Why Marriage Equality Is Good For The Economy And The Budget

On Wednesday, the Supreme Court ruled that the Defense of Marriage Act, a federal law defining marriage as between a man and a woman, is unconstitutional while also dismissing the Proposition 8 case, effectively making it legal again for gay couples to get married in California.

These historic decisions mean so much to America’s gay and lesbian couples. But they will also mean something for the federal budget and the economy at large. Without DOMA, the federal government will now give gay couples who are legally married in their home states benefits they had previously been denied. Those getting married in California will have an impact too.

In 2004, the Congressional Budget Office (CBO) looked at what it would mean for the federal government to recognize same sex marriages. In all, this would impact 1,138 statutory provisions in which marriage is a factor in determining benefits, including perhaps most prominently Social Security and federal taxes. The CBO found a slightly positive impact on the budget if same-sex marriages were to be legalized in all states and recognized by the federal government: an extra $1 billion each year for the next ten years. It estimates that the government would see a small increase in tax revenues: $500 million to $700 million annually from 2011 to 2014 depending on the fate of the Bush tax cuts (which were law at the time of the report).

The government would have to spend more on Social Security and the Federal Employees Health Benefits program, but it would also save money when it came to safety net programs such as Supplemental Security Income, Medicaid, and Medicare. On net, gay marriage would reduce spending by about $100 million to $200 million a year from 2010 to 2014.

The savings in programs that help low-income families come from the fact that gay and lesbian couples are more likely to live in poverty. As Matt Yglesias has written at Slate, a study from the Williams Institute at UCLA found that 7.6 percent of lesbian couples live in poverty, compared to 5.7 percent of married opposite-sex couples. It also found that nearly a quarter of children living with a male same-sex couple and just under 20 percent of those living with a female same-sex couple live in poverty, compared to just 12.1 percent of children living with married heterosexual couples. This means they’re more likely to rely on government benefits: 2.2 percent of women in lesbian couples receive cash assistance, versus 0.8 percent of women in opposite-sex couples, with a similar difference for men. Marriage reduces the likelihood that couples live in poverty and comes with important financial benefits.

States would also see a substantial benefit. A 2009 report on marriage equality in Maine found that allowing same-sex couples to marry would increase the state budget by $7.9 million a year, a substantial sum on the state level. This comes not just from an increase in income tax revenue when couples file jointly – $69,110 per year – but also an estimated $60 million spent on weddings and tourism over three years, which could generate $3.1 million in sales tax revenue, and $538,193 in marriage license fees over three years.

In fact, a year after New York passed the Marriage Equality Act, gay marriages generated $259 million in economic impact in New York City alone.

On the business side, a report from the Human Rights Campaign found that while employers will likely have to pay more for benefits, they will have a negligible impact on costs. “In fact, because same-sex couples make up such a small percentage of the U.S. population,” it notes, “the business benefits costs of allowing same-sex couples to marry will be no greater than the costs caused by fluctuations in the U.S. heterosexual marriage rates.”

The Supreme Court decisions in no way guaranteed the ability for same-sex couples to get married in all 50 states, so many of the economic benefits are yet to be realized. But with DOMA struck down and 13 states legally allowing gay marriage, including California after the Proposition 8 ruling, the impacts are still likely to be felt in government coffers at both the federal and state level. All signs point to a positive economic impact from allowing gay men and lesbians to marry the people they love.