Nov. 11, 1998 

Marriage May Not Be Financially Wise For Gay Couples

By Steve Friess

Forget for a split-second all of the idealistic, principled reasons why gays and lesbians should be allowed to legally wed.

Forget the religious and moral arguments you may regularly endure with your parents, your co-workers or your priest about the relative value of a gay and straight relationships. And forget all high-court battles that have ensued across the U.S. in the seven years since a trio of same-sex couples sued the state of Hawaii for the right to obtain a marriage license.

Yes, forget all of that. Imagine instead a world where Jesse Helms and Jerry Falwell recognized their error, where Anne Heche can be called Ellen DeGeneres' wife without the media sticking the word wife in quotes, where you and your beloved could live out your days in legally recognized bliss. Would it be worth it? Not "worth it" from a personal or ethical point of view. Would it really be worth it financially?

"For tax purposes, I don't see any advantages," says Gary Babe, a Las Vegas financial planner who is gay. "As a couple you can juggle finances to make it work in your favor."

Indeed, the most significant financial advantage now available to same-sex couples is not being subject to the so-called "marriage penalty," in which the standard deduction received by a married couple filing jointly is less than double what a single person receives.

There are rumblings in Congress to eliminate this archaic rule created for an era when only one spouse, usually the husband, earned a substantial income. But few political watchers expect the federal government to easily give up any tax source that reliably delivers millions into the U.S. Treasury each year.

Thus in 1998, a same-sex couple can claim a combined standard deduction of $8,500, while a heterosexual married pair can only knock an automatic $7,100 off their taxable income total. And because the IRS doesn't view the gay duo as a team, each partner can remain in lower tax brackets than they would if income were combined on the 1040.

"The partner with the higher income should be taking the full mortgage deduction (for home-owners) and the same person should be making out all the charitable deductions," says Brenda Stout, a openly gay Las Vegas accountant. "The other person files the short form with the standard deduction. That's called good tax planning. To split the deductions down the middle is 
throwing away a free deduction." 

Marriage: Doesn't Make Sound Financial Sense

Brenda Stout knows of these benefits first-hand. Stout's girlfriend of nine years, Gloria Dillon, is entering her final year as an accounting major at University of Nevada at Las Vegas, and their single status was considered a boon to her landing federal grants and loans to pay the college bill. 

Dillon also has a 17-year-old daughter, which further boosts her appeal on a loan application as a single mom. Truth be told, the pair have been raising the daughter and sharing that expense together for nearly a decade but the law does not recognize that.

"If we were considered legally married, she would lose those advantages because she'd have to put down our combined income," Stout says. 

The Flip-Side: Legal Advantages

State-recognized marriage does carry several significant legal benefits, including various assumptions about who owns the couple's property if one dies and who has rights in a medical setting to make decisions for an incapacitated party.

But almost every legal guarantee implicit in state-recognized marriage can be mirrored by hiring a family planning attorney to draw up paperwork, says openly gay Chicago attorney Daniel Davis.

Such work could cost up to $500, according to Washington D.C. attorney Loyal Snyder, which is greater than the approximately $100 it usually costs for a wedding certificate in most states.

Yet, Snyder warns, those contracts are still not as strong as those they emulate in legalized marriages. "You cannot build an entire substitute for the legal framework of marriage," Snyder says. "Unmarried partners can handle most property issues as good as or better than married people, but when it comes to areas like medical power of attorney, sometimes the family might 
fight your contract in court. Nobody would even think do that to a married couple. Can you imagine the money a partner might have to spend to get access to and control over decisions made in medical circumstances?" 

Also lost without a legal marriage is the presumption that a surviving spouse is entitled to proceeds from a pension, Social Security or insurance when the partner dies. Even if a gay spouse can access the pension funds, there is usually a tax cost that does not apply for the married survivor, says Las Vegas accountant Babe. 

Other costs lurk. Probably the most hidden of these is how the IRS treats the domestic partnership benefits that dozens of major corporations and local governments offer nowadays. The money spent by an employer on the insurance premiums for the unmarried spouse is viewed as taxable income for the employee and in some cases could even push that employee into a higher tax bracket. 

"Unmarried employees are required to pay taxes, where married employees are not," says Suzanne Goldberg, staff attorney for Lambda Legal Defense and Education Fund. "So it's a clear case of discrimination against unmarried employees which, of course, includes many gays and lesbians." 

Auto insurance is another problem for gays. Tom Harris and his lover, Joe, are both 25, jointly own two vehicles on which they pay $1,043 every six months to Geico Direct Auto Insurance for liability and comprehensive coverage. They would save $202, or almost 20 percent, off that rate if they were legally married, according to a Geico customer service representative. 

The Future: The Buck Stops Here

Yet even on that count, times are changing. The Hartford Insurance Company, which has independent agents in every state, this year became the first to offer its lower married rates to domestic partners. To qualify, the couple must occupy the same residence, be jointly responsible for basic living expenses and be willing to sign a short statement declaring they are "in a committed relationship of mutual caring." 

Still, says Stout, those costs pale in the shadow of the thousands of dollars saved over the course of a lifetime through the standard deductions advantage. 

"That's the big-ticket item, the tax thing," says accountant Blake McGroth of Los Angeles. "It's hard to put a price tag there, but that has to tower over everything else. Now, I believe in the rights of queers to marry very strongly if that's what they want to do. But I'll tell you right now, it's not going to make them any richer." 

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