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MAJOR LEGAL AND ECONOMIC BENEFITS EXTENDED TO MARRIED OPPOSITE-GENDER COUPLES, BUT NOT TO SAME-GENDER COUPLES The Commission approached their first task to "(1)Examine the major legal and economic benefits extended to married opposite-sex couples, but not to same-sex couples;" by reviewing the Hawaii Supreme Court decision in Baehr v. Lewin, inviting various speakers to testify, and reviewing the work of the former Act 217 Commission.
I.Supreme Court and Act 217 Commission's Work
The Supreme Court of the State of Hawaii identified fourteen different "salient marital rights and benefits" in the Baehr decision(1). This served as the starting point for the Act 5 Commission.
The Act 217 Commission had started identifying specific statutes that conveyed benefits but did not complete their review of the entire Hawaii Revised Statutes. The Legislative Reference Bureau completed the analysis and submitted and distributed to Commission members a memorandum identifying thirty-seven areas of the law (including the fourteen previously identified by the Supreme Court) which may confer major legal and economic benefits.
II.Invited Guests
The Commission invited several individuals to speak to them regarding their opinions on the legal and economic benefits of marriage. The speakers represented a range of expertise including economists, a professor of tax law, representatives from the Employees Health Fund and the Employees' Retirement System, as well as the attorneys representing the parties in the Baehr v. Lewin case. Others were invited but could not attend. A list of invited guests for this topic as well as other topics appears in Appendix C.
III.Terminology
An important terminology modification made by the Commission should be noted. In an effort to be more precise and avoid confusion, the term "sex" has been replaced with the term "gender".
A.The Definition of Major Legal and Economic Benefit
The Commission's task includes examining major benefits, necessitating understanding the meaning of that term. As it was not defined in the legislative history, the Commission adopted the common rule of interpretation that the words of law are generally to be understood in their most known and usual significance(2).
Using this general understanding rule for the definition of "major" is similar to the reasoning applied by the Supreme Court of Hawaii in identifying some of the "most salient" benefits of marriage which relied on a combination of legal and economic factors(3). This definition would necessarily include a range of benefits from those of lesser direct economic value, but of major emotional importance, to those with great economic value and of major importance.
This definition of major legal and economic benefit has been the subject of vigorous debate. Act 5 differs from Act 217 with regard to the first defined purpose of the Commission by replacing the word "precise" with "major"(4). Without direct legislative intent this proved to be a controversial topic. Several objections to the definition, together with several alternative approaches to resolving this issue were examined.
A draft list of major legal benefits was generated by the Legislative Reference Bureau using the definition of the Act 217 Commission(5).
This definition necessarily included benefits that could be obtained through other means in the law but accounted for "lazy spouse" benefits which referred to instances where if no action is taken the benefit automatically inures to the spouse. It also included a benefit even if a burden was attached to it.
A second definition was suggested that would operate to exclude a statute as bestowing a benefit if that benefit could be obtained by other avenues in the law(6). In other words, if it costs $50 to change your name if you are a same-gender couple, but it is free if you are legally married, then this $50 marriage benefit should not be counted as it is technically not prohibited for same-gender couples who want to change their names and are willing and able to pay(7) is the opinion of both the minority and the majority that to determine whether there is a major legal and economic benefit you necessarily have to include the balancing of any burden. Where the minority differed was in application of that principle. In a definition that was rejected twice by the majority,7the minority would like to apply a four-step analysis to their definition that is structured as follows:
(1)Does the statute in question create a significant improvement in condition or advantage for a married couple as a result of holding the status "spouse" or "family"? If yes, then
(2)Is there any burden associated with that significant improvement in condition or advantage? If no, then go to question 4; if yes then
(3)After considering the burden associated with the improvement in condition or advantage, is the remaining improvement in condition or advantage still significant? If yes, then
(4)Is that remaining significant improvement in condition or advantage not offered to a same-sex couple nor available to a same-sex couple by another avenue or means?
The majority considered this definition. But when the Commission applied this formula to the fourteen marriage benefits identified by the Supreme Court, not one would qualify as a benefit. Therefore, this formula was rejected as flawed.
