(Part 1)
MANY of our kababayans who are guided by their conservative views ask: Why do gay couples insist on their “right” to marry, when the Defense of Marriage Act (DOMA) defines “marriage” as legal a union between one man and one woman? They add that even the Bible defines marriage as such.
Right now, there are nine states that have already legalized gay marriage. But as reported by the Human Rights Campaign: There are 1,138 benefits, rights and protections provided on the basis of marital status in federal law that are not being fully enjoyed by homosexual couples who are legally married and those in domestic partnership because of DOMA.
The Human Rights Campaign is the largest civil rights organization working to achieve equality for lesbian, gay, bisexual and transgender Americans, representing a force of more than 1.5 million members and supporters nationwide — all committed to making HRC’s vision a reality.
For the purpose of this article, let us set aside for now any emotional element that are very important for married gay couples and their children to be recognized by society as a “family” – founded on the the love and commitment of two people in “marriage.”
Instead, let us understand the socio-economic implications of a marriage and why gay couples insist that the federal government should also accord to them the same rights and privileges that heterosexual couples now enjoy.
They contend that the Constitution of America guarantees equal rights and protection for ALL.
Let me share with you a summary of several categories of federal laws contingent upon marital status, as outlined by the Human Rights Campaign:
Social Security
Social Security provides the sole means of support for some elderly Americans. All working Americans contribute to this program through payroll tax, and receive payments upon retirement. Surviving spouses of working Americans are eligible to receive Social Security payments. A surviving spouse caring for a deceased employee’s minor child is also eligible for an additional support payment.
Surviving spouse and surviving parent benefits are denied to gay and lesbian Americans because they cannot marry. Thus, a lesbian couple who contributes an equal amount to Social Security over their lifetime as a married couple would receive drastically unequal benefits.
Taxes
According to the GAO report, as of 1997 there were 179 tax provisions that took marital status into account. The following is a limited sample of such tax provisions.
Tax on Employer-Provided Health Benefits to Domestic Partners
As policymakers have put an increasing emphasis on delivering health coverage through the tax code and as the cost of healthcare has once again begun to skyrocket, the current inequities in the tax code have placed a burden on the employers who provide healthcare coverage to domestic partners and on the employees who depend upon these benefits to provide security for their families.
Inequitable Treatment of Children Raised in LGBT Households
Recent data shows that at least 1 million children are being raised by same-sex couples in the United States. The Code contains competing definitions of “child.” Certain provisions of the Code defining child penalize children for the marital status of their parents and caregivers.
1. Earned Income Tax Credit
Eligibility for the earned income tax credit (EITC) is based in part upon the number of “qualifying” children in the taxpayer’s household. See 26 USC § 32. The definition of qualifying child under this provision includes only a child who is the taxpayer’s (a) biological child or descendent; (b) stepchild of the taxpayer; or (c) adopted child. Certain children of lesbian and gay couples are disadvantaged by this provision.
For example, a taxpayer and his/her domestic partner are jointly raising the partner’s biological child. The taxpayer works full-time and the child’s legal parent stays home to care for the child.
The state in which the taxpayer resides does not permit them to adopt through second-parent adoption or to marry the partner and become the child’s step-parent. This working family is therefore ineligible for an adjustment of the EITC, and therefore has decreased the resources to devote to the child’s care.
2. Head of Household Status
Heads of household, as defined by 26 USC § 2, are eligible for an increased standard deduction that, among other things, provides taxpayers with increased funds to care for their dependents.
The “limitations” section of this provision explicitly denies the benefit of head-of-household status to taxpayers supporting non-biological, non-adopted children. Thus, a gay or lesbian taxpayer who supports his or her partner’s child (and who is ineligible to adopt the child) has fewer post-tax dollars with which to support the child.
3. Child Tax Credit
Taxpayers meeting income eligibility requirements are entitled to a credit against tax for qualifying children in their households. This provision limits the child tax credit to children who meet the relationship test set fourth in the earned income tax provisions, § 32(c)(3)(B). As set forth above, § 32 does not include children of a taxpayer’s domestic partner if the children are not related to the taxpayer biologically or through adoption.
All three of these inequities have the effect of penalizing families who choose to have one parent in the work force and the other caring for the children full-time. In addition, they disadvantage such couples and their children by limiting the choice of which parent will be a full-time caregiver.
Although similarly situated married couples may choose which parent will fulfill that role without consequence – lesbian and gay couples, as well as other unmarried couples, face negative tax consequences for the same decision.
Tax on Gain from the Sale of the Taxpayer’s Principal Residence
Under Internal Revenue Code §121, a single taxpayer may exclude up to $250,000 of profit due to the sale of his or her personal principal residence from taxable income. Married couples filing jointly may exclude up to $500,000 on the sale of their home.
Lesbian and gay couples, who are not permitted to marry or to file jointly, are therefore taxed on all gain above $250,000, creating a large tax penalty compared to similarly situated married couples.
Estate tax
Internal Revenue Code § 2056 exempts amounts transferred to a surviving spouse from the decedent’s taxable estate. For same-sex couples who are legally barred from marriage, this exemption is not available, creating an inequity in taxation.
Taxation of retirement savings
Under current law, when a retirement plan participant dies, plan benefits must be distributed in a lump sum or remain in the plan to be distributed in accordance with the minimum distribution requirements of § 401(a)(9).
This problem does not exist if the beneficiary is the deceased participant’s surviving spouse, because the surviving spouse may transfer plan benefits to an IRA or a retirement plan in which he or she is a participant.
This entitlement is valuable because (a) it allows the surviving spouse to defer taxation of the proceeds, often until the survivor is in a lower tax bracket; and (b) it protects the surviving spouse from being forced to withdraw from an investment program when its value is depressed.
Because gay and lesbian couples are treated as strangers under federal tax and pension law, they cannot transfer plan benefits without incurring significant penalties, and do not have the flexibility to withdraw funds when they choose. (Part 2 next week: family and medical leave, immigration law, employee benefits for federal workers, continued health coverage. ABANGAN!)
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Gel Santos Relos is the anchor of TFC’s “Balitang America.” Views and opinions expressed by the author in this column are are solely those of the author and not of Asian Journal and ABS-CBN-TFC. For comments, go to www.TheFil-AmPerspective.com, https://www.facebook.com/Gel.Santos.Relos
