McDermott Introduces Legislation
to Remedy Tax Inequity
For Immediate Release - Febuary 28, 2003

Washington, DC - Representative Jim McDermott(D-WA) introduced legislation this week to extend tax benefits for health insurance for domestic partners. The Tax Equity for Health Plan Beneficiaries Act would remedy an inequity in the federal tax code that discriminates against employees who use their employer-provided health insurance benefits for people other than spouses.

Under current law, income spent on health insurance coverage for legal spouses is not taxed. However, when employers choose to provide coverage for other recipients, including domestic partners, employers are obligated to withhold employee taxes on the fair market value of domestic-partner coverage.

"This is about equal pay for equal work," McDermott said.

This effort to change the tax code is an effort to keep pace with the evolution of health insurance benefits. Since 1982, a growing number of employers have provided domestic partner benefits. Today, nearly 6,000 public and private employers, including Boeing and Microsoft, offer domestic-partner benefits.

"Employers are stepping up to address the equity issue in terms of employee benefits, but the tax code hasn't kept up," said McDermott. "Removing this complication is the fair and right step to take."

The legislation (H.R. 935) has been referred to the House Ways and Means Committee, of which McDermott is a senior Member.