knows what’s best. Our laws are based on Chrisitan values…. NEWS FLASH… NOT EVERYONE IN THE COUNTRY IS CHRISTIAN!!! Some of us can actually think for ourselves and don’t need a fabricated fictional book to tell us how to live ‘good lives’.

  • 8
    Bess says:

    Another benefit accorded married couples is “Flexible Spending” accounts. Since these are Federally based I cannot use this benefit through my employer for my wife’s prescriptions or doctor visits.

  • 9

    [...] needy? NOM hampers our ability to provide health insurance for our partners and kids. Furthermore, they don’t care. In Maggie’s even crusaded against private employers offering domestic partner [...]

  • 10

    [...] needy? NOM hampers our ability to provide health insurance for our partners and kids. Furthermore, they don’t care. In fact, Maggie’s even crusaded against private employers offering domestic partner [...]

  • 11
    Larissa says:

    Wow! Never more than now have I been so very very glad I live in South Africa!!! I get health insurance through my partner’s work and there was never any question that we are exactly the same as a married straight couple!
    Hooray for a truly equal-rights-based constitution! I hope America comes to the party SOON!

  • 12
    JT says:

    Just learned about imputed income the hard way…I had no idea that I would be paying extra federal taxes to add my partner to my insurance. Luckily, the state of Oregon does not tax medical benefits paid for by a partner. 
    Since this is the only way for both my partner and I to have benefits…I can’t believe that I have to pay more taxes than a hetersexual married couple. It’s unfair and complete bull.

  • 13

    [...] truly is nonsense. I tore it apart a couple years ago with facts and figures, but now I have a more personal [...]

  • 14

    [...] truly is nonsense. I tore it apart a couple years ago with facts and figures, but now I have a more personal [...]

  • 15

    [...] of federal tax penalties, putting Will on my insurance amounts to a $3500 annual pay cut compared to what my married colleagues give up. I can see why someone might think I’m merely [...]

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