One economist defined "major economic benefit" as a large benefit to a large group of people as distinguished from a large benefit to a small group of people(8), or small benefits or infrequent large benefits to a small group of people(9). A second economist approached the topic by attempting to calculate the benefit to society from extending benefits to same-sex couples(10). That analysis did not address the direct benefit to an individual but instead included calculations that took into account the probability of a member of the public actually taking advantage of a particular benefit, which greatly reduced its economic value. This made it difficult to compare and contrast their testimonies, as they approached the topic from different points of view, somewhat like comparing apples with oranges. For example, in analyzing what the economic benefit of offering a resident tuition to the spouse of a non- resident University of Hawaii faculty member, Dr. Moheb Ghali took the differential value of the tuition, $1,500, and then multiplied it by the probability of someone taking advantage of the benefit, which is one in a thousand (1500 x .001), and arrived at a $1.50 value for that benefit. Dr. Ghali further discounted the value of a resident tuition to a nonresident spouse over a five-year period and arrived at a present economic value of ninety-six cents(11). The distributive expected value economic analysis of Dr. Moheb Ghali may be accepted economic practice, but Dr. Ghali's "barricade of abstraction that separates us from economic reality"(12)does not consider the direct benefit to the individual, and therefore the Commission has rejected his economic valuations. Dr. Sumner La Croix's analysis would value this benefit at the full differential. While he recognizes that it is likely that there will be only a few instances in a year, he also states that "the sum of these numerous small benefits can be quantitatively significant"(13). The Commission agreed that to some people the sum of many of these small benefits or just one may create a major benefit(14).
B.Balancing the Burdens Against the Benefits of the Marriage Law
The public testimony of both economists and the professor of law(15) brought out that it would be unfair or an incomplete review if the examining of benefits was not weighed with any correlating burdens. The Commission did not disagree and, while no formal motions were made, it was accepted that the burdens would be addressed at the appropriate time. The double-edged sword of marriage rights and benefits versus the burdens and obligations appears particularly in the arena of determining the economic value of benefits.
C.Economic Values
The economic values of each benefit received great attention by the Commission. Attempting to quantify the exact value of every benefit was impossible, as was pointed out by both economists who testified before the Commission. Even between economists there appeared to be some difference in what to measure, the value of the benefit to the individual, or the value to society of the benefit extended to the individual(16). The Commission was able to categorize benefits into three categories:
The Commission could not ignore all the benefits that are reliant on the State's definition of marriage. When the State defines a spouse it has the effect of pushing the first domino in a parade of dominos. The marriage certificate affects issues under county ordinances, other state laws, federal laws and regulations(18), international treaties(19), as well as issues in private industry. While the Commission recognizes many possible reactions in other states and in the federal jurisdictions to allowing marital status to same-gender couples, such reactions cannot be accurately predicted. Further, it is not the Commission's task to analyze such reactions, and many would be based on private litigation. Rather, it is the Commission's task to recommend what will best serve the public interest and the private rights of people in Hawaii. While exploring all these benefits is beyond the scope of this Commission's assigned tasks, the Commission did hear a considerable amount of testimony(20) with regard to the federal tax system, and as our state tax system is based on the Internal Revenue Code(21), the essence of that discussion is included in this report.
Regarding tax issues, both economists and the professor of tax law agreed that the tax law can carry a marriage "bonus" or a marriage "penalty" and was strictly dependent on individual fact situations(22). For example, when married couples have two $100,000 incomes there is a marriage "penalty," but if the same amount of income ($200,000) is earned by one married individual with the other married individual as a dependent, there is a benefit of reduced taxes. Combining several ideas suggested by those who testified before the Commission, the benefit may be framed in this particular situation as giving the couple the opportunity to make a choice(23) to select an "economy of the family"(24). This economy of the family issue relates to the decisions families make as to what is the best economic situation for the family. For example, does one spouse work in the home to provide care for children or do both spouses choose to work and pay someone to care for the children. Often these decisions are based on the economic impact of these decisions. For example, will there be higher taxes if both work, or additional costs for health insurance? And what is the cost of a caregiver for a dependent?
The Commission attempted to identify persons in the private industry who would speak on the major legal and economic benefits associated with marriage in the private industry but was unable to. Thus, having no direct testimony related to the benefits in private industry, the Commission did not deal directly with those issues.
