Box Turtle Bulletin
News and commentary about the anti-gay lobby“Now you must raise your children up in a world where that union of man and box turtle is on the same legal footing as man and wife…”
News and commentary about the anti-gay lobbyOctober 13th, 2011
Bank of America has decided to reimburse its domestically-partnered employees for “gay tax” they pay on their health insurance benefits. Our opponents will decry this as special treatment, so be ready. Here’s a reprint from March, 2010, where I calculated the gay tax’s impact on me. You can use the analysis and link to figure out the havoc it wreaks on you, as well.
I investigated how much it would cost to add a domestic partner to my heath plan. If I were a straight man adding a wife, I could find the answer right in my employee handbook: $729.04 a year. And of course I wouldn’t have to pay taxes on that money, which eases the pain.
But a domestic partnership is more complex, because the law says I do have to pay federal income tax on it — and by “it” I don’t just mean my own contribution. The feds tax me on my employer’s contribution, too: $5876.52 a year. This appears on my W-2 as “imputed income.”
Add it up, and being gay means my taxable income would be $6605.56 greater than if I were straight. So, at my marginal tax rate, my federal taxes would be higher by $1849.56.
But there’s more. That’s $1849.56 in take-home pay. What kind of salary cut does that represent? Don’t forget, take-home pay is only a fraction of your actual salary. My employers sent me to this site for calculating that sort of thing. It turns out a take-home hit like that is equivalent to a $3500 salary cut.
That’s right. Adding a spouse to my health plan is like getting $3500 pay cut, compared to what would happen if I were straight.
And this is at a company with full domestic partner benefits.
Actually, that analysis is pretty limited. It only looks at medical and dental benefits, and only takes into account federal income taxes. My accountant would have to calculate my taxes in two different ways: once as a single man for federal income tax, and once as a domestically partnered man for state income tax. That extra effort costs extra money.
And then there’s the death-by-a-thousand-cuts. To find all this out, I had to research company policy, call HR, be transferred to Payroll, then back to HR, and then wait on hold while the rep went hunting this information down. After that, I had to go online and play with payroll calculators. Same-sex couples go through this sort of small hassle again and again. And sometimes the hassles aren’t so small. Don’t forget, the National Organization for Marriage doesn’t even want to give us the right to claim our partner’s body from the morgue unless we’ve had the foresight to fill out a special bureaucratic form — a requirement married couples don’t face. These many small burdens add up to a Kafka-esque nightmare, and our opponents are quite happy to send us there.
Speaking of NOM, what does its president, Maggie Gallagher, have to say about the insurance issue?
But when both adults are working (as in egalitarian relationships), both partners tend to sustain their own health insurance.
Wow. How many ways can one sentence be lame?
Here’s are some facts for Maggie.
Maggie, of course, ignores all that. Instead she just makes up stuff like:
But when both adults are working (as in egalitarian relationships), both partners tend to sustain their own health insurance.
And then she pretends she’s actually said something.
[Feel free to share the table/picture at the top of the post; please just link it back to me.]
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Timothy Kincaid
October 13th, 2011
My calculations show the impact as even greater
Assuming Fred makes 70,000 per year, his incremental tax rate is 25% (he pays 25% on each additional dollar he makes) and his FICA (social security and medicare) rate is 5.65%.
The total Gay Tax that the federal government would charge Gay Fred for health insurance would be $3,656 per year ((5,876 + 8,748) x .25 = 3,656). In order for Straight Fred and Gay Fred to have the same amount of cash in their pocket after taxes, Gay Fred would have to be paid $5,242 more per year.
$5,242 income
-1,607 FICA and income tax
-3,656 Gay tax
______
$0,000 take home dollars
And that, my friends, is a 7.5% pay cut
MattNYC
October 13th, 2011
The right wing will just claim that this is where the outrageous $5 monthly debit card fee will be going–to the f*gs.
I am sorry, Bank of America is still evil and all of their thieving executives should pay back their bonuses and go to jail.
My partner just shut down his BoA account and most of my friends are following suit.
“Pink-washing” does not make up for a company’s horrific economic policies. The fact that Home Depot supports its LGBT employees (well, at least it allows an LGBT employee group which has the AFA enraged) does not make up for the fact that its sociopath CEO has dedicated his life (and billions) to destroying every progressive policy and politician remaining in this country.
