Legislation seeks to make same-sex benefits tax-free

Posted on 05 Apr 2007 at 9:14pm
By Staff and Wire Reports

Bill in U.S. House would allow domestic partners to exclude health plans from income



Rep. Jim McDermott

WASHINGTON The U.S. House of Representatives recessed for Easter on Friday, March 30, but not before Washington Democrat Jim McDermott introduced a bill that would help at least a little in giving some same-sex couples a break when tax time rolls around each year.

McDermott’s bill, titled the “Tax Equity for Health Plan Beneficiaries Act” would make employer-sponsored health care benefits for domestic partners nontaxable, giving the same status as employer health insurance plans for married couples.

The Internal Revenue Code currently excludes from income the value of insurance premiums and benefits employees receive for insurance coverage for their legal spouses and dependents. The code does not, however, treat insurance coverage for domestic partners the same way.

The result is that employees who are not legally married are taxed on coverage provided to their domestic partners with no additional income to cover the added tax burden. The value of those benefits is also included in the employee’s wages in calculating payroll taxes, which increases the employee’s and the employer’s payroll tax payments.

Rep. McDermott is the lead author of the bill in the United States House of Representatives. Senator Gordon Smith (R-OR) and Senator Chuck Schumer (D-NY) are expected to introduce a bipartisan, companion bill the “Domestic Partner Health Benefits Equity Act” in the United States Senate soon.

In a news release about the measure, McDermott said: “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. The bill is my commitment put into action.”

The bill quickly gained support from the Human Rights Campaign, but also from Microsoft, which is based in McDermott’s home state.

Jack Krumholtz, managing director for federal government affairs at Microsoft, told the Seattle Times that his company supports McDermott’s “efforts to create this unequal taxation.”

“Microsoft’s benefits program for domestic partners is an essential component of our culture of respect for all employees,” Krumholtz said.

Joe Solmonese, president of HRC, called McDermott’s bill “as fair and common-sense as it gets.”

Solmonese added, “Over half of Fortune 500 companies now offer domestic partner health benefits to their employees and there is no logical reason why these benefits should be taxed any differently. This bill is a win, win proposal for both workers and businesses.”

This article appeared in the Dallas Voice print edition April 6, 2007

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