Published June 26, 2013
The Supreme Court’s decision to strike down the Defense of Marriage Act, paving the way to same-sex marriages, could mean more money for the federal budget, government data have shown.
The Congressional Budget Office (CBO) estimates that on net, same-sex marriage would bring in $1 billion annually to the federal budget's bottom line in each of the next 10 years, due to potentially increased tax revenues and less government benefit payouts.
The Government Accountability Office has found 1,138 legal rights denied to same-sex couples in the U.S. on the federal and state level. Marriage can affect a married partner’s eligibility for their spouse’s federal benefits such as Social Security and Medicare, even as the couples have been paying taxes into the system, as well as their inheritance of pensions and annuities. Married couples may incur higher or lower federal tax liabilities than they would as single individuals, depending on how they file.
Marriage also confers benefits in the form of joint insurance policies for home, auto and health; immigration and residency for partners from other countries; inheritance of jointly-owned real and personal property through the right of survivorship; wrongful death benefits for a surviving partner bereavement; or sick leave to care for a partner.
According to Fox News analyst Michael Daniels, here’s what the government data show:
Effects on Revenues
On balance, legalization of same-sex marriages would mean more money for the federal government in terms of federal income tax revenues, the CBO estimates. Revenues would be slightly higher -- by $700 million annually in 2014. However, that amounts to less than 0.1% of total federal revenue.
Recognizing same-sex marriages for federal tax purposes would require people in those marriages to file income tax returns as couples, either jointly or separately.
For almost all married couples, filing jointly rather than separately results in lower tax liability, as couples can take advantage of higher, combined deductions. But depending on the division of income between spouses, marriage can lead to higher income tax liability due to the "marriage penalty.”
The greater the similarity in the two spouses' earnings, the more likely the couple is to incur a marriage penalty. Conversely, the greater the disparity in earnings, the more likely the couple is to receive a marriage bonus. When one spouse earns all of a couple's income, the couple always gets a bonus.
Together, 2001 and 2003 federal legislation attempted to reduce the number of couples incurring marriage penalties and increase the number receiving bonuses into 2010. The 2003 law provided relief from marriage penalties for 2003 and 2004 in the form of a higher standard deduction and broader 15% tax bracket for married couples.
However, because of those changes and rising real (inflation-adjusted) incomes, same-sex married couples could pay higher marriage penalties. The CBO found federal revenues would increase by $500 million to $700 million more each year than they would be if same-sex marriages were not recognized. The government also found a tiny hit to federal revenues from estate tax revenues due to same-sex marriage.
Effects on Outlays
While recognizing same-sex marriages may increase outlays for Social Security and for the Federal Employees Health Benefits (FEHB) program, CBO estimates, it would cut spending for Supplemental Security Income (SSI), Medicaid, and Medicare.
Marital status has a direct impact on people's eligibility for some federal payments, such as Social Security benefits, veterans' benefits, and civil service and military pensions. It can affect other benefits indirectly if a spouse's income and assets enter into determinations of eligibility.
Altogether, CBO concludes, recognizing same-sex marriages would actually cut outlays by about $100 million to $200 million in 2014.
CBO estimates that additional Social Security benefits would grow to $350 million in 2014 (adjusted for intervening wage growth and cost-of-living increases).
Supplemental Security Income
Partners who now collect benefits from SSI-a means-tested program for the elderly and disabled-could lose some or all of their benefits if same-sex marriages were recognized, because their spouse's income and assets as well as their own would count toward their eligibility.
Partners who do not now collect SSI benefits would find their future applications rejected because of their spouse's income.
As a result, legalization of same-sex marriages would save the SSI program about $100 million a year in 2014, CBO estimates.
A joint federal/state program, Medicaid provides health coverage to some poor elderly and disabled people, children, and families.
CBO estimates that by 2014, about 100,000 fewer children and their parents would have Medicaid coverage than under current law.
In all, CBO expects, federal spending for Medicaid would decline by about $400 million (or about 0.1%) in 2014 because of same-sex marriages and by smaller amounts in earlier years. Because states pay about 43% of the program's total costs, they would realize savings of about $300 million in 2014.
Savings would also occur in the new Medicare prescription drug benefit's low-income subsidy program. Under current law, people who meet certain income and asset tests are eligible to receive government subsidies for their cost-sharing payments and premiums for the drug benefit. Some of those people would no longer qualify if the income and assets they shared with a partner were considered for eligibility purposes. The resulting savings for Medicare would amount to less than $50 million in 2014, CBO estimates.
Federal Employees Health Benefits Program
By recognizing same-sex marriages, the government would automatically extend health care insurance under the FEHB program to civil servants and civil service retirees who elected to cover a spouse. Under that program, the government pays almost three-quarters of health care premiums, and employees and annuitants pay the rest.
But CBO estimates that covering the same-sex spouses of retired enrollees in the FEHB program would cost the government less than $50 million a year in 2014. Premiums for current employees, by contrast, come from agencies' salary and expense budgets, which are funded by appropriations.
CBO expects that those additional premiums would cost agencies less than $30 million in 2014.
Food Stamps and Other Programs
In the Food Stamp program, the basic unit is the household (people who live together and usually buy and prepare food together), not necessarily the family. Thus, CBO expects that recognizing same-sex marriages between partners who already live together would not affect Food Stamp spending.
In addition, the costs or savings for veterans' benefits, civil service retirement, and military retirement would be negligible if the federal government recognized same-sex marriages, CBO estimates.