Edith Windsor’s tax bill led to the recognition of gay marriage, but same-sex finances are still clouded by uncertainty
History is not often made through a married couple’s tax bill, but it was last week. In 2007, Edith Windsor married Thea Spyer, her partner of more than 40 years. Spyer died in 2009 and, like almost any married person, attempted to leave her property to her significant other. But it didn’t work out as hoped.
Since the United States did not acknowledge the legality of Spyer and Windsor’s union, Windsor received a several-hundred-thousand-dollar combined tax bill on Spyer’s bequest, from the Internal Revenue Service and New York state. Spouses can leave all their money and other valuable goods to one another tax-free. “Friends” cannot.
So Windsor sued.
But the demise of the Defense of Marriage Act, as wonderful as it is for the many same-sex couples who can now make their love legal should they wish, exposes a less than romantic truth.
Marriage is, if you look at the law, is a way of recognizing and treating a family as an economic unit. Married couples can apply for auto insurance together. Partners – for the most part – cannot. Married couples can make joint purchases with ease. They are responsible for one another’s debts – just ask any divorce lawyer. When it comes to Social Security, legally married men and women can claim benefits under their own earnings or elect to receive 50% of their spouse’s monthly check, depending on which is the higher amount.
We believe all of these intertwined finances are good. Look, for example, what happened when the Federal Reserve recently attempted to stop stay-at-home moms and dads (and all non-working spouses) from obtaining their own credit cards, claiming that if they did not earn their own salary, they could not have independent credit. Everyone from women’s-rights advocates to defenders of more traditional family relationships quickly cried foul, saying the entire household income should be the determining factor.
The Consumer Financial Protection Bureau agreed. Bye-bye, rule.
So now same-sex couples – if they live in certain states – have the same rights. But don’t pop the celebratory champagne bottles just yet. There are still a lot of logistics to be worked out and lot of laws to be re-written. The federal government alone has more than 1,000 statutes that now need to be adjusted.
Probably the biggest unresolved question concerns what happens to couples who marry in one of the 12 states (13 if you count Washington, DC) where same-sex marriage is legal, but later decide to move to a place where it is not. This is not a far-fetched scenario. What happens to same-sex married folk who live in New York or California, but decide to retire to Boca Raton or Tucson? “This is one of the big questions of the day,” says Gail Rosen, a New Jersey-based accountant.
Let me try to explain. Some federal benefits are determined by place of residence; others, by the place the marriage originated. So, for example, the United States Immigration and Citizenship Services last Friday issued the first post-Doma ruling green card to the Bulgarian husband of an American man. The couple lives in Florida, where the state does not recognize their marriage. But they married in New York. Benefits are rewarded based on place of origination.
But can that couple collect Social Security when they turn 62, based on one another’s earnings history? If they live in one of the states where gay marriage is legal, the answer is yes – or it will be, as soon as regulatory statutes are re-written to take into account the post-Doma world. These same-sex couples are now entitled to all the rights and privileges enjoyed by those in traditional heterosexual unions. As Eric Laursen, author of The People’s Pension, notes among other things, this will result in the greatest expansion of Social Security in decades.
But if this same couple lives in one of the 37 states that does not recognize same-sex marriage? Oy vey, as my grandmother used to say. One week later, and still no one knows the answer to that one.
Or consider the situation of workplace benefits. Prior to the supreme court rulings, if a company offered same-sex partners health insurance, pension and other benefits, it was considered income and both federal and state taxes had to be paid – something not true for heterosexual couples. Now? Well, again, if the couple lives in one of the states that recognizes their marriage, they’re not paying that bill any longer. But as for the others, we simply don’t know how this situation is going to be resolved.
President Obama is on record as favoring amending the statutes so that, as he puts it, “if you’ve been married in Massachusetts and you move someplace else, you’re still married and that under federal law you should be able to obtain the benefits of any lawfully married couple.”
But even he admitted to some befuddlement, quickly adding: “I’m speaking as a president and not as a lawyer.”
In an attempt to solve these questions, the California senator Diane Feinstein and New York representative Jerrold Nadler introduced legislation in Congress last week to fully roll back Doma. No one is giving that much chance of success.
It’s Washington, DC, after all.