The economic impact of same-sex marriage on the US economy

Now this is just damn ducky. A couple of years ago, the Congressional Business Office (CBO) released a report on the impact on the US economy of legalizing same-gender marriages. This wasn’t a question of morality, fair treatment of citizens, biblical imperative, or anything like that. The report is pretty much a straight-up study of how the US economy would be helped or hurt by allowing same-gender marriages (also available in PDF format if you prefer.

The federal government does not recognize “marriages” of same-sex couples either for receipt of federal benefits or for tax purposes. The 1996 Defense of Marriage Act (Public Law 104-199) provides that the federal government will honor only marriages between one man and one woman. It also stipulates that no state, territory, or possession of the United States or Indian tribe can be required to recognize a same-sex marriage performed in any other jurisdiction.

The potential effects on the federal budget of recognizing same-sex marriages are numerous. Marriage can affect a person’s eligibility for federal benefits such as Social Security. Married couples may incur higher or lower federal tax liabilities than they would as single individuals. In all, the General Accounting Office has counted 1,138 statutory provisions–ranging from the obvious cases just mentioned to the obscure (landowners’ eligibility to negotiate a surface-mine lease with the Secretary of Labor)–in which marital status is a factor in determining or receiving “benefits, rights, and privileges.”(1) In some cases, recognizing same-sex marriages would increase outlays and revenues; in other cases, it would have the opposite effect. The Congressional Budget Office (CBO) estimates that on net, those impacts would improve the budget’s bottom line to a small extent: by less than $1 billion in each of the next 10 years (CBO’s usual estimating period). That result assumes that same-sex marriages are legalized in all 50 states and recognized by the federal government.

The number of same-sex couples who would marry if they had the opportunity is unknown, but the 2000 census offers some insights. The census does not ask about sexual orientation, but it allows people living with a nonrelative to identify themselves as “partners” instead of “housemates/roommates.” Almost 600,000 households (or 1.2 million people) identified themselves as same-sex partners in 2000, roughly half in male couples and half in female couples. They represented about 0.6 percent of the total adult population and almost 1 percent of people between the ages of 30 and 50.(2) By several common measures of stability–age, home ownership, and length of residence–those 600,000 same-sex couples resemble married couples more than they resemble other cohabiting households, so it seems reasonable to assume that many of them would marry if given the chance.(3) Some would not, of course; but other same-sex couples who did not live together, or who labeled themselves “roommates” rather than “partners” in the census, might choose to marry. The census also contained limited data about the income, earnings, and assets of those 600,000 couples–clues that CBO used to gauge budgetary impacts.

For the purposes of this analysis, CBO assumed that about 0.6 percent of adults would enter into same-sex marriages if they had the opportunity. (That proportion is equivalent to nearly 600,000 couples in 2000, with adjustment for subsequent population growth of about 1 percent a year.) CBO’s estimates reflect significant uncertainty because predicting how many same-sex couples would marry is difficult and because data on their incomes, assets, and participation in federal benefit programs are sparse.

The report thens goes through a high-level breakout of where the fiscal impact for the government would be. Areas such as Income Tax revenues (generally higher tax income because of the “marriage penalty”), Estate Tax revenues (generally flat due to recent changes in estate tax law), Social Security benefits (generally slightly higher cost to the government due to surviving spouse benefits), government provided insurance, and more. Ultimately, the financial impact would be small given the size of the US economy. Still, the report is an interesting read, I think regardless of what side you take on same-gender marriages.

[tags]Congressional Budget Office studies economic impact of legalizing same-gender marriage[/tags]