Chapter 7 - The Impact of Federal Laws & DOMA on Gay Marriage

Defense of Marriage Act (DOMA)

Enacted in 1996, The Defense of Marriage Act (DOMA) defined marriage as “only a legal union between one man and one woman as husband and wife, and the word ‘spouse’ refers only to a person of the opposite sex who is a husband or a wife.”

The Supreme Court recently ruled that DOMA was unconstitutional.  In the case, Edith Windsor was the surviving spouse of Thea Spyer. They were legally married in Canada and living in New York, which recognized their marriage. When Thea passed away, her partner Edith was required to pay approximately $363,000 in federal taxes on her wife’s estate. If the federal government had recognized their relationship, her tax bill would have been $0.

What Happens Now that DOMA was Overturned?

Despite the court’s rulings, unresolved issues remain both at the federal and state levels which may arise for couples who get married in a state that recognizes same-sex marriage move or travel to states that don’t. For example, there may be some federal benefits that remain unavailable for a couple that marries in a state that recognizes gay marriage but then resides in a state that does not.

There are other state-by-state issues that same-sex couples may continue to experience related to their children and parental rights.  There may be ongoing issues around ending a relationship and the extent to which the federal government will recognize the various rights and responsibilities associated with marriage and related benefits.

The Supreme Court decisions also practically differentiated between the various forms of legally recognized same-sex relationships. The court’s decisions basically means that the federal government will recognize gay marriages, but not Registered Domestic Partnerships or a Civil Unions.

What About States that Don’t Recognize Gay Marriage?

In addition to the issues around marriage vs. quasi-marital relationships, same-sex couples who get married in Washington or another state which allows gay marriage will experience problems when they travel, particularly if they move to a state that does not recognize same-sex marriages (or if the couple never resided in a state that had marriage recognition but married in Washington or another state that recognizes same-sex marriage).

There are approximately 1,000 federal benefits that are connected to marriage. Whether or not the federal government will recognize the rights of same-sex couples who reside outside Washington, in a state that does not recognize same-sex marriage, will vary based on the benefit.

For more information on the various benefits, several of the national LGBT organizations have created a variety of “After Doma” factsheets.

Effects on Non-Married Same-Sex Couples

Even with the downfall of DOMA, legal discrimination continues to exist for same-sex couples in quasi-marriage relationships like domestic partnerships and civil unions. Federal law benefits and responsibilities are connected to “marriage.” This means that couples in Domestic Partnerships and Civil Unions will not benefit from the Windsor decision.

The Supreme Court held that it was unconstitutional for the Federal Government to deny the recognition of a marriage when a state recognized the marriage. However, had Edith and Thea been in a State Registered Domestic Partnership or a Civil Union, they would have still had to pay taxes. Couples who are not married will still be faced with the estate tax Edith experienced.

This distinction is particularly important for couples in Washington State who entered into a State Registered Domestic Partnership and have not married. For example, there may be tax consequences in dissolving the domestic partnership (in Washington we refer to “divorce” as the dissolution of the relationship). There may be taxes connected to property transfers, and there may be issues with taxation and alimony/maintenance payments.

Economic Impact of Legalizing Gay Marriage

Effects on Federal and State Budgets

Many fear that lifting the federal ban on same-sex marriage would put an immediate drain on federal budgets. Research by the Congressional Budget Office suggests that this is not so: “The Congressional Budget Office (CBO) estimates that on net, those impacts would improve the budget’s bottom line to a small extent.”

Federal income tax revenue would also likely increase, as joint filers often are subject to what is called the “marriage penalty.”

Any increased state spending on benefits would be outweighed by savings from lower cash assistance and Medicaid spending. It also appears that state budgets would also get a boost due to wedding licensing fees (e.g. New York City reported a $250 million increase in revenue after legalizing gay marriage).

More same-sex partners would have medical insurance (once they are able to qualify for their spouse’s insurance plan), reducing healthcare costs nationwide.

Economic Stimulation

The wedding and divorce industry could receive a $9.5 billion boost from the country’s nearly 800,000 unmarried same-sex couples.

Economic Advantages for Same-Sex Couples

While same-sex couples might have to dole out some extra cash to pay for weddings and higher income taxes, they would pay less estate and gift taxes. Same-sex couples would also pay fewer legal fees to accomplish legal tasks that are currently necessary. They would also pay less to prepare their federal income tax returns.

Continue to Chapter 8