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Congressional Essay: Rep. Jim McDermott

Posted by Will Rice (will) on Aug 05 2011 at 12:55 PM
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By U.S. Rep. Jim McDermott

Same sex couples and the enlightened companies that provide them equitable health benefits would stop being penalized on their federal taxes if a bill I introduced earlier this year becomes law.   Establishing such tax parity for health plan beneficiaries would be one more step towards treating same sex couples with the basic fairness all American families deserve.

Under current law, employer health benefits for employees, their opposite-sex spouses and dependent children are not counted as income for tax purposes.  This tax-free treatment saves the employer money on its half of payroll taxes, and the employee’s family on both payroll and income taxes.

But if an employer offers coverage for same-sex domestic partners (or, for that matter, grandchildren or certain other household members), those benefits must be treated as extra income and taxed as such.  For an average employee, that can mean over $1,700 more in combined extra taxes, not to mention several hundred dollars more in payroll taxes and extra administrative hassle for the employer.

Well over half the Fortune 500 companies now provide equitable health coverage for their employees’ families, including such well known names as American Airlines, AT&T, Bank of America, IBM, and Microsoft.  But because of the federal government’s so-called “Defense of Marriage Act” (DOMA), the IRS is prohibited from providing the same equitable treatment of those benefits under the tax code.

My bill would allow the federal government to catch up to private industry in treating all families equally when it comes to health benefits.

This legislation has received ample study and enjoys broad-based support.  I have introduced it in every Congress since 2001; in 2009, it passed the House of Representatives as part of health care reform (it was later removed by the Senate from the final bill).   This year’s bill, like earlier versions in both the House and the Senate,  has co-sponsors from both parties.

It also has the support of the business community, which sees it as an important issue of economic reform.  The Business Coalition for Benefits Tax Equity, a group of 77 corporations and trade associations, has announced it backs the bill because “the provision of domestic partner health coverage is an essential component of a comprehensive benefits package...[which] helps corporations attract and retain qualified employees...”

The Coalition said because of the higher tax bill currently involved, some employees in same-sex relationships forgo coverage altogether, threatening their physical and economic well-being and increasing the ranks of the uninsured.

I hope to include my bill in tax reform legislation expected this Congress.  Dow Chemical, a member of the tax-equity business coalition, is headquartered in the district of Michigan Rep. Dave Camp, chair of the tax-writing House Ways and Means Committee.  I hope not only Dow, but all his constituents, urge him to include this simple issue of equity in any tax reform bill.  And I hope every American who cares about fair and equal treatment of all our nation’s families will contact their members of Congress and ask them to support the “Tax Parity for Health Plan Beneficiaries Act of 2011” (H.R. 2088).

Representative McDermott (D-WA) is a past president of Americans for Democratic Action.