Marital Exemptions on Other Taxes.

One benefit of marriage for wealthy couples is the exemption on federal estate taxes. All transfers of property to a surviving spouse are exempt from taxation, regardless of the size of the estate. Otherwise, only up to $600,000 of estate property can be transferred to heirs without estate taxes. It is difficult to estimate the amount of estate tax revenue that would be lost by legally recognizing same gender marriages. However, wealthy people tend to engage in estate tax planning to minimize taxation, so the difference would likely be small.

Marriage also creates an advantage when adding a spouse's name to a car title, for instance. Such changes in title are often subject to a conveyance tax unless the new owner is a spouse. This exemption recognizes that property owned by married people is typically treated by the law as jointly owned, even if held in only one spouse's name.¹⁵ Like other taxes, this tax transfers income from one person to others through the state tax system and does not create any true cost or benefit.

Spousal and Survivor Benefits.

Married couples are eligible for spousal social security benefits in the Old-Age and Survivors Insurance Program (OASI).¹⁶ When a fully insured worker retires, his or her spouse is eligible for a benefit of 50% of the retiree's benefit. When the retiree dies, his or her spouse continues to receive the retiree's monthly benefit as well as a $255 lump-sum death benefit.

We do not know how many same gender couples would be eligible for spousal benefits, but evidence suggests the amount of additional benefit payments is likely to be small. Spousal benefits are only paid when the spouse is not entitled to better benefits based on his or her own work record. As noted earlier, though, both partners in same gender unions are likely to work, making them eligible for separate benefits.

Currently, a surviving partner in a same gender couple is not eligible for survivor benefits. What would be the impact of recognizing those marriages? If the survivor's own OASI benefit is more than that of the deceased spouse, there would be no increase.

Imagine the most potentially costly scenario: an insured worker receiving OASI dies, leaving behind a spouse who was uninsured and has no earned income. If the couple was married, the survivor would receive a benefit that averaged $608 per month in 1992. If the couple was unmarried, the partner would not receive OASI, but might be eligible for SSI, which could conceivably pay more than OASI since the maximum individual benefit in a high-cost California county was $663 per month in 1995.

The Impact on Private Sector Businesses in California.

What hidden costs to recognizing same gender marriages might there be? Some call for nonrecognition out of concern that it will impact business employment costs.

Health Care Costs.

Many people worry that businesses providing health benefits to employees and their spouses would have to pay for more spouses. This concern is unfounded.

First, costs to an individual business are likely to rise by very little, if at all. A growing number of employers currently offer health benefits to their employees' same gender "domestic partners." Those businesses have experienced very low cost increases because few employees (typically well under 1%) enroll domestic partners; and those partners are not incurring higher than average medical costs.¹⁷ So recognizing same gender marriages will not dramatically increase the number of people insured by a single business.

Second, even a low cost increase for a single employer may not be true for the state economy as a whole. Some newly married people might switch from their own employer's insurance benefits to his or her spouse's insurance plan, but that just shifts the costs from one employer to the other. Others might shift from MediCal to a spouse's employment plan, which simply shifts the costs from the state to the employer and could benefit the employer in the long run through lower taxes.

Even those who are currently uninsured but would become eligible for benefits if married would not necessarily increase total state health care costs. Those individuals currently constitute a vulnerable group of people who, in a medical crisis, might become eligible for MediCal or simply be unable to pay for care. Recognizing marriages of the currently uninsured might mean some small increase in employers' costs but would likely reduce the amount of uncompensated care that is a growing burden on health care providers, private insurers, and the state. The net effect of the uninsured gaining health insurance through marriage will depend on the balance between reduced uncompensated care expenses and the potential for increased usage of health care services while insured.

Overall, recognizing same gender marriages will most likely result in a redistribution of health care costs, with some possibility of a small increase in total costs to the state or private businesses.

Insurance and Business Discounts.

Insurers often provide lower auto insurance for married people based on actuarial data showing that married individuals are lower risks. Extending the same discount to married same gender couples should not, therefore, increase costs to the insurance companies if a similar reduction in risk occurs.

Discounts on other products or services offered to married couples may not result in lower business revenues. When the price of a product falls, more people purchase it, so such discounts will not necessarily reduce revenue. Presumably those businesses offer discounts in the first place because those discounts increase revenues and profits.

Private pension plans.

Most employers offering pension benefits must offer "joint and survivor" benefits as an option upon retirement -- the retiree receives a lower payment while alive and his or her spouse gets a smaller payment after the retiree's death.¹⁸  Allowing employees with a same gender spouse should not increase employers' costs because the values of the two different income streams -- the higher one for the life of the retiree or the lower one with survivor benefits -- are set to be actuarially equivalent.

Overall, then, the cost of recognizing more marriages should be small to nonexistent for private sector businesses.

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