Love and Taxes in Washington State

An initiative has been filed in Washington state that would tax the adjusted gross incomes of couples making more than $400,000 per year or individuals making more than $200,000. Because Washington offers extensive rights to domestic partners, however, the initial language of the bill was amended to make sure domestic partners are taxed in the same way as married couples.

As the Seattle Post-Intelligencer explains, the bill as initially written would have taxed a DP’d person making $225,000, even if the person’s partner only made $30,000. A married couple making $255,000, however, would not have been hit with the tax. The revisions would now tax married couples and domestic partners at the same rates.

While we're on the subject, some of you may say, why not mention the unfair tax treatment of same sex couples by the federal government?

Here's where things get tricky.

As lawyer Nancy Polikoff explains, when it comes to federal taxes, most same-sex couples would only benefit tax-wise from marriage if one person is making far more than the other. Our tax system is set up to favor couples who have an imbalance of income, a reflection of the traditional set up with a working husband and a stay-at-home wife. Couples who earn roughly the same amount typically pay more taxes as married than they do as single. Give same-sex couples marriage rights, and the same would happen to us.

There are plenty of other financial inequities same-sex couples face, such as being taxed on employer-provided medical benefits for our partners. I do not mean to imply that such inequities don’t exist, just that we should make sure to have our facts (if nothing else) straight. And tax issues are rarely straightforward.

Of course, the reason most of us are fighting for marriage equality is not just to pay more or less taxes, but to be treated equally under the law. I, for one, would willingly pay more in taxes to achieve that goal.

The other thing we should learn from the story of the Washington initiative is that even if same-sex couples are given equal rights in one state, at one point in time, there’s no guarantee that equality will automatically keep up as laws change. The initial version of the tax initiative needed to be clarified to ensure equality for DP’d couples.

Keep in mind, too, that domestic partnerships in Washington are equivalent to civil unions in New Jersey — ostensibly providing everything but the name “marriage” — but other jurisdictions, such as Wisconsin, offer domestic partnerships with a more limited set of rights.

Confused yet? Me, too. Without consistent, federal terminology, there will continue to be questions about the rights of same-sex couples as we travel and move. Such terminology is ready at hand. It's called "marriage."

Luckily, when I call my spouse “honey,” she knows what I mean, no matter what state we’re in.

Photo credit: Borman818