Bipartisan Bill Will End Tax Inequities That Apply to Employer-Provided Health Insurance for Domestic Partners
WASHINGTON — Today, Sens. Gordon Smith, R-Ore., and Joseph Lieberman, I-Conn., introduced the Tax Equity for Domestic Partner and Health Plan Beneficiaries Act, a bill supported by the Human Rights Campaign. Smith and Sen. Maria Cantwell, D-Wash., are the lead sponsors of the legislation; Lieberman is an original co-sponsor. The legislation, which was introduced in the U.S. House of Representatives on March 29, 2007, by Rep. Jim McDermott, D-Wash., would end the tax inequities that currently apply to employer-provided health insurance for domestic partners.
Currently, the Internal Revenue Code 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 takes the next step to ensure that all American workers receive equal benefits for equal work,” said Human Rights Campaign President Joe Solmonese. “A majority of Fortune 500 companies, collectively employing more than 15 million people, now offer healthcare benefits for the domestic partners of their employees. It is past time that our federal tax code is updated to reflect the reality of what is already happening in businesses across the country.”
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 June 1, 2007, a majority (266) of the Fortune 500 corporations offered health benefits to employees’ domestic partners, more than twice as many as in 2000 and more than a tenfold 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. More than 30 businesses have joined the Business Coalition for Benefits Tax Equity in support of these changes becoming law.
“At Nike, we have a strong history of supporting an environment of inclusion for all of our employees and have worked very hard to make the benefit package as equitable as possible under the limitations of the law,” said Randy Lyons, a Nike project manager who is chair of the company’s Gay, Lesbian, Bisexual, Transgender and Friends Employees Network. “Nike is proud to join Senator Smith in supporting this legislation to help ensure that Nike’s GLBT employees do not incur undue federal tax penalties in order to provide essential medical coverage and benefits for their loved ones.”
“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 Senator Smith’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 and inclusion and public affairs at the Dow Chemical Company, a member of the Business Coalition for Benefits Tax Equity.
“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 at Chubb & Son. “Unfortunately, the continued taxation of domestic partner benefits places an undue burden on our employees and our company. We support Senator Smith’s efforts to repeal the unfair taxation of these important benefits.”
The Human Rights Campaign is America’s largest civil rights organization working to achieve gay, lesbian, bisexual and transgender equality. By inspiring and engaging all Americans, HRC strives to end discrimination against GLBT citizens and realize a nation that achieves fundamental fairness and equality for all.