Correcting Workplace Injustice In Domestic Partnership Benefits

Press Release

Correcting Workplace Injustice In Domestic Partnership Benefits

Rep. Jim McDermott (D-WA) introduced legislation today to remove the tax inequity that denies gay, lesbian, bi-sexual, transgender and domestic partnership relationships the same health care benefit in the workplace that other Americans receive with employer-provided health insurance.

"Every American deserves to be treated with dignity, respect and equal treatment under the law, but that is not what is happening in the workplace today, and I intend to right this wrong," McDermott declared.

McDermott, chairman of the House Ways and Means Income Security and Family Support Subcommittee, and a member of the Select Revenue Subcommittee, has begun building what he hopes will be a bi-partisan coalition to work for passage of his legislation.

Under current law, an employer's contribution of the premium for health insurance for an employee's spouse is excluded from the employee's taxable income. However, any employer contribution for the domestic partner's coverage is considered wages and, therefore, is counted as taxable income under the current tax law.

"This glaring inequity can add thousands of dollars to an employee's taxable income every year, and result in higher federal income taxes, when the only difference is one household includes a married couple and another household includes a domestic partnership- that's absolutely wrong," McDermott said.

McDermott's bill, The Tax Equity for Health Plan Beneficiaries Act, would remedy this injustice. The legislation would simplify the tax code and address - and encourage, McDermott hopes - a growing national trend by private and public employers to provide domestic partner benefits in order to promote fairness and equality in the workplace.

The Human Rights Campaign immediately endorsed McDermott's legislation. HRC President Joe Solmonese said: "This legislation to provide equitable tax treatment to all employees, regardless of their sexual orientation, is as fair and common-sense as it gets."

The Business Coalition for Benefits Tax Equity, which includes 30 model companies across the country, including like Microsoft in Washington State, supports changing the law.

"Microsoft's benefits program for domestic partners is an essential component of our culture of respect for all employees," said Jack Krumholtz, managing director of Microsoft's federal government affairs. "Unfortunately, the taxation of these benefits creates an unnecessary financial burden for our employees. We support Rep. McDermott's efforts to correct this unequal taxation."

Added Joe Solmonese from the Human Rights Campaign: "Over half of Fortune 500 companies now offer domestic partner health benefits to their employees and there is no logical reason why these benefits should be taxed any differently. This bill is a win, win proposal for both workers and businesses."

Rep. McDermott said: "Even model corporate citizens in Washington State, including Boeing, Microsoft, Starbucks, Nordstrom, Safeco, and Washington Mutual, are forced to treat employee earnings differently under the existing Internal Revenue Code. I want these companies to be recognized for their commitment to equality in the workplace and encourage others to follow their lead."

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