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Will a relationship neutral tax code save traditional marriage?

March 14, 2013

On two successive days at the end of this month, the U.S. Supreme Court will hear two cases dealing with gay marriage.

Hollingsworth v. Perry, schedule for argument on March 26, involves California's constitutional amendment that forbids same-sex marriage.

Then on March 27, the justices will hear arguments in United States v. Windsor. This case concerns federal law that denies gay couples who legally marry the
right to obtain federal benefits available to heterosexual married
couples.

Specifically, in the Windsor case, Edith Windsor filed suit against the federal government in 2010 following the death of her spouse, Thea Spyer, in 2009. In dealing with the financial issues after her wife's death, Windsor learned she had to pay federal estate taxes of $363,053 because the Defense of Marriage Act, or DOMA, prohibits the IRS from recognizing same-sex spouses as surviving
spouses.

If Spyer had been married to a man, her estate would have passed tax-free to her spouse.

Contracts, not marriages: Same-sex marriage cases wouldn't need to be litigated if we followed one U.S. Senator's suggestion.


Rand Paul speaking at Kiwanis ClubAt a media briefing March 12 at National Review's Washington, D.C., offices, Sen. Rand Paul (R-Ky.; pictured at left) said that while he is "an old-fashioned traditionalist" who believes in "the historical
definition of marriage," he thinks it might be a good idea to remove that concept from the tax code.

Instead, said Paul, federal tax law should consider instead contracts between adults.

Paul explains:


"In fact, if there
are ways to make the tax code more neutral where it doesn't mention the
word marriage, then we don't have to redefine what marriage is. We just
don't have marriage in the tax code. If health benefits are a problem,
why don't we not define them by marriage? Why don't we say, you have
another adult who lives in the house, and a kid who lives in the house
can be part of family coverage? Then you don't have to redefine, and
have people like myself, and people who live in the southeastern part of
the country, we don't have to change our definition of what we think
marriage is, but we allow contracts to occur so there is more ability to
[make] the law neutral."

So the idea of marriage would be left to states, and more specifically to the religious groups that perform most of the marriage ceremonies in the United States. What type of vows a couple exchanged would not have any relevance to their taxes and the benefits for which they might be eligible.

Or, as the Washington Post's Right Turn columnist Jennifer Rubin puts it, "conservatives at the national level need to extract themselves from a
losing battle that should not be within the purview of the federal
government."

Rubin continues:

"Americans have not bought into the 'traditional marriage' advocates
(presumably high divorce rates in heterosexual marriages are none of
their business?), most especially the claim that same-sex marriage
'harms' other 'traditional' marriages. (I confess to never having
understood that argument.) Paul is dead right: It is time for
conservatives to move on and start focusing on issues that are properly
the concern of elected leaders and on which the public actually wants
government to act."

Of course there are lots of obstacles to doing away with marriage in the Internal Revenue Code. It is larded through the tax law, with special tax rates for jointly filing and separately filing couples. Some tax credits are avaible to couples but not to spouses who don't file one tax return together. Then there are the references to separated taxpayers.

There's even a special IRS document, Publication 504, that spends 29 pages (in PDF format) discussing tax issues that might affect divorced or separated taxpayers.

So while Paul's idea that marriage shouldn't matter when it comes to taxes, the fact is that it does. A lot.

And marriage, particularly between a woman and a man, is important to most of Paul's conservative rather than libertarian brethren on Capitol Hill. So don't expect them to embrace the junior Senator from Kentucky's idea to erase marriage from the tax code.

The best (and easiest) way to make sure the tax code applies to all taxpayers evenly and appropriately is to consider all legally married individuals, regardless of gender, as married federal taxpayers.

Later this year we'll find out what the Supreme Court thinks about this important civil liberties and tax matter.

What do you think? Should we consider Paul's idea to take marriage out of the tax equation? On a personal level, would you feel like your marriage wasn't real if it didn't come into play when you filed your tax return? OK, maybe that last one is only something I think about.

You also might find these items of interest:

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It’s over! With October’s extended filing deadline behind us, it is now time to focus on year-end moves to reduce your 2026 tax bill. 

You’ll find ways to do just that on the Tax Tips page (see the More Tax Posts drop-down menu at the top of the blog), as well as the separate tax tip pages for each month, notably October through December. If you’re on the Tax Tips page, you’ll find a monthly list at the end of this column. If you’re on another blog page, you can head straight to the October tips; at the bottom of that tips page you’ll find links to all the other 11 months’ collections of tax advice.

Not to spoil what you’ll find in that tax advice, but it does cover such things as tax deductions for charitable donations, investment moves that could reduce tax due, and ways to max out your tax-favored retirement savings. 

Finally, as the year winds down, things get hectic. There are lots of other things to occupy our time, like the much more fun upcoming holidays. But don’t lose sight of taxes, since timing is key. To be of use, most tax moves must be made by the end of the tax year. That’s Thursday, Dec. 31, which also is the last business day of the year. 

So that you don’t miss that final tax year deadline, also keep an eye on the countdown clock below. It will keep you on top of just how much time is left to make important, tax-saving moves. (Note: I’m in the Central Time Zone, so adjust accordingly for where you live.)

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