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June 08, 2011

Category: Domestic Partners

Human Rights Campaign Lauds Introduction of Legislation to Remove Unfair Taxation of Health Benefits

Measure would remove discriminatory burden on LGBT families as well as fair-minded employers.

Washington - The Human Rights Campaign, the nation's largest lesbian, gay, bisexual and transgender (LGBT) civil rights organization, 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 would end the unfair taxation of employer-provided health insurance for domestic partners. A companion measure was introduced in the House of Representatives last week by Representatives Jim McDermott (D-WA), Richard Hanna (R-NY), Earl Blumenauer (D-OR) and Nan Hayworth (R-NY).

Under current law, although employer-provided health coverage for different-sex spouses is excluded from an employee's gross income, domestic partner benefits and coverage for same-sex spouses are not. As a result, an employee who elects to cover his or her domestic partner or same-sex spouse pays more income and payroll tax than a similarly-situated employee with a different-sex spouse. Moreover, because of this inequitable treatment, employers who offer benefits to domestic partners face the administrative burden of calculating taxes separately, and they also pay additional payroll taxes.

"Many American families continue to struggle to make ends meet, put food on the table and pay for healthcare - but LGBT families face an additional barrier to securing affordable health insurance coverage," said HRC President Joe Solmonese. "This legislation would remove that added tax burden, which can be as much as $2,200 per year, as well as 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 increases each year. In fact, nearly 60% 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. To see a full listing of businesses who have publicly stated their support for this legislation, go to: http://www.hrc.org/issues/workplace/benefits/business-coalition-benefits-tax-equity.htm

"Morgan Stanley has a long history of support for inclusive employment and benefits practices, equal treatment of all employees and diversity. It is in this spirit of basic fairness that we continue to support the Tax Parity for Health Plan Beneficiaries Act to equalize the tax treatment of employer-provided health benefits for domestic partners. This change will also ease the administrative burdens on employers, such as Morgan Stanley, that currently provide health coverage to domestic partners. We appreciate the leadership of Senators Schumer and Collins and their colleagues in the House of Representatives in re-introducing this legislation," said James Rosenthal, Chief Operating Officer, Morgan Stanley."

"American has been at the forefront of supporting fair and equitable tax policy for all Americans and today's introduction of the Tax Parity for Health Plan Beneficiaries Act is another step toward achieving that goal. Eliminating the federal tax inequities for corporations like American that provide health care coverage to the domestic partners of our employees remains a priority and we encourage the Congress to enact this important legislation," said Will Ris, Senior Vice President, Government Affairs at American Airlines.

Decisions about employee benefits have a significant impact on an employer's ability to compete. Those that recognize the value of equality for all employees have seen a real impact in their ability to draw top talent.

"MetLife's decision to extend benefit coverage was made nearly 10 years ago, and was centered around questions not only of equity, but the usual factors influencing benefit offerings - to attract and retain the most qualified, committed, talented and diverse workforce. As a leader in the benefits area, we know that tax treatment is not the only factor considered when employees make a benefits decision - but, it is very often an important catalyst to education and action, and certainly influences affordability," stated Margery Brittain, Senior Vice President, Global Compensation and Benefits at MetLife.

"Employers that choose to treat their LGBT workers fairly are also penalized by current policy and forced to pay additional payroll tax," added Solmonese. "Our government shouldn't burden hardworking families, nor should it punish employers for making business decisions that are both the right thing for their employees and their bottom line."

The Human Rights Campaign is America's largest civil rights organization working to achieve lesbian, gay, bisexual and transgender equality. By inspiring and engaging all Americans, HRC strives to end discrimination against LGBT citizens and realize a nation that achieves fundamental fairness and equality for all.

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