Photo (cc) by joseanavas
This past week the Supreme Court began hearing arguments that could reshape the American definition of marriage. Whatever your opinion, Reuters has taken a look at some financial implications for gay couples if the Defense of Marriage Act is struck down – There are both positives and negatives.
On the plus side, surviving gay spouses would be eligible for a federal estate tax break. That’s what one of the two court cases challenging current law is about: Edith Windsor had to pay $363,000 in taxes to inherit her wife’s estate, while a heterosexual spouse would have paid nothing.
They would also get certain tax breaks relating to health insurance and more access to federal family and medical leave benefits. They’ll qualify for Social Security survivor benefits, and enjoy many other rights. Reuters says there are “more than 1,100 federal benefits, rights and burdens linked to marriage status.”
On the other hand, joint filing means Social Security benefits are more likely to be taxed. And gay and lesbian couples may hit higher tax brackets sooner – the so-called marriage penalty. With incomes over $1 million, that could mean $30,000 extra on the tax bill.
We’ve mentioned before that gay people as a demographic tend to make and save more money, and the Congressional Budget Office has estimated gay marriage would bring in an additional $1 billion in tax revenue over a decade.