Google and the Federal Domestic Partner Tax

Google is now boosting the pay of its domestically-partnered gay and lesbian employees. This is to compensate them for federal income tax they have to pay on spousal benefits, a tax not levied on straight married employees. Predictably, many on the right see Google’s move as inequity rather than an attempt to wipe inequity out.

Here’s a reprint of something I wrote a few months ago, in which I calculate that my own domestic partner federal tax would amount to a $3500 annual salary 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.]