IV.Conclusions
After reviewing the variety of definitions for major legal and economic benefits, a majority of the Commission decided not to view this definition as a static formula to be applied mechanically to each statute but instead to adopt a concept that would provide guiding principles to help clarify and identify the major legal and economic benefits to the Commission. This concept is similar to the reasoning applied by the Supreme Court of Hawaii in identifying "most salient" rights. And the Commission, as did the Supreme Court, relied on a combination of legal and economic factors in arriving at the list of major legal and economic benefits extended to opposite-sex couples but not to same-sex couples. The major legal and economic benefits identified by the Commission included benefits from the three categories of economic value benefits.
A.Intangible Benefits
Intangible benefits, as explained earlier in the text, often have almost no real economic value. While they cost nothing in terms of burdens on the State, ironically some of them involve some cost to the individual spouse. The intangible benefits identified by the Commission as major legal and economic benefits are the right to visit a spouse in the hospital(25) to make decisions regarding the medical use of a spouse's body(26), to decide the final disposition of a spouse's body(27), to receive legal notice of certain proceedings in law(28) the right of spousal privilege and confidential marital communications under the rules of evidence(29), the extension of the physician-patient privilege to family members(30) and above all, the simple recognition and equality(31) that is bestowed by section 572-1, Hawaii Revised Statutes, the requisites to enter into a valid marriage contract.
B.Substantial-quantifiable Benefits
The second category of major legal and economic benefits were identified in terms of substantial-quantifiable benefits and contained fourteen different areas in the law. They are
These major legal and economic benefits in the substantial- quantifiable category have economic values attached to them that can be quantified. Where feasibly possible, in terms of the actual amount of the benefit to the individual, the value is attached. The economic valuation as analyzed by Dr. Sumner La Croix is accepted because Dr. La Croix's analysis considers the direct benefit to the individual. The Commission identified the following major legal and economic benefits in this category:
1.Spousal and Dependent Support Benefits The Commission identified the group of spousal and dependent-support benefits as major legal and economic benefits. This package of major legal and economic benefits is usually made available to only one spouse. Through the government's enforcement of the marriage law, one spouse will benefit while a burden is placed on the other spouse. That is to say, by the couple agreeing to the terms of the marriage contract, they are each agreeing to support the other spouse. The Commission notes that of the fourteen "most salient" benefits identified by the Supreme Court of Hawaii, six are included in the benefits identified in this group as spousal and dependent support benefits(32). These benefits as identified by the Commission are the control, division, acquisition, and disposition of community property under Chapter 510(33) Hawaii Revised Statutes; the rights to notice, protection, benefits, and inheritance under the Uniform Probate Code, Chapter 560, Hawaii Revised Statutes(34); the award of child custody and support payments in divorce proceedings under Chapter 571, Hawaii Revised Statutes(35); the right to spousal support pursuant to section 572-24, Hawaii Revised Statutes; the right to file a nonsupport action under Chapter 575(36) Hawaii Revised Statutes; post- divorce rights relating to support and property division under Chapter 580, Hawaii Revised Statutes; the right to dower and curtesy under Chapter 533, Hawaii Revised Statutes; and the protection of the right to enter into a premarital agreement under Chapter 572D(37).
2.Health Insurance Benefits
The Commission also recognizes health insurance benefits as a major legal and economic benefit. The Hawaii Prepaid Health Care Act(38) mandates that employers provide a minimum package of health insurance benefits to employees who work more than twenty hours per week. The law allows an employer to charge the employee up to 1.5 percent of the employee's wage or salary as payment towards the health insurance premium(39). A parallel law(40) mandates public employers to provide health insurance benefits. A minimum contribution from the public employers is mandated, with the precise contribution level set by collective bargaining(41). For most workers, even if an amount is withheld from their salaries, the portion contributed by the employer is still substantial. Some employers in Hawaii in certain situations pay all of the insurance premium, a substantial benefit.
The law requires that the health insurance coverage provided to workers be available to their dependents but does not require the employers to pay for the additional costs of insuring dependents(42). The payment amount for the coverage of dependents under a group rate is substantially below the cost of getting the insurance independently. This represents a substantial benefit. Assuming one spouse is not working (the dependent spouse) and is eligible for coverage through the other spouse's employer, and assuming the employer contributes nothing to the cost of the dependent spouse's policy, the estimate of the value to the married couple is $1,251.48 in saved costs by getting insurance at group rates through the employer's plan.
