News (USA)

Cambridge, Mass., to reimburse gay employees for unfair federal tax

The city of Cambridge, Mass., said it will reimburse nearly two dozen gay public employees to offset the cost of a federal tax that city officials call unfair.

Because they’re in a same-sex relationship, the value of coverage for spouses on their employer-provided health insurance is considered taxable income by the federal government.

But starting this month, Cambridge will become what is believed to be the first municipality in the country to pay its public employees a stipend in an attempt to defray the cost of the federal tax on health benefits for their same-sex spouses.

The city employees hit by the extra tax pay an additional $1,500 to $3,000 in taxes a year and officials estimate the stipends would cost the city an additional $33,000.

“This is about equality,” said Marjorie Decker, a Cambridge city councilor. “This is a city that models what equality really means.”

Associated Press, via Boston Herald

While same-sex couples can legally wed in Massachusetts, the Defense of Marriage Act does not recognize their unions in connection with federal benefits, so the added tax does not apply to their heterosexual colleagues.

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