Warning! $467,562 Charge for Same-Sex Partnerships

hundred dollar billsBy Steve W.

When we talk about the Defense of Marriage Act (DOMA) and the fact that, because it prevents the federal government from recognizing same-sex unions, lesbian and gay partners are denied over 1,100 benefits, we’re not just talking about marriage, are we? We’re really talking about health insurance, Social Security, estate tax and much more. 

The lifetime monetary cost of being in a same-sex relationship when compared to a heterosexual marriage has now been estimated by The New York Times’ financial analysts Tara Siegel Bernard and Ron Lieber in a two-month exercise that they had originally thought would take them only one week. 

To do this they created a hypothetical family that was designed to mirror the average heterosexual married couple, comparing the financial situations of the two couples based on the options open to them and creating a best and worst case scenario for the outcomes of that comparison for the gay couple.

The same-sex family they created was made up of “two women living in New York state in a committed partnership that lasts 46 years, until the first partner dies at age 81”.

Here is the context for the analysis:

“Our goal was to create a hypothetical gay couple whose situation would be similar to a heterosexual couple’s. So we gave the couple two children and assumed that one partner would stay home for five years to take care of them. We also considered the taxes in the three states that have the highest estimated gay populations: New York, California and Florida. We gave our couple an income of $140,000 [which was split between the two partners so that one partner earned $110,000 and the other earned $30,000] which is about the average income in those three states for unmarried same-sex partners who are college-educated, 30 to 40 years old and raising children under the age of 18.”

The analysts then calculated the taxes incurred and the federal benefits denied as a result of the government not recognizing the couple’s union. 

What did they find? 

Worst case scenario, not being able to claim the same benefits as their heterosexual counterparts cost the same-sex couple a huge $467, 562. 

Best case scenario it would cost them $41,196. 

Best or worst case scenario, it still seems to add up to injustice. 

According to the data the analysis provides, the areas in which same-sex couples are worst hit by the denial of benefits are in health insurance, Social Security and estate taxes. 

In health care, the figures depended largely on whether an employer allows same-sex couples spousal benefits. If they didn’t, as was the hypothetical situation in the worst case scenario, the couple were forced to buy health care coverage for both themselves and their two children, adding up to a cost of $211,993. If spousal benefits were allowed, this figure was significantly reduced but still quite dramatic at $41,196.  

In Social Security, due to a denial of survivor benefits and higher spousal benefits, as well as other factors, the projected result was a loss of around $88,511 when compared to what a claimant from a heterosexual married couple would have been entitled to receive. 

In estate tax, same-sex couples can not enjoy the same ability to move money between themselves tax-free like heterosexual married couples do. True this is only going to be a significant problem for really quite wealthy gay couples, but the worst case cost ran to $43, 378. If they were wealthy before, they would be considerably less so after. 

The study also noted that because same-sex couples were not eligible for the Marriage Penalty Tax, they could stand to save up to $112,146 in income tax during their life-time. This number was also factored in to the final totals. I’d wager its a price that same-sex couples would be more than willing to pay if they had the choice, however.  

The other categories that the analysis factored in were the costs of having a child, pension income, spousal I.R.A., tax preparation and financial planning. 

With the analysis simulating an average same-sex couple, it does not take into account the legal fees and implications associated with a same-sex partner who is a foreign national, which would have further increased the costs. 

To read the full New York Times article where you can also see the results in chart form, click here.

To read the full workbook that gives calculations, methodologies and in-depth results, please click here. 

The analysts concluded that if DOMA was repealed, and the federal government then began recognizing same-sex marriages, this huge disparity in taxation and benefits could be greatly diminished. They also asked the question: Were gay and lesbian couples being discouraged from having children due to these large benefit gaps and tax penalties? 

While a $140,000 annual income might seem high for either a heterosexual or homosexual couple right now, and this average feels anything but typical when the rest of America is factored in, the analysis does show that DOMA has real and tangible consequences beyond just denying people the right to have federally recognized marriages, and demonstrates the inequality that DOMA creates. 

Take Action Now:
Support the Respect for Marriage Act and help repeal DOMA today.

Have Your Say:
Do you think that this analysis is a reminder that DOMA unfairly discriminates against same-sex partners? 

Or do you think that the study has weaknesses and doesn’t in fact tell us much at all?

Posted at Care2.

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