The U.S. Supreme Court recently struck down a part of the federal Defense of Marriage Act (DOMA) that made it illegal for the federal government to treat marriage solely as the union of one man and one woman — legally referred to as Part 3 of DOMA. The Court’s ruling, however, left firmly in place Part 2 of DOMA which says that the states are the final arbiter of how marriage is treated. The ruling did not implement so-called same-sex marriage (SSM) in 35 states where it is banned by statute or constitutional provision.
Despite the narrow ruling from the Supreme Court, President Obama is determined to undermine these 35 states through the use of federal executive power. President Obama bluntly stated that “It’s my personal belief — but I’m speaking now as a president as opposed to as a lawyer — that if you’ve married in Massachusetts and you move someplace else, you’re still married, and that under federal law you should be able to obtain the benefits of any lawfully married couple.”
On August 29 the IRS issued guidance for SSM, saying couples could file their federal tax return based on their “state of celebration” (the state where they were married) as opposed to their “state of residency.” Therefore, if a same-sex couple was married in a state that legally recognized SSM, then the federal government will forever recognize them as “married filing jointly” for tax purposes even if they move to a state that does not recognize SSM.
Some analysts agree with President Obama and the IRS, saying “state of celebration” makes for better tax policy than “state of residency.” They warn against decoupling a state’s tax code from the federal tax code, saying doing so would impose huge compliance burdens and economic inefficiencies in the process.
But there are several problems with that argument. First, decoupling from bad federal tax law is not a sin. If higher compliance costs result, it is not the fault of the states but rather the fault of the IRS.
Second, though some would argue that decoupling sends the message that a state is more concerned with its local preferences than with long-term economic growth, in fact quite the opposite is true. States that are protecting natural marriage as between one man and one woman are the ones maximizing long-term economic growth. Professor W. Bradford Wilcox, who leads the University of Virginia’s National Marriage Project, summarized a 2011 study on the impact of marriage on the economy this way: “The core message … is that the wealth of nations depends in no small part on the health of the family.” Wilcox further says the study suggests that marriage and fertility trends “play an underappreciated and important role in fostering long-term economic growth, the viability of the welfare state, the size and quality of the workforce, and the health of large sectors of the modern economy.”
Third, decoupling from the federal tax code is not an all-or-nothing proposition. States choose to conform — or not to conform — to various federal tax provisions all the time. The reason for doing so could be as superficial as the (+ or -) budgetary impact of conforming, or there could be legitimate disputes over what constitutes sound tax policy. If a state chooses to keep “state of residency” as the basis for tax filings, it will hardly impact all state taxpayers. Only same-sex couples would face the prospect of filing two federal tax forms and two state tax forms — the same situation that had existed prior to the Supreme Court ruling. Put simply, under the provisions of Section 2 in DOMA, the IRS must take its cue on SSM from state law, meaning following “state of residency.” Therefore, the IRS cannot unilaterally allow same-sex couples the ability to file a single federal tax form as “married filing jointly” in states that do not recognize SSM — they must still file separate federal tax forms as “single” filers.
In the end, there is a very good policy reason for states to decouple from “state of celebration” and keep the current “state of residency” requirement. That reason is to push back against federal overreach which threatens to negate policies protecting natural marriage that were overwhelmingly supported by voters of these states — including Oklahoma, where in 2004 a full 76 percent of voters stated quite simply and directly that “Marriage in this state shall consist only of the union of one man and one woman.”
If Oklahoma policymakers passively adopt the IRS “state of celebration” ruling by conforming to the federal tax code, they will be in direct conflict with the will of the people, the Oklahoma Constitution, and the engine for economic growth. That is bad tax policy.