IRS Rolls Out Gay Marriage Stimulus

A blog about business and economics.
Aug. 29 2013 4:23 PM

IRS Rolls Out Gay Marriage Stimulus

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Hooray! Higher taxes! Wait? What?

Photo by Marty Melville/AFP/Getty Images

We had a shrewd move today from the Treasury Department and the Internal Revenue Service today who will be implementing federal tax recognition of same-sex couples' marriages in a way that's likely to stimulate the economy.

This starts with the fact that on a forward-looking basis, taxing same-sex married couples the same as opposite-sex married couples will increase tax revenue. Some couples get a marriage bonus and others get a marriage penalty, but in the aggregate the penalty impact outways the bonus impact. So more long-term revenue.

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But here's the trick. The IRS says that it will let couples go back as far as 2010 and amend their tax filings if you were married according to state law but the IRS didn't recognize that marriage due to DOMA. The key point is that you can do this but you don't have to do it. So in practice only "marriage bonus" couples are going to refile and get refunds. Nobody's going to pay extra. So in the short-term, you'll get a one-off increase in the deficit while in the long-run you get a lower deficit due to structurally higher tax revenue. It's a textbook fiscal stimulus plan, albeit on a very small scale.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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