Achieving some tax fairness for LGBT households in California

  • by Philip Y. Ting
  • Wednesday May 29, 2013
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Assemblyman Phil Ting
Assemblyman Phil Ting

The struggle to achieve marriage equality for all is a long and difficult journey. Across the most basic aspects of everyday life, same-sex couples have faced entrenched discriminatory policies.

From denial of hospital visitation rights and the right to make medical decisions for loved ones, to the right to be adoptive parents, our LGBT friends and family members have been wrongly and unfairly subjected to unequal treatment under the law.

I fought against those discriminatory policies, and am proud to be a part of the social movement that is striving to change thousands of other injustices that continue to face the LGBT community, one by one, law by law, and tax by tax.

It may take some time for the courts to ultimately resolve the moral imperative of marriage equality, as the legal challenges to the Defense of Marriage Act and Proposition 8 are decided. In the meantime, those of us on the frontlines of the movement to achieve parity for same-sex couples must dedicate ourselves to overturning the long list of remaining laws and policies that make life harder, more expensive and less fair for members of the LGBT community. 

This month, as we mark the 83rd birthday of the late gay San Francisco Supervisor Harvey Milk and celebrate the 4th Annual Harvey Milk Day, we should take to heart his words spoken nearly 40 years ago: "It takes no compromising to give people their rights. It takes no money to respect the individual. It takes no survey to remove repressions."

His visionary comments ring true today, and remind us our work is not done until full equality is achieved for everyone regardless of their sexual orientation. 

Nowhere is the unfair treatment of same-sex couples more prevalent than in our tax laws. Prior to serving in the state Assembly, as San Francisco's assessor-recorder, I fought to bring fairness to the laws governing taxation of homes owned by unregistered domestic partners.

Prior to my reforms, property was automatically reassessed when one partner passed away, leaving the remaining partner with a huge property tax bill that often forced him or her out of their own home. We changed that policy, and now property tax increases triggered by tragedy are no longer the rule.

Today, in the state Legislature, I am working to change other tax policies that result in unfair treatment of same-sex couples. I authored legislation, Assembly Bill 362, to correct the unfair taxation of same-sex couples that happens when an employer reimburses them for extra federal taxes they must pay because they received health insurance coverage for the employee's partner and his or her children.

These employers are doing the decent and honorable thing, and we are fortunate to have companies such as Facebook, Google and the Kimpton Hotels provide this type of reimbursement to employees in same-sex relationships. And, I am grateful to San Francisco Supervisor Mark Farrell who led the effort to pass an ordinance requiring the City and County of San Francisco to reimburse its employees for these federal taxes as well.

But as the saying goes, no good deed goes unpunished. Here is how the unfair tax comes about; John and Tim are a legally married California couple. John's employer provides health care coverage for the entire family, including their two children. Because they are not married in the eyes of the federal government, John is required to pay federal taxes on these health care benefits. In recognition of the unfair treatment of this couple, John's employer generously reimburses him for the extra federal income taxes.

In California, as soon as John's employer helps him pay the federal taxes, the state steps in and taxes this payment as income. As a result, John pays about $540 more in state taxes than his co-workers in opposite-sex marriages. It is a classic case of a state tax policy that is discriminatory and just plain wrong. 

To correct this injustice, my legislation will change state law so that John and Tim will no longer have to pay taxes on the income they receive from their employer to offset the federal taxes on the health insurance benefits. It is a simple, but meaningful, reform that is part of a larger effort to chip away at similar injustices across the board.

The quest for marriage equality marches on. The road is long, with many a winding turn, but working together we will prevail.

The key is to stay true to Harvey Milk's admonition of no compromise - that's what we will do - one by one, law by law, and tax by tax.

 Assemblyman Phil Ting represents the 19th Assembly District covering parts of San Francisco and the cities of Colma, Daly City and South San Francisco.