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Gay Couples Pay Millions More in Federal Estate Tax

Steve Sanders, a Chicago appellate attorney, pointed out a new study by the UCLA Law Williams Institute finding that same sex couples subject to the estate tax (people with more than $3.5 million at death) pay on average $3.3 million more in taxes than straight couples.

The study [PDF] says that the tax disadvantage stems from IRS non-recognition of gay marriages due to the Defense of Marriage Act. Other findings include [PDF]:

The estate tax penalty will cost same-sex couples $237 million in 2009 and nearly $620 million in 2011, if the exclusion limit falls back to $1 million.

If current estate tax law is not changed, by 2011 the estate tax disadvantage will have cost same-sex couples more than $3.5 billion over the last decade.

The loss to federal tax revenue of equalizing the treatment of same-sex couples would be less than one twentieth of one-percent (.05%) of total federal government revenue.

Still, with around $2.5 trillion in revenue, .05% is about $1.25 billion. Congress would need to come up with a way to pay for the lost revenue if they let the IRS recognize same-sex relationships.

[Cross-posted at the Gay Couples Law Blog, which discusses same sex family law, estate planning, and taxes.]

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Gideon Alper

Gideon Alper