The Gay Tax

By Brian Amaral

The timer on my voice recorder stopped at 58 minutes and 17 sec­onds.

If this had been an interview with a straight couple about their health insurance plan, it would have ended at two minutes—just enough time to complain about rising co-pays and cold stethoscopes. But I had just interviewed Dawn Kline, who works in the Whitman advising of­fice, and her husband, Mitch, who is legally a woman, named Michelle, but who identifies as a man.

Couples like the Klines face challenges every day—from the extra time explaining their situation (hence the hour-long interview) to funny looks when they check into a hotel room and ask for a king bed, not two doubles.

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But there’s one thing that’s often overlooked: Because the federal government doesn’t recognize their marriage, they pay more—much more—in taxes, including about $1,500 on their health care plan.

That’s a good amount of money for couples like the Klines. Dawn is starting her own baking business—there seem to be cookies and brownies everywhere. And commercial ovens ain’t cheap.

In her benefits package proposal, Chancellor Nancy Cantor has proposed a plan that would help close that loophole: an extra $1,000 to employees in same-sex relationships. It’s something that straight employees don’t have to worry about. The federal government will recognize their marriage, but not the Klines’.

This would make SU the first known university to offer such a plan, according to the Human Rights Campaign. Gay groups and activists are applauding the plan as a step in the right direction for equality, even as some argue that it’s not enough. Still others say it’s unfair to give a benefit to one group (gay couples) when another can’t receive it (everyone else).

The reason for this whole mess can be traced back to the Defense of Marriage Act, or DOMA, a 1996 bill passed by Congress. The law established that marriage is between a man and a woman. No other arrangement is legitimate.

Now, federal tax law says you can’t be taxed on your health insurance benefit if you have your husband or wife on the plan. But because of DOMA, gay couples can be taxed, because the federal government does not recognize gay marriages.

The tax is so high on the university’s health care plan, gay employees at SU who list their partners on the plan are paying more out of pocket – about $1,500 per year, according to a study by the university. The extra tax is actually even more than the co-pay, just over $1,000. So, final score: Straight couples pay $1,000 for their health care plan. Gay couples pay $1,000, and THEN $1,500 in taxes on the plan.

Which, advocates say, reeks of discrimination. So the university giving $1,000 to SU employees with same-sex domestic partners would help offset that.

“The basic point is that, to me, it comes down to values for the institution,” said Amit Taneja, the associate director of the LGBT Resource Center at SU. “They’re saying, ‘We value our same sex employees. We think every family should have access to healthcare.’ Doing this very slight offset is reflective of that value.”

A recent study conducted by the university found that, of all who were eligible, 90 percent of straight employees sign up for the university’s health care plan with their spouses. But only 28 percent of eligible gay employees enroll with their partner.

“Right now there’s a massive disparity in how the benefits are utilized by employees because of  a tax differential,” Taneja said. That is, the extra $1,500 that they pay to the federal government.

Taneja uses himself as an example: A few years ago, he enrolled his partner on the plan, but the taxes were too high. “That only lasted one month,” Taneja said. “Because we were like… Uh… I can’t afford this. It was a significant chunk.”

Some versions of Congress’s moribund health care bill included a fix for the tax disparity. Taneja is hopeful that the bill will soon be passed, but after the election of Massachusetts Sen. Scott Brown, that seems dubious at best.

The university could help, Taneja said, by lobbying. “Most of the lobbying has been around tuition,” Taneja said. “What we haven’t done is lobbying about these other policy changes. Both to benefit the students and employees, I think the university is going to start taking a more defined stance.”

University spokesman Kevin Quinn said that the university is indeed lobbying on this issue, pushing for a bill in Congress that would close the loophole that forces gay employees to pay more in taxes. Asked about lobbying for other issues that affect gay people, Quinn said that the university is “not specifically at this time” lobbying on these issues.

Now would be the time to do it.

The university’s move comes at a time of significant movement in the field of gay rights. Perry v. Schwarzenegger, a case that appears headed to the Supreme Court, is being hailed as the gay rights version of Brown v. Board of Education. If the court sides with gay rights activists, the ruling would nullify the Prop 8 decision that banned gay marriage in California, and could have repercussions on gay marriage laws nationwide.

And then there’s “Don’t Ask, Don’t Tell,” a law that forbids gay men and women from serving openly in the military. President Obama has supported getting rid of the law, and recently, Defense Secretary Robert Gates and Adm. Mike Mullen, the chairman of the Joint Chiefs of Staff, called for a repeal of the law.

Like a repeal of the Don’t Ask, Don’t Tell policy, the university’s plan to pay gay employees more money to make up for unfair tax rules has been in the works for some time. The Lesbian, Gay, Bisexual and Transgendered Concerns committee of the University Senate first approached the university with the idea in 2005, said Thomas Keck, who represented the committee in the working group that helped form the benefits package.

The University Senate endorsed the idea in 2007, but it’s taken some time to study the issue and its costs, Keck said.

As proposed, the plan is not perfect. The plan would give $1,000 more, but that money, too, would be taxed, so for most employees, only an extra $600 would end up in the bank account, leaving gay couples to pay $900 more than their straight counterparts.

This plan is no silver bullet or magic solution, said Taneja of the LGBT Resource Center. But it will help attract more eligible gay employees (double the 28 percent, who already do, Taneja predicts) to the university’s health care plan. That’s why the university set aside $300,000, most of which will pay the health benefits for the gay employees who are expected to sign up, even though only 35 are currently on the plan.

Though the plan has seen little opposition, some feel it is unfair to give a benefit based on sexual orientation. One professor, Pat Cihon, raised concerns about the legality of the plan.

Tom Evans, the university’s legal counsel, said, “I’m very confident that the university is doing something legal, and if somebody were to challenge us we would prevail.”

Cihon doesn’t see it that way. “The university says: Legally, we can discriminate based on sexual orientation,” he said. “It may be legally right, but is it morally right?”

Cihon notes that he isn’t against giving money to same-sex domestic couples to overcome a tax burden, as long as opposite-sex domestic partners receive the credit as well.

More sinister opposition to the same-sex benefit has been reported, but nothing out in the open, as often happens with that sort of thing.

Whether the discrimination is blatant or not, it bothers Dawn Kline. Because while she seems perfectly content to start her new baking business and live her life with her husband, Mitch, she knows that not everybody understands her life choices, even when she takes the time to explain them.

What makes the explanation more difficult is that Mitch is in transition right now. He identifies as a man, though he’s spent most of his life as Michelle, a lesbian, which he always considered a sort of cop-out. He’s finally comfortable in his own skin, as Mitch. “I just finally decided to do something about it,” he said.

This article “will actually be the first time I’ve identified as a man,” Mitch says.

“Your coming-out party,” I suggest.

Says Dawn: “Well, I’m glad I baked.”

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