The Defense of Marriage Act (DOMA) is Bad Income Tax Policy

Abstract

In matters of marriage and its legal consequences, Congress has – insofar as the Internal Revenue Code (IRC) is concerned – largely deferred to state law. Through the Defense of Marriage Act (DOMA), however, Congress announced that federal law would not recognize any marital relationship other than one of a man and a woman, irrespective of what some states’ laws might otherwise recognize. This article evaluates the wisdom of construing the IRC through DOMA’s federal lens. The IRC is a revenue-raising tool and failure to recognize same-sex marriages probably causes revenue loss. Congress also pursues social policy through the IRC by encouraging taxpayers to make expenditures that are socially beneficial by excluding their cost from their gross income, allowing a deduction, or granting a credit. In structuring these incentives, Congress acknowledges that many persons purchase social benefits as spouses. Congress also acknowledges that spouses might abuse the Code’s provisions for taxing gain or recognizing losses and so for some purposes treats the interests of the individuals of a marital couple as a unity. This article identifies some policies that Congress pursues through the IRC and concludes that inserting DOMA into the Code at the least subverts these policies and, at times, actually thwarts them. DOMA is a congressional denial of what is or will be a reality, i.e., that same-sex partners have the same interests in such matters as heterosexual couples – and so does (or will) Congress.