Human Rights Campaign Lauds Introduction of Legislation To Provide Fair Tax Treatment For Domestic P

by HRC Staff

"This bill is a win-win proposal for both workers and businesses," said Human Rights Campaign President Joe Solmonese.

Washington - The Human Rights Campaign, the nation's largest lesbian, gay, bisexual and transgender civil rights organization, today lauded the introduction of the Tax Equity for Health Plan Beneficiaries Act in the U.S. Senate and House of Representatives. The bill sponsored by Sen. Charles Schumer (D-NY) in the Senate and Rep. Jim McDermott (D-WA) and Rep. Ileana Ros-Lehtinen (R-FL), in the House, would end the tax inequities regarding employer-provided health insurance for domestic partners.

Under current law, coverage for beneficiaries other than spouses or dependents is included in taxable income, resulting in increased tax burdens on lesbian and gay couples that other families do not have to pay. The Internal Revenue Code excludes from income the value of insurance premiums and benefits received by employees for coverage of an employee's spouse and dependents, but does not extend this treatment to coverage of domestic partners. In addition, the value of domestic partner benefits is included in the employee's wages for the purpose of calculating payroll taxes, thus increasing both the employee's and the employer's payroll tax obligations.

"This legislation is as fair and common-sense as it gets," said Human Rights Campaign President Joe Solmonese. "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."

"At a time when America is confronting the inefficiencies, inequities and injustices in our health care system, extending health care benefits in the workplace to gay, lesbian, bisexual and transgender Americans must not be left out and my legislation is as much about equal rights as it is about health care," McDermott said.

In growing numbers, both public and private employers across the country have made the wise business decision to provide health benefits to domestic partners of their employees. As of Jan. 1, 2009, a majority (286) of the Fortune 500 corporations offered health benefits to employees' domestic partners, more than twice as many as in 2000 and more than a tenfold increase since 1995. Unfortunately, federal tax law has not kept up with corporate change in this area and both employers and employees who offer these benefits are being taxed inequitably. The 57 member Business Coalition for Benefits Tax Equity includes many of these companies and supports the changes becoming law.

"There is no excuse for our tax code discriminating against any group of Americans for any reason. This is a fundamental question of fairness and it is long past time this antiquated policy was overturned," Schumer said. "Our legislation is a common-sense fix that will spare both workers and employers from this unjust tax on health benefits."

"The health benefits of domestic partners are the same as any other health benefit and should be treated equally. Federal law is archaic in this area and this bill will resolve this inequity. I urge my colleagues to support this legislation as it will benefit both employer and employee," Ros-Lehtinen noted.

"At Chubb, we take pride in the progress we have made in creating a workplace that values employee diversity. As one of the first major corporations to extend benefits to domestic partners, we continue to seek ways to demonstrate how we value all of our employees' diversity - enabling us to attract and retain the most talented and diverse group of employees," said Kathy Marvel, senior vice president and chief diversity officer at Chubb & Son. "Unfortunately, the continued taxation of domestic partner benefits places an undue burden on our employees and our company. We support the efforts of Representatives McDermott and Ros-Lehtinen, and Senator Schumer to repeal the unfair taxation of these important benefits."

"Our ability to attract and retain a qualified and diverse workforce is greatly enhanced by our domestic partner health benefits program, and we believe our program would be stronger with the enactment of Representative McDermott's legislation, which would end the tax penalties we and our employees face when we make these benefits available under current law," said Howard Ungerleider, Vice President, Investor Relations for The Dow Chemical Company and executive sponsor of Dow's GLAD (Gays, Lesbians and Allies at Dow) Diversity Network.

View numerical examples of how the current domestic partner tax inequity affects many same-sex couples [PDF].

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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