Andrew
October 13th, 2011
BofA evil… Well, parts of it are, sure. But lumping the entire organization together like that is like saying “the U.S. Military is evil” because one doesn’t like Gitmo. Some of their policies are predatory, some of them are so incompetent they might as well be predatory, and some of their policies, like this one, are the right thing to do. Sorry, I keep getting into this conversation at home where my guy thinks that the bad policies are constructed by evil men with cigars in back rooms, and I tend to view them as the aggregate of bad choices made by a few people either through incompetence, or with the wrong set of goals, functioning in an environment with bad communications and feedback processes, and a lack of accountability. It’s possible for the aggregate of incompetence and mistaken visions at a massive multinational to arrive at results that are, effectively, evil. All it takes is a bunch of cogs in a sociopathic wheel (profit motive) and a failure of any one person to take ownership.
Steven Sylvia
October 13th, 2011
I have been paying this gay taxes each and every year for the past 8 years that my husband has been on my Health Insurance here in Massachusetts..
It makes me sick each time I see my pay stub and every year that I have to perjure myself fining my federal income tax saying that I am single and not married.
Put me down for $28000 for being gay and married.
Andrew
October 13th, 2011
Also, I think it’s a little misleading to talk about “the kind of salary it *would* take” in order to achieve those taxes. The fact is, there are 3 scenarios: straight Fred, gay Fred, and single Fred.
I’m not altogether comfortable with the fact that the one exception to the provisions in Federal and State law relating to discrimination on the basis of marriage status is… compensation. I have colleagues who get special access to additional funds (medical benefits, HSA contribution, and of course off-the-books preferences on scheduling and holidays) on the basis of being in a relationship, or making babies. Last time I checked, neither of those was on their job description. In fact, if anything, those serve as distractions from their job… but heaven help you if you raise that issue (that’s discrimination, and actionable).
I think if we talk purely about the taxation on the imputed income, rather than back-calculating the supposed salary involved in the imputation, which is money you never would have seen anyways, then it’s still a powerful argument, and it’s both simple and powerful. Gimmicks can cloud message and undermine credibility. I argue that the simple taxation on imputed income is powerful enough on it’s own — especially for lower wage workers, where the imputed costs of health care are substantially greater as a relative portion of their worker’s take-home salary.
Andrew
October 13th, 2011
Steven – didn’t MA take the Feds to court over precisely that issue – that the Feds are treating you differently than they would other states’ citizens? Any word on the status of that suit?
Rob Tisinai
October 13th, 2011
The problem, Andrew, is that when I negotiate with my employer, I have to negotiate based on my salary. That’s how my compensation is compared to the compensation of my colleagues. So it makes perfect real-world sense to say, “This is how much my salary would have to increase to achieve financial equity.”
Timothy Kincaid
October 13th, 2011
Andrew,
Yes indeed there are a PILE of differences in employment based on whether your or not your spouse is the opposite sex.
But while listing those differences just results in their eyes glazing over, tell your coworker that the federal government charges you an extra tax, the Gay Tax, of about 7.5% for the exact same salaries and benefits that he gets and you will build an ally.
Even if he’s a Republican. Actually, especially if he’s a Republican. (Go ahead, test it out. find that Republican at work who says “oh, its about the economy” and ask him if gay people should pay 7.5% higher taxes for the same compensation.)
Paul Douglas
October 13th, 2011
It’s the middle of October and I already have been taxed on $5200 dollars I’ve never seen, for my husband to be on my medical, dental and vision insurance. Don’t get me started…..
Charles
October 14th, 2011
Why do we rely upon our employer to provide us with medical insurance in the first place? The complexity of the current situation is overwhelming.
Andrew
October 14th, 2011
Rob, thanks for the explanation – I think I see where you’re coming from. I think the public argument is better made from a simpler perspective (people do NOT have long attention spans for other people’s problems), but yes, I completely understand how you’re impacted directly that way.
My salary increases each year as a percentage… but percent of what? If you’re effectively tacking on a flat fee not subject to that percentage, then annual increases are not being negotiated on a level playing field. How much salary have you had to forego on that basis is a very fair question.
HOWEVER. That’s details. The public doesn’t want details. And they really don’t want to do math. The easiest way, IMHO, is to say “HEY! Here’s the damn tax bill I paid last year to get what you got for free”. Not subject to calculation or whatever — even though the truth is actually WORSE than what what goes on the “poster”.
THANK YOU for reminding me, however, that yes, it goes deeper than just the tax amount when looking at compensation in terms of the dollars and cents. And yes, by the way – interesting to note that as a federal law, the FMLA doesn’t apply to us, so my guy had better stay in good health.
Charles – I couldn’t agree more… the absence of a public option is an outrage. I have no problem with the creation of competitive public corporations for infrastructure – I’d love to have a choice on where I get my electricity, water, and trash (some is private, some is public). I do love being able to choose between USPS and UPS. Healthcare is, IMHO, not a privilege, or just another product, it’s a fundamental, and it should be treated as such.
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