3.Other Insurance Benefits
In addition to health insurance benefits, the Commission recognizes other insurance benefits as major legal and economic benefits. The Commission finds that partially by tradition, and partially by legal mandate(43), insurers in Hawaii have granted certified families discounts for various types of insurance and special considerations of spouses. This may include premium discounts for life insurance, auto insurance, and private disability insurance. The matter is sufficiently complex that the Commission has been unable to further quantify the amount, but the Commission finds that the benefit is substantial and includes it as a major legal and economic benefit.
4.Retirement Benefits
The Commission identified two specific major legal and economic benefits in the area of public employee retirement benefits. Retirement benefits are required by law for public workers of the four Counties and the State(44). The two benefits are (1) retirement health insurance coverage; and (2) death- benefit payments as part of workers' pensions. The marriage bonus arises because these benefits are extended to surviving legal spouses in certain circumstances.
This report addresses retirement health insurance coverage first. If a public worker qualifies for retirement benefits and retires before the age where Federal Medicare benefits become available, that worker is allowed the option of retaining the very comprehensive medical-dental-vision-drug coverage that the worker enjoyed while in active service with the government. Further, the worker's right to extend these benefits to a legal spouse (a right that was enjoyed during active service), is retained: in retirement, the legal spouse is subsidized in his or her comprehensive coverage(45). One estimate of the value of this benefit is $1,464 annually(46).
When the public retiree reaches the age of qualifying for Medicare, the retirement benefit shifts to paying for the "Premium for Part B" fee. This benefit is extended to legal spouses for the full lifetime of the spouse, whether or not the retiree predeceases the spouse(47) One estimate is that this benefit is worth $553.20 annually(48). With legislation presently in Congress to raise the premium cost, and with the public employers committed to covering the cost at whatever level it rises to, this benefit amount is expected to rise over time.
Many private pension plans provide similar coverage for retirees' spouses below the effective age for Medicare, and for retirees' spouses eligible for Medicare coverage. Like the legal mandate for public employees, this traditional coverage is limited to certified spouses. As above, these benefits are substantial.
The second benefit in the public employee retirement area is the death-benefit pension coverage(49). There are currently two public-sector pension plans, referred to as the "contributory" and "non- contributory" plans. Generally, the former plan covers workers who started prior to the mid-1980s, and the latter plan covers most workers since that time. In general, a contributory plan means the worker contributes to the plan, whereas a non-contributory plan means the worker does not. In both cases the employer makes contributions(50). The benefits are usually higher for a contributory plan as more payments have been made into it. Over ninety percent of current public pensioners are on the contributory plan, whereas approximately seventy percent of current workers are on the non-contributory plan.
If a worker dies prior to retirement, but the death was an "ordinary" one, in the sense that it was NOT caused by an accident on the job, and the worker was in the contributory plan, there is no "marriage benefit" because the death-benefits are paid to whomever the worker designated as their beneficiary. The beneficiary need not be a spouse or a relative. So, whether legally married or not, a worker has the option of naming a partner or not(51). If the same ordinary death occurs, but the worker was in the noncontributory plan, however, a marriage benefit clearly exists. In this case, the death benefits are paid to a legal spouse. If there is no legal spouse, then no payment is made unless there are children. However, payments to the children are much lower than to a legal spouse(52). In other words, the worker has no right to name a beneficiary, and instead is forced to have the primary payments go only to a legal spouse. Furthermore, the value of the death-benefits do not go to the worker's estate or other heirs if there is no legal spouse or any children as it would in the contributory plan(53).
The value of this "marriage bonus" is dependent on each worker's particular case. Its exact figure depends on the specific salary conditions of the employee and can be assumed to be a substantial amount of money.
The next type of death benefit is one caused by an accident on the job. In the case of non-contributory members, their benefit is the same as above: the death-benefits are paid to a legal spouse (and children) only. The value is the same as if the worker had died an ordinary death, and is substantial(54). If the accident-on-the-job death was to a public worker on the contributory plan, however, things are treated differently than if it had been an ordinary death(55). For an accidental death, the legal spouse gets a death-bonus whether or not the worker named the spouse as a beneficiary(56). This benefit is a substantial benefit.
In the case of all certified spouses receiving a death- benefit payment, they have the further benefit of rolling the payment amount over into an IRA, while an unrelated recipient of the death-benefit cannot do so and so must pay a sizeable tax penalty. Deferring and reducing the ultimate tax penalty (through use of the IRA option) is an additional substantial benefit for legal spouses(57).
