When employers provide health benefits to employees, employers typically pay a portion of the health care premiums. A woman who lists her husband on the health plan (thereby providing him health coverage) does not have to report the benefit paid by her employer as wages earned by her or given to her husband. However, when a woman lists her same-sex domestic partner on a health plan, the benefit provided to the domestic partner is taxed as "imputed income" or additional wages earned. In addition, the imputed income results in increased payroll taxes for the company providing the benefit.
The issue is a failure to update IRS tax code to recognize that most major employers now offer domestic partner health benefits.
Why should taxation be determinded by the sex of the recipient?