On March 29th, Congressman Jim McDermott (D-WA) introduced the
Human Rights Campaign supported "Tax Equity for Health Plan
Beneficiaries Act" into the 110th Session of Congress. The legislation
would end the tax inequities that currently apply to employer-provided
health insurance for domestic partners.
Currently, the Internal Revenue Code (IRC) 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. As a result, employees
are taxed on the coverage provided to their partners, but have no
additional income to cover this tax burden. 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 to provide equitable tax treatment to all employees,
regardless of their sexual orientation, 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."
Rep. McDermott is the lead author of the bill in the United States House of Representatives. Senator Gordon Smith (R-OR) and Senator Chuck
Schumer (D-NY) are expected to introduce their bipartisan, companion
bill – the "Domestic Partner Health Benefits Equity Act" – in the United
States Senate soon.
"Human rights is unattainable without equal rights; I want dignity,
respect, and the law to extend to health care benefits for gay, lesbian,
transgender and bisexual Americans in the workplace, and this bill is my
commitment put into action," Rep. 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 January 1, 2007, a majority
(265) of the Fortune 500 corporations offered health benefits to
employees' domestic partners, more than twice as many as in 2000 and
more than a ten-fold 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. A total of 30 businesses have joined the Business
Coalition for Benefits Tax Equity in support of these changes becoming
law.
"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, Chubb & Son, a member of the Business
Coalition for Benefits Tax Equity. "Unfortunately, the continued
taxation of domestic partner benefits places an undue burden on our
employees and our company. We support Rep. McDermott's efforts to repeal
the unfair taxation of these important benefits."
"Domestic partner health benefits have been a key part of our effort to
attract and retain a qualified and diverse workforce, and we are pleased
to support Rep. McDermott's legislation that would end the tax penalties
we and our employees face when we make these benefits available," said
Julie Fasone Holder, Corporate Vice President for Human Resources,
Diversity & Inclusion, and Public Affairs, The Dow Chemical Company,
also a member of the Business Coalition for Benefits Tax Equity.
For numerical examples of how the current domestic partner tax inequity
affects many same-sex couples, visit:
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