A full examination of private-sector retirement benefits that includes a marriage bonus is beyond the scope of this report, though it is understood that similar retirement plan benefits exist in private-sector plans and represent substantial and common benefits to certified spouses.
5.Workers' Compensation Benefits
The Commission identified major legal and economic benefits in the Workers' Compensation law.
The Commission finds that Hawaii's workers' compensation law allows death benefits to be paid, due to employment-related death, to a dependent certified spouse (or other family members: dependent parent, children, grandchildren). However, these benefits are not paid to an uncertified spouse(58).These benefits are significant and may equal sixty-two percent of the worker's weekly wage. This monthly payment to the certified spouse does not end until that spouse's death or remarriage(59).
6.Wrongful Death Benefits
The Commission identified a major legal and economic benefit under the wrongful death law(60). In a wrongful-death complaint, a legal spouse is allowed to sue for loss of support to the surviving spouse and the loss to the estate. The suit may also attempt to recover damages, including loss of companionship, consortium(61), and marital care, as well as the expenses of any illness and burial. In most cases, an uncertified spouse cannot sue for support. For example, if someone murders or causes the wrongful death of a spouse, except for any private insurance a same-sex couple may have carried, and except for the extremely limited payments under the Criminal Injuries Compensation law(62), the surviving partner will get no monetary payment other than charity.
Society has addressed this injustice by allowing legal spouses to bring "wrongful death complaints," which are forms of civil lawsuits, against those responsible for the wrongful death. If the perpetrators are capable of making a payment, and if the lawsuit is successful, the surviving spouse may collect support payments (i.e., payments over time), a lump-sum award for the loss to the person's estate of his or her earning power caused by the death, together with other payments. The precise sum collected would, of course, depend on the cost of support to the surviving spouse, the lost value to the estate (including the earning power of the deceased), the circumstances of the wrongful death, the level of success of the lawsuit, and the amount spent on legal costs for the case. While an exact value cannot be determined, this nevertheless is a substantial benefit. These laws provide this comprehensive form of benefit at no real cost to the government, and the benefit is a significant one.
7.Hawaiian Home Lands Surviving Spouse Benefit
The Commission identified a major legal and economic benefit under the Hawaiian Homes Commission Act that provides, upon the death of a Hawaiian Home Lands lessee, a certified spouse can assume the lease if the spouse is qualified by blood-quantum(63), while a spouse without a marriage certificate cannot(64). The marriage benefit here depends on having the lessee spouse die while the legal spouse is still living. The value of the benefit would depend on how many years the surviving spouse lives. One estimate puts the benefit at $4,812 annually.65 In any case, it is a substantial benefit.
8.Savings in "Creating the Relationship"
The Commission recognizes that to replicate certain automatic presumptions that a spouse may have under the law, a same-gender couple would have to take extensive legal action. The cost of this legal action, which is automatic on becoming a certified spouse, can be seen as "savings in creating and documenting the relationship." The Commission recognizes this savings to certified spouses to be a major legal and economic benefit.
This package of major legal and economic benefits can be called "creating the relationship." While some of the costs listed in this section refer to benefits that may have been mentioned in other sections, this major legal and economic benefit does not look to the actual legal condition creating the benefit but looks to the cost of setting up the relationship that duplicates the benefit under marriage. There are three costs associated with replicating a certified marriage. First, some of the steps involve paying a government fee (as with the name-change). Second, nearly all the steps require costly legal (or other) services and third, the replication is not always guaranteed. We have placed an undervalued estimate of financial value on this specific marriage-certificate benefits to illustrate what it would cost to replicate the benefits by drawing up documents(66).
The benefits in this package start with the right to change your name without paying the normal costs of a name-change, $50 plus $250 in legal and notice fees(67). Another item of this benefit is under the probate code where a certified spouse can inherit by intestate succession. In addition, the surviving spouse would be presumed to assume the custody of any dependent children. Non-certified spouses can attempt to replicate this right by each having careful wills and trusts set up by their lawyer(s) at a substantial cost of $300 for the two wills(68) and $3,000 for the two trusts. An additional parenting agreement that details what happens if the marriage is dissolved, including the care for children and custody and visitation rights if the marriage is dissolved, $500. Durable power of attorney for finances, which allows one spouse to make financial decisions should the other spouse become incapacitated: $100 each, or $200 total. A living- together contract, including an agreement about any sharing of finances in the marriage, an agreement about property owned before and during the marriage, and an agreement about disposition of property at (non-legal) divorce: $2500.
