Analysis: Death, taxes and Supreme Court's gay marriage case

Tue Mar 12, 2013 11:31am EDT
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By Kim Dixon

WASHINGTON (Reuters) - Edith Windsor and Thea Spyer, the lesbian couple at the center of a major gay rights case set to go before the Supreme Court this month, were in many ways a typical New York power couple.

Spyer was a psychologist; Windsor, a consultant at IBM. They met in a Greenwich Village restaurant in the 1960s and lived together for decades, summering at a Long Island beach house.

They waited until they were in their mid-70s to marry in Canada in 2007. When Spyer died in 2009, Windsor inherited her spouse's estate, worth about $4.1 million, according to lawyers.

But because she is gay, Windsor missed out on one of the most lucrative tax breaks enjoyed by affluent Americans - the exemption from federal estate tax on wealth passed from one spouse to another.

"The biggest benefit of marriage, financially, is when you die," said Fred Slater, a New York tax accountant.

The spousal exemption to the estate tax is denied to same-sex couples because of the Defense of Marriage Act (DOMA), a law passed by Congress and signed by the president in 1996 that defines marriage as between a man and a woman.

Windsor is challenging DOMA in a case the nine-member high court will hear on March 27. At its core, Windsor's fight is with the Internal Revenue Service over how much federal tax she owes on Spyer's estate.

She seeks the return of hundreds of thousands of dollars in taxes she would not have had to pay if she and Spyer had been of opposite sexes. Her challenge asks whether married gays should be able to claim the same exemption as married heterosexuals do.   Continued...

Edith Windsor, an 83-year-old woman who says the Defense of Marriage Act discriminates against gay couples in violation of the U.S. Constitution, speaks to the media during a news conference in New York October 18, 2012. REUTERS/Eduardo Munoz