Marriage equality is good for business
by Bill Schmick
Happy LGBT History Month everyone.
On June 26, when the Supreme Court legalized gay marriage at the Federal level, the decision was greeted with a sigh of relief by most large companies. It also makes my job a lot easier as well. Here’s why…
Previously, the myriad of laws that allowed or disallowed gay marriage cost the private sector at least $1 billion annually. Over two-thirds of Fortune 500 companies were offering health and retirement benefits to same-sex partners in states that did not recognize their marriage. That incentive became a nightmare for human resources departments throughout the country that tried to square their practices with that of the states.
Spousal benefits for employees’ same-sex partners were also more expensive, since some states and the Federal government taxed those fringe benefits for gays, while heterosexual married couples were tax-deferred. That caused many same-sex employers to offer gay employees a bigger salary to compensate for these tax costs.
Companies also have had a harder time recruiting workers with same-sex partners to states where their marriage isn’t recognized, where varying laws require corporations to treat same-sex marriages differently depending on the state.
From my own experience, advising clients in same-sex relationships to plan for the future has been extremely difficult. In addition to the confusing and contradictory nature of state laws in regard to gay marriage, the Federal government has also been a Gordian knot of confusion. Regulations and interpretations of same-sex marriage were handled differently depending on the government agency. Different bureaucracies, whether in Veterans Affairs, the Department of Labor, Social Security and even the Railroad Retirement Board had all devised different interpretations of what constitutes a gay union and its benefits (or lack thereof).
In addition, there are over 1,000 federal laws and regulations that apply to married couples only. These same laws will now need to be or are being reviewed and re-evaluated with all couples in mind.
The Supreme Court ruling now allows our LGBT clients to simplify what had been complicated estate plans, including trusts and living wills. Since same-sex marriages will be viewed the same as other marriages, much of the estate planning can now follow a more standardized process. Spousal beneficiaries of pension plans, 401 (K) and other tax-deferred and IRA plans, as well as spousal health insurance benefits, will no longer be in question.
Some sources have guesstimated that the same-sex decision could generate as much as $2.6 billion in an economic windfall over the next three years. The $51 billion/year wedding industry should see a boost in business for sure. Others calculate that the tax savings from reporting a combined income and other cost savings by the LGBT community will result in additional consumer spending.
Economic benefits aside, the Supreme Court decision on same-sex marriage was great for Americans, in my opinion. In that same month, the court’s upholding of Obamacare, the 5-4 decision in favor of gay marriage, and witnessing the families of the Emanuel African Methodist Episcopal Church forgive the alleged murderer of its family and congregation members were all momentous events. That week, I knew I was proud to be an American.
Prior to joining Wall Street, Bill Schmick enjoyed a successful 15 year career as an award-winning journalist for some of the nation’s largest publications. Over his 33-plus years in financial markets, he has worked as an investment strategist, a research analyst, an institutional broker and a money manager.
None of this commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser.
The Gayly – October 4, 2015 @ 5 p.m.