The basic value of a government marriage certificate can be placed at $6800. An additional point concerning wealth should be made. The duplication of the marriage relationship rights is only to same-gender couples who are wealthy enough to afford a lawyer to draft the documents--in contrast to the poorest opposite- gender couple, to whom these rights are available for the small $25 fee for a marriage certificate.
9.Income Tax Rate Benefits
The Commission agrees with the Hawaii Supreme Court in recognizing that there are several benefits from marriage associated with the income-tax law. The Commission identified the variable tax-table rates as a major legal and economic benefit. While the economic issues in tax law can be complex, the Commission accepts the discussion above with regard to the federal income-tax benefits and recognizes that the individual fact situations under state income tax law may also operate to provide a benefit. While testimony was received by the Commission that the average of the tax effects on all legally married couples in the United States is a marriage penalty of $4,500(69), this should not exclude those families who balance the average by enjoying the marriage bonus in their income taxes. These families typically have only one working spouse. In that case a substantial benefit exists. Testimony was also received that perhaps the best way to frame the income-tax benefits with regard to the tax-table rates is to allow a same-gender couple the choice of deciding whether they will receive a marriage bonus or a penalty(70). The Commission agrees with this testimony and finds that the income- tax law with regard to the variable tax-table rates for same-gender couples and married couples is a major legal and economic benefit.
10.Additional Income Tax Benefits
The Commission also recognizes that there are other items in the income tax law that create additional major legal and economic benefits. The Commission finds that certified spouses (who are not claimed as dependents on other tax returns), are automatically given an exemption, while uncertified spouses must meet a much more rigorous test of economic dependency which many certified spouses could not meet. The Commission further finds that if an uncertified spouse's employer offers domestic partner benefits (such as health care or other benefits), the amount paid to the worker for their spouse's benefits are considered part of the worker's income unless the spouse is claimed as a dependent(71). The amount paid out by employers for certified spouses' benefits, however, is not treated as taxable income.
The Commission further finds that if a marriage dissolves, there are tax advantages if the couple was certified. Alimony payments for (once) certified couples are deductible, and (legal) divorce-related property settlements (such as transfers from one legal spouse to the other) are exempt from capital gains tax (until the certified spouse receiving the property sells it). When uncertified marriages dissolve, these tax benefits cannot be claimed. The Commission finds that these additional tax benefits are a major legal and economic benefit.
11.Estate and Transfer Tax Benefits
The Commission identified major legal and economic benefits in the Estate and Transfer Tax Reform Act of 1983(72). This state estate and transfer tax is based solely on the federal estate and gift tax and as such the allowances and laws regulating those actions directly affect the State's treatment. Under the federal estate and gift tax laws, a legally married person receiving an estate (or total gifts) beyond $600,000 from his or her spouse does not owe transfer taxes due to the unlimited "marital deduction." Other heirs, including an uncertified spouse, would have to pay estate and transfer taxes on the value of the estate or gifts beyond the $600,000 ceiling. The generally positive effect of this law for certified surviving spouses is to allow them to defer payment of the transfer tax until their own death. Also, annual gifts beyond $10,000 to unrelated individuals are taxed; transfers to spouses are not taxed(73).
In the cases of couples without sizeable estates, the marriage bonus here is irrelevant. But to those couples who are affected, this bonus is substantial, amounting in the hundreds of thousands of dollars (or millions of dollars), depending on their assets.
12.Capital Gains Tax Benefit for a Couple's Home
The Commission also identified a major legal and economic benefit on the transfer by death of a couple's home. Couples, particularly homeowners in Hawaii, commonly find their homes (and other assets) to have appreciated enormously over the time they have owned them. Upon the death of one spouse, the general half-ownership of the house (and other assets) are transferred to the surviving spouse. Normally at this time a capital-gains tax (of 45-50 percent between the Federal and State tax systems), would become due on the increase-in-value (capital gain), that belonged to the deceased spouse(74). Legal spouses may, however, choose to defer the capital-gains tax on the deceased spouse's appreciated assets. This free deferral can continue throughout the remaining life of the surviving spouse. Thus the value of this marriage benefit is two