It's wedding season. So we're busy looking for gifts, booking plane tickets, and buying inappropriate favors and drinks for the bachelorette party.
In fact, we may be doing more of these activities than before because we've got invitations for some new events: gay weddings.
That's right, with seven states (plus Washington, D.C.) sanctioning marriage for same-sex couples, you're more likely than ever to be invited to a wedding that involves two blushing brides or two handsome grooms.
But out of the nearly 650,000 same-sex couples in the U.S. only about 50,000 have married, according to the Williams Institute for Sexual Orientation Law and Public Policy at UCLA. That's a whole lot of couples who could potentially walk down the aisle.
Setting aside the morality of gay marriage, let's analyze how the legalization of same-sex marriage affects the economy and your own budget. (Just like we did for immigration.)
Read on to find out the surprising economic facts behind matching cake toppers:
Get started with a free financial assessment.
Get started with a free financial assessment.
The Impact on Same Sex Couples
Contrary to popular belief (and anecdotal evidence provided by that fabulous gay couple you know who always looks so bespoke), gay couples do not earn more than their heterosexual counterparts. In fact, LGBT couples both with and without children earn less than heterosexual ones, and more LGBT couples with children live in poverty and receive public assistance than straight couples.
This could be due to lifestyle and social factors. But at least part has to be because of the high financial hurdles gay couples face. The New York Times ran an analysis in 2009 and found that a same-sex couple raising two children will suffer a financial penalty of anywhere from $41,196 to $467,562 over their lifetime, depending on their income, health insurance and tax situation.
Below are some of the things they lose money on now--if gay marriage were federally approved they would no longer be at a financial disadvantage for these reasons:
- Being ineligible to receive Social Security and pension benefits from their partner
- Having health care benefits from their partner's employer taxed as income
- Paying high taxes when "gifting" to each other assets like cars or houses that married couples automatically own jointly
- Not being able to take advantage of spousal retirement accounts
- Paying high tax preparation costs
- Spending on complex legal paperwork to give their partner the same rights as a spouse would
For example, one couple profiled by the Chicago Tribune spent $10,000 in legal fees to create the same protections a $40 marriage license would provide, like power of attorney, wills and trusts.
The cost of health care is especially onerous. We've talked before about how difficult it can be to obtain health insurance, and how medical costs are a leading factor in credit card debt. Being able to rely on a partner's insurance is a safety net many depend on. Yet of the companies that do offer benefits, only 21% extend them to same-sex couples.
The Impact on Government Budgets
There's only one point at which a gay couple may rethink (financially, at least) the trip down the aisle. They currently escape the marriage penalty on their taxes, meaning they pay less in income taxes overall. Though the government isn't making this income from them, it is at least saving by not having to extend benefits like Social Security to gay couples, or employment benefits to partners of gay federal employees. The Congressional Budget Office estimated in 2009 that extending employment benefits such as health insurance to same-sex domestic partners of federal employees would cost the federal government $596 million in mandatory spending and $302 million in discretionary spending between 2010 and 2019.
The thing is, those are just two pieces of the government income and spending puzzle when it comes to marriage taxes and benefits. Looking at the entire picture, if same-sex marriage rights were granted nationwide, such marriages would generate a net $1 billion each year for the federal budget over the next ten years, according to a 2004 report by the Congressional Budget Office, mainly because the government would now start raising extra money in taxes from gay couples. That even takes into account the fact that newly married gay couples would also qualify for more tax breaks, and the government would pay out more to them for health care benefits and Social Security.
On the state level, a report from the Independent Economic Conference projected that same-sex marriages would generate $27 million in taxes and license fees for New York state over the next three years.
The Impact on the Economy
Let's talk tuxes and wedding gowns. And engagement rings, DJs, flowers and all the other things couples spend on for their big day--or would spend, if they could get married.
The New York comptroller's office estimated that the legalization of gay marriage in New York State last year would add $142 million to New York City's economy from wedding-related purchases and tourism revenue in the three years after the law's passage. The state economy could stand to gain another estimated $184 million. The additional tourism alone will generate an estimated 2,000 jobs.
That's impressive, but it could be even more economically beneficial in reality. To come up with these numbers, researchers used a very conservative wedding spend of $4,000 (a hard feat to pull off, though possible as this heterosexual couple demonstrated). Couples actually spend an average of $27,000 on their wedding, according to a survey of gay and straight newlyweds by TheKnot.com.
While gay couples generally spend less on their weddings--since they may have already had a smaller commitment ceremony somewhere else or are at a later life stage and have been together for a long time already--the average New York City wedding comes in at $70,000. All that points to a wedding-related economic boost to New York in the next three years of a couple billion, according to The Daily Beast.
Aren't these all just estimates? Yes, but they're based on the previous experiences of other states. Below are the economic boosts states got from granting same-sex marriage rights in the first year after doing so:
- 2004 Massachusetts: $60 million (Likely so high because, as the first state, it turned into a destination for couples looking to get married.)
- 2008 Connecticut: $16 million
- 2009 Vermont: $5 million; Iowa: $8 million
- 2010 New Hampshire: $5 million
New York has the highest population of any state that has legalized gay marriage so far, leading to a much larger projected economic boost.
The Economic Downside to Gay Marriage
There is one case in which you could be negatively impacted by the legalization of same-sex marriage: If a neighboring state legalizes it before yours does. Rhode Island, for example, has missed out on about $8 million in revenue as gay couples pop over to Massachusetts to get married.