HRC Applauds Introduction of Legislation to Remove Discriminatory Taxation of Health Benefits
April 15, 2013 by Paul Guequierre
HRC today lauded Senators Charles Schumer (D-NY) and Susan Collins (R-ME) for introducing the Tax Parity for Health Plan Beneficiaries Act in the United States Senate. The bill, which was also introduced in the 112th Congress, would end the unfair taxation of employer-provided health insurance for domestic partners, as well as the penalty imposed on fair-minded employers who provide equal benefits to their LGBT employees. On average an LGBT employee will pay $1,069 a year in federal taxes for employer provided spousal health care, according to the Williams Institute at UCLA.
The Tax Parity for Health Plan Beneficiaries Act addresses a fundamental flaw in the U.S. tax code. Currently, employees are taxed on the fair market value of employer-provided health coverage for same-sex domestic partners or spouses. The same employer-provided health coverage for opposite-sex spouses is excluded from the employee's gross income and no taxes are paid. While a growing number of fair-minded companies "gross up," or pay LGBT employees with dependent partners more to offset the tax burden, most do not. Employees who elect to cover domestic partner or same-sex spouse pay more income and payroll tax and employers who offer benefits to domestic partners face the administrative burden of calculating taxes separately, and they also pay additional payroll taxes.
"Health insurance is critical to the stability of any family and gay and lesbian couples shouldn’t be unfairly taxed," said HRC President Chad Griffin. "In removing a discriminatory tax burden, this legislation will make families stronger and will end the penalty imposed on fair-minded employers who provide equal benefits to their LGBT employees."
The number of major companies providing family benefits for domestic partners continues to rise. Currently, sixty-two percent of Fortune 500 companies offer these benefits as a matter of fundamental fairness. That is why a coalition of top employers like Dow, Corning, Chubb, IBM, Microsoft, Nike, and dozens more support ending the taxation of health benefits, and endorse the Tax Parity for Health Plan Beneficiaries Act. View a full listing of businesses who have publicly stated their support for this legislation, here.
“In today’s economy it is more important than ever that we are able to attract the best and brightest. Domestic partner benefits play a large role in our ability to recruit and retain top talent. This legislation would end the discriminatory tax burden our employees and their families face when we offer these important benefits to them,“ said Howard Ungerleider, Executive Vice President, Advanced Materials, for the Dow Chemical Company and executive sponsor of Dow’s GLAD (Gays, Lesbians and Allies at Dow) Diversity Network.”
July 30, 2014