March 28, 2013
Nanette Lee Miller, West Coast Partner-In-Charge of Assurance Services, Quoted in Reuters Article "Analysis: Gay Marriage Rights May Carry Bigger U.S. Tax Burden For Some"
By Kim Dixon and Patrick Temple-West
If the U.S. Supreme Court strikes down a federal law defining marriage as between a man and woman, the newfound rights for gay married couples may bear something not so welcome - a bigger tax burden.
That's because with equality, gay couples will face the same tax woes of many heterosexual couples with similar incomes, including the tax hit known in America as the marriage penalty.
Taxpayers filing as married couples may be forced to pay higher taxes as their collective income crosses into a higher tax bracket sooner than if they were filing separately.
Oral arguments on Wednesday gave gay marriage backers hope the court would overturn the 1996 Defense of Marriage Act (DOMA) after a majority of the nine justices raised concerns about the law's validity under the U.S. Constitution.
Taxes are at the very heart of the challenge to DOMA.
The case involves Edith Windsor and Thea Spyer, a New York couple. When Spyer died in 2009, DOMA prevented Windsor from enjoying one of the biggest tax breaks enjoyed by heterosexual Americans - the exemption from federal estate tax on wealth passed from one spouse to another.
Although the case was about the estate tax, only 3,600 estates owed the estate tax in 2012, according to government figures, and the wealthiest Americans pay most of it.
The end of DOMA might also save same-sex couples from having to pay some federal taxes on healthcare benefits they receive through a spouse's employer. Unmarried domestic partners on average owe an extra $1,000 annually in taxes on these benefits because they are now taxed, according to Williams.
"Everyone will get a benefit if they were carrying health insurance," said Nanette Lee Miller, head of non-traditional family practice at accounting firm Marcum LLP in San Francisco.