Same-sex stipend may be a first in the US

Cambridge seeks to defray federal tax on health care

By Brock Parker
Globe Correspondent / June 9, 2011

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In a move that may be the first of its kind in the country, Cambridge will soon begin making payments to same-sex married public employees to defray the cost of what local officials have called a discriminatory federal tax.

Beginning in July, the city will begin paying quarterly stipends to city employees in a same-sex marriage who must pay federal taxes on the value of the health benefits their spouse receives from the city.

Federal law requires employers to calculate the value of the benefits received by a same-sex spouse as taxable income to the employee, but health benefits of an opposite-sex spouse as not taxable.

While a number of private employers, such as Google, already offer an additional stipend or payment to same-sex married employees to defray the cost of the federal tax, Cambridge is believed to be the first municipality in the nation to do so, said Sarah Warbelow of the Human Rights Campaign, a national lesbian, gay, bisexual, and transgender civil-rights organization.

“To the best of my knowledge, yes,’’ Cambridge is the first, said Warbelow, who is the state legislative director for the campaign. “Nobody else is doing this at this point.’’

The city, which in 2004 was the first in the nation to offer same-sex marriage licenses, currently provides health insurance benefits to the spouses of 22 city and school department employees who are married to a partner of the same sex, said city personnel director Michael Gardner. The stipend will cost the city an estimated $33,000 per year once it is fully implemented.

The federal tax costs same-sex married families as much as $1,500 to $3,000 a year that those of the opposite sex do not have to pay, officials said.

“Having marriage equality yet an unequal tax burden keeps [gay, lesbian, bisexual and transgender] married couples on the margins, and marginalization in a lot of ways is seen as a level of discrimination,’’ said City Councilor E. Denise Simmons, who was mayor of Cambridge from 2008-09 and is openly gay.

Simmons co-sponsored an order in January asking City Manager Robert Healy to propose a plan for Cambridge to carry the burden of the “discriminatory taxation’’ on the same-sex married couples.

In a recent interview, she said the stipend program the city ultimately included in its budget for the upcoming fiscal year does not carry an egregious cost but will make a difference in the lives of employees.

“It’s a wonderful way to say that you value your workforce,’’ said Jeff Walker, a member of the city’s Gay, Lesbian, Bisexual, and Transgender Commission.

Priscilla Lee, a teacher with the city’s Community Learning Center who married her wife Marlene Beggelman in 2009 , said that the effect the federal tax has had on her income has been significant.

Lee said she earned $38,000 working for the city last year but was taxed as if she earned $53,000 after the value of health benefits for her wife and stepchildren was added to her income.

Lee is also a member of the city’s Gay, Lesbian, Bisexual, and Transgender Commission, and she said she spoke publicly before City Council about the tax to make sure local officials were aware of it.

But Lee said she did not expect the city to pay the tax, and she and her wife have been thrilled by the city’s response.

“I think it’s great,’’ Lee said. “I think it’s a great leadership role for them to play.’’

Cambridge Mayor David Maher, who came out as a gay man last summer, said the city is proud of the diversity in its workforce, and City Council chose to address an unfair situation.

“As a result, the City of Cambridge once again stepped up as a leader in civil rights and took steps to mitigate this tax inequity,’’ Maher said. “We hope that other communities across the Commonwealth will follow suit. This action is the right and fair thing to do until the federal government addresses this issue.’’

But Warbelow said it could be some time before other cities follow Cambridge’s lead.

“I think it’s a little bit tough in a down economic time to see this moving particularly quickly because it requires the expenditure of funds,’’ Warbelow said.