Tuesday, April 15, 2008

Tax Day proves that separate is unequal

While all of us Libertarians tend to be activists on Tax Day each year, those of us Libertarians who are also LGBT-identified have an extra reason to be angry. Not only are we not getting our money's worth, just as most Americans do not, but those of us who have married in a jurisdiction where same-sex unions are recognized face an extra penalty of not being able to file our federal income taxes jointly.

There are two main effects of the different treatment under federal law.

One is the tax rate. Take two couples where one partner has a taxable income of $20,000 and the other makes $40,000. If they can file their federal taxes jointly, the tax bill would be $8,217.50. Filing separately, the combined bill would be $9,032.50 -- more than $800 higher.

Another disparity comes with the federal government's treatment of employer-provided health insurance, which also affects unmarried heterosexual couples.

For example, Dan Jessup is a project manager at JPMorgan Chase in Indiana. His partner, Bob Chenoweth, is self-employed, running two businesses out of the couple's Mooresville, Indiana, home. So Chenoweth gets health insurance through Chase.

But Jessup is required to count the company's cost of his partner's benefits as additional income for tax purposes.

State and federal taxes on those benefits cost about $1,800 per year, Jessup said.

Let's see Congress fix that marriage penalty!