Equality California
LGBT Health Insurance Tax Parity Bill Advances Out of Key Senate Committee
August 15, 2013

CONTACT: Jesse Melgar, Equality California
PHONE: 909.800.3840 EMAIL: jesse@eqca.org

LGBT Health Insurance Tax Parity Bill Advances Out of Key Senate Committee

(Sacramento) The LGBT Health Insurance Tax Parity Bill (AB 362), which would provide tax relief for employees who receive reimbursement from their employer for federal taxes they paid on healthcare benefits provided to their same-sex partner and dependents, has passed out of the Senate Governance & Finance Committee today.

The Internal Revenue Service has yet to provide clarity on how it will address the current lack of parity and put into action the Supreme Court decision striking down Section 3 of the Defense of Marriage Act.

“Anticipating fairness at the federal level shouldn’t delay fairness by the state,” said John O’Connor, Executive Director at Equality California. “With bipartisan support, this bill moves us closer to rectifying unjust taxation. We will continue supporting this bill’s passage as it moves forward.”

“The vote today was clear — California should not profit from the federal government’s discrimination of same-sex couples,” said Assemblymember Phil Ting. “Even with the U.S. Supreme Court recent rulings, justice delayed is justice denied. It’s time to treat LGBT Californians fairly. I look forward to moving the bill forward.”

The federal government assesses taxes on these benefits because it has not recognized marriages of same-sex couples. Similar benefits offered to opposite-sex couples are not considered taxable. Under current state law, the reimbursements provided by an employer would be considered income to the employee, and subject to taxation by the state of California.

Last November, the City of San Fransicso passed a measure, proposed by Supervisor Mark Farrell, that requires the City and County of San Francisco to reimburse its employees for federal taxes they must pay on benefits provided to a same-sex partner. Regarding the bill’s passage out of the Senate and Governance Finance Committee, Farrell says:

“Same-sex couples should not be required to pay more income taxes than others simply due to the nature of their partner relationship. This legislation will expand on legislation I introduced in City Hall for San Francisco, and expand it across California.”

AB 362, authored by Ting and sponsored by Equality California, would cover people in a same-sex partner relationship who work for public entities, such as the City or County of San Francisco, or private sector companies that choose to reimburse their employees for federal taxes they pay on benefits received for their partner and dependents. Among the companies providing this type of reimbursement to employees are Google, Kimpton Hotels and Restaurants, and Facebook.

“Facebook is proud to support our employees in same-sex partnerships by covering the federal taxes they are forced to pay for the health insurance coverage we offer their partners,” said Ann Blackwood with Facebook. “People in opposite-sex marriages do not pay taxes on employer-sponsored health benefits, and we see no reason why other employees should be penalized for receiving this benefit. We do this because it is the right thing to do and because it keeps us competitive for top talent.”

“As an employer of more than 3,600 Californians, we believe it is important to offer benefits that help our employees and families thrive,” said Robyn Hines with Microsoft. “Microsoft reimburses our employees for federal and state taxes imposed on same-sex couples receiving health insurance coverage. AB 362 builds on Microsoft’s history of supporting corporate and public policies that promote inclusion and equality.”

The bill will now move forward to the Senate Appropriations Committee.

Equality California (EQCA) is the largest statewide lesbian, gay, bisexual, and transgender advocacy organization in California. Over the past decade, Equality California has strategically moved California from a state with extremely limited legal protections for lesbian, gay, bisexual and transgender people to a state with some of the most comprehensive human rights protections in the nation. Equality California has partnered with legislators to successfully sponsor more than 90 pieces of pro-equality legislation. EQCA continues to advance equality through legislative advocacy, electoral work, public education and community empowerment. www.eqca.org