Well, those unmarried same-sex couples are getting unfair tax advantages. Let me list them for you.
As Minnesotans scramble to meet the income tax filing deadline, bemoaning their tax bills or celebrating their refunds, I am reminded that tax policy necessitates a closer look at the proposed state constitutional amendment defining marriage.
There are 515 rights and benefits, including tax benefits, which are denied to unmarried Minnesotans in same-sex relationships due to the current state definition of marriage and the Federal Defense of Marriage Act. These tax benefits will be permanently denied in Minnesota if the constitutional amendment is passed.
For example, same-sex couples cannot file their income tax returns jointly or pass wealth tax-free to their partner at death the way heterosexual married couples can.
Why should this concern married heterosexual Minnesotans? Because, due to legal nonrecognition of their relationships, unmarried same-sex couples (and unmarried heterosexual couples) may also qualify for certain tax advantages that married couples may not access. In some cases, unmarried couples may be paying less in taxes than they would if they were legally married.
A marriage amendment will set in stone relationship nonrecognition, lack of marriage choice, and tax advantages for some Minnesota same-sex couples. Here are some examples:
Head of household filing status
Without marriage recognition, each partner in a same-sex family with two or more children may file their returns under "Head of Household" tax status. This allows them to take advantage of lower graduated tax rates by each claiming a separate child on his or her income tax return. Married couples with two children are required to file as married, with higher tax rates.
Working families/earned income tax credits
A same-sex couple with a generous household adjusted gross income of, say, $100,000 annually may qualify for the Earned Income Tax Credit or the Minnesota Working Families Credit -- if one parent-spouse does not earn much of the combined income but provides more than 50 percent of the child's support. A married couple with an identical household income would not qualify.
Child care credits
A parent may hire her same-sex partner to provide child care for her child (if the child has no relation to the caregiver) and qualify for the Minnesota Child and Dependent Care Credit or the federal Child Care Tax Credit. Married couples cannot pay their spouses for child care and get a credit for the same expense.
One partner may adopt the other same-sex partner's child and claim the federal Adoption Tax Credit for their expenses. Heterosexual stepparents cannot do the same.
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Does reading about the unfair differences outrage you? It should, since it matters for everyone, not just same-sex couples. If the unfairness of denying marriage based on sexual orientation doesn't offend you, perhaps the unfairness of disparate tax treatment will make you believe in equality of marriage choice.
Principles of horizontal tax equity demand that families in similar financial positions should pay the same amount of taxes. There is no horizontal tax equity or logic in an amendment that treats similarly situated same-sex families differently than heterosexual families.
The irony is that most same-sex couples would trade tax credits or other tax benefits for marriage equality in a heartbeat. Unmarried heterosexual couples have the choice to get married and forgo any tax advantage. Same-sex couples do not and will not if the amendment passes.
Minnesotans should demand marriage equality as a matter of tax policy, not enshrine inequality permanently into our Constitution.
Beverly Luther is a tax attorney in Minneapolis.
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