A Financial Justification

The fact that same-sex marriage has not yet been legalized at a federal level in the United States is an embarrassment to our system of government. The argument in favor of allowing loving couples equitable rights should be easily affirmed by the human struggle faced by the gay community. However, if the dialogue of “rights” and “equality” is still insufficient to drown out the unbearably staunch position held by religious objectors, perhaps economics can rationalize the debate.

Same-sex couples, as they are barred from marriage in many states, face disadvantages from the current federal tax codes by being unable to claim various benefits including the ability to engage in a non-taxable transfer to a partner, establish estates together, and split incomes in order to file jointly. However, in states such as California, Nevada, and Washington, due to the filing process, same-sex couples experience tax advantages. Although complaints indicate that joint filings have become more complicated and thereby result in larger upfront filing costs (i.e. due to higher accountant fees), couples may benefit from filing in a lower income bracket. This results from the ability to divide aggregate household income by two for each partner, thereby lowering net taxes in households wherein one high-earning and one low-earning individual cohabit.

In states with this net income divided by two rule, same-sex couples have been reaping the benefit of filing separately. In certain cases, the economic difference may be drastic. From the 2010 Census, we can see that in Iowa the average aggregate household income for unmarried same-sex couples was $77,561. By using the National Bureau of Economic Research Tax Simulation program, we find that the ability to file jointly means that if each of these partners were to marry, an average of $767 per household would be gained by the state government. Certainly, the significant gains in health insurance, retirement plan benefits, and various other financial capabilities would more than compensate couples for the loss of tax benefits. Every gay marriage forgone is another missed opportunity for communities to benefit from the associated financial injection into the local economy.

Therefore, the only parties currently at a loss are local governments and gay couples. Insurance agencies that provide health and life coverage programs are currently allowed to reap the revenue benefit of technicalities such as two policies per household while state governments have the potential to utilize these newfound funds to reinvest into the community. Rather than allowing such capital to be merely absorbed by these insurance agencies, governments must enable equal taxation of same-sex couples to provide for local support. Occupy marriage, anyone?

Beyond whether legalizing same-sex marriage is economically profitable, its time has come. Stonewall is more than four decades old, yet marriage discrimination is an issue that still pervades the United States at an unacceptable level. Although political figures consistently tout American global supremacy, the United States is now over a decade behind the Netherlands in terms of marriage equality. In 2011, 53 percent of the United States public believed that same-sex marriage should be legally recognized compared to just 26 percent fifteen years ago. The hatred espoused by the now minority perspective cannot be used as a rationalization to deprive local economies of necessary revenues.

The tide has drastically turned and politicians must get on board with the popular opinion. It is no longer acceptable that serious (I use the term loosely) presidential candidates for the nomination of a major political party consider the gay lifestyle as “personal bondage.” The gay community will never stand down until the law has come to reflect the needs of the people.

Saieed Hasnoo ’12, The Crimson’s associate business manager, is an economics concentrator in Currier House. His column occurs on occasional Thursdays.