by Bob Roehr
WASHINGTON, D.C. –
Tax discrimination against LGBT couples will be ameliorated if Congress passes legislation introduced in the U.S. House of Representatives on March 29 by Rep. Jim McDermott (D-Washington). The bill is known as the Tax Equality for Health Plan Beneficiaries Act.
Under current Internal Revenue Service regulations the value of employers' health insurance premiums and benefits for spouses and dependents is not counted as income for the employee, and so is not taxed.
However, when employers extend similar benefits to the domestic partners of employees, those benefits are treated as taxable income by the IRS. It means a double whammy for the employee who must pay both a higher payroll tax and a higher income tax, which means a smaller paycheck.
McDermott's bill would rewrite IRS regulations to treat health insurance benefits for domestic partners the same way as benefits for spouses and dependents currently are treated.
"Human rights is unattainable without equal rights; I want dignity, respect, and the law to extend to health care benefits for gay, lesbian, transgender and bisexual Americans in the workplace," McDermott said. "The bill is my commitment put into action."
"This legislation to provide equitable tax treatment to all employees, regardless of their sexual orientation, is as fair and common-sense as it gets," said Joe Solmonese, president of the Human Rights Campaign.
In the example provided by HRC, a 35 year old employee making $32,000 a year whose company extends family health benefits to a domestic partner and children now pays an additional $1,555 a year in taxes on those benefits. The legislation would eliminate that penalty.
"We support Rep. McDermott's efforts to repeal the unfair taxation of these important benefits," said Kathy Marvel. She is a senior vice president with the insurance company Chubb & Son and a member of the Business Coalition for Benefits Tax Equality.
Companion legislation is expected to be introduced in the Senate by Chuck Schumer (D-New York) and Gordon Smith (R-Oregon).
