Wednesday, April 3, 2013

The Gay Marriage Tax Trap

Richard Wolf writes at USA Today:
The federal Defense of Marriage Act may be history in a matter of months, but same-sex couples won't be the financial winners, and the U.S. Treasury won't be the loser.

Those are but some of the unexpected consequences that could emerge if the Supreme Court overturns the 1996 law, which appeared likely — though far from assured — following Wednesday's oral arguments.

For years, the debate has focused on the law's denial of federal spousal benefits to gay and lesbian couples married in states that have legalized same-sex marriage. Those benefits include joint tax returns and estate tax exclusions, Social Security and veterans benefits, civil service and military pensions.

A Supreme Court ruling declaring DOMA unconstitutional would make married same-sex couples eligible for all those benefits, leading to the presumption that they would gain and the federal Treasury would lose. But just the opposite is true.

A 2004 study by the Congressional Budget Office estimated that it would increase government revenue by nearly $1 billion a year over 10 years — just a fraction of the $3.8 trillion budget. That's mostly because two-income gay couples with relatively equal earnings would pay more in taxes, not less.[...]"It's absolutely going to net the federal Treasury more money," says James Esseks of the American Civil Liberties Union[...]


  1. This reminds me of that Rodney Dangerfield style joke that's been told a few times by a few different comics on the topic:

    "Why not let gays marry? They have a right to be miserable too."


    If the wife reads this I'm screwed.

  2. Would not those who would not benefit from the tax code just not get married?

    1. Don't straight couples that lose by getting married still get married?

    2. I suspect it's mostly people who want to have and raise children and by older people who do receive tax advantages in many cases. Childless, double high income married couples buy leveraged McMansions and are afforded a substantial tax break from the interest deduction. Lots of these end in divorce. All this is pretty anecdotal from my clients, but I would think it is at least as accurate that a CBO model which assumes who knows what at to behavioral changes and which has never been right about a single matter in 30 years.