I would like to thank all who have read my previous letters. I realize this is the forth letter I have submitted since May. I hope all fair-minded people continue to read as I cover different aspects of this issue.
In this letter, I want to illustrate a few examples of economic disadvantages same-sex couples face due to the fact they are denied the opportunity to obtain a civil marriage license. I will cover federal income tax, tax treatment of inherited retirement accounts and the estate tax.
For federal income tax purposes, if two single people work and earn a similar income, there is no income tax benefit to being married. If one person in the relationship is either unemployed or disabled, the unmarried couple will pay significantly higher taxes. A household income of $60,000 would be taxed as follows. The married couple would file married, claiming two dependents and would pay $5,205 in taxes. For the unmarried same-sex couple, the wage earner would have to file single with one dependent and pay $8,592 in taxes. The unmarried same-sex couple pays $3,387 more.
I now want to discuss tax treatment of inherited retirement accounts such as an IRA or 401k. Money contributed to these types of accounts is not taxed until it is withdrawn during retirement. For married couples, if one spouse passes, the surviving spouse may inherit a retirement account and not pay any taxes until money is withdrawn during retirement. An unmarried same-sex couple in this situation may inherit the retirement account, but must immediately begin taking distributions and pay taxes on those distributions. This will dilute the purchasing power of this account in retirement.
Now I want to discuss the estate tax. Married couples may inherit unlimited assets from each other tax free. Unmarried same-sex couples are treated as strangers under the law. They are subject to full estate tax when one partner passes.
A lesbian couple who were legally married in Canada filed a case: Windsor v. United States of America. One partner passed and because of the Defense of Marriage Act (DOMA), had to pay over $350,000 in estate taxes. Had this couple been an opposite-sex married couple, their tax liability would have been zero!
DOMA and Missouri's anti-gay constitutional amendment are harming your gay and lesbian loved ones. This harm is measurable. It doesn't have to be like this.