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U.S. Congress

Senators re-introduce bill to remove unfair tax burden on LGBT families

Wednesday, April 17, 2013
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WASHINGTON — U.S. Sens. Charles Schumer (D-N.Y.) and Susan Collins (R-Maine) on Monday introducing the Tax Parity for Health Plan Beneficiaries Act, a bill that would end the taxation of employer-provided health insurance for domestic partners, as well as the penalty imposed on employers who provide equal benefits to their LGBT employees.

The bill, which was also introduced in the 112th Congress, addresses inequality in the U.S. tax code dealing with same-sex partners and spouses.

Currently, employees are taxed on the fair market value of employer-provided health coverage for same-sex domestic partners or spouses. The same employer-provided health coverage for opposite-sex spouses is excluded from the employee’s gross income and no taxes are paid.

While a growing number of companies “gross up,” or pay LGBT employees with dependent partners more to offset the tax burden, most do not.

Employees who elect to cover domestic partner or same-sex spouse pay more income and payroll tax and employers who offer benefits to domestic partners face the administrative burden of calculating taxes separately, and also pay additional payroll taxes.

Currently, sixty-two percent of Fortune 500 companies offer family benefits for domestic partners as a matter of fundamental fairness, according to the Human Rights Campaign.

Among them, a coalition of major employers — including Dow, Corning, Chubb, IBM, Microsoft, and Nike — support ending the taxation of health benefits, and endorse the Tax Parity for Health Plan Beneficiaries Act.

“Domestic partner benefits play a large role in our ability to recruit and retain top talent. This legislation would end the discriminatory tax burden our employees and their families face when we offer these important benefits to them,“ said Howard Ungerleider, an Executive Vice President at Dow Chemical Company and executive sponsor of Dow’s Diversity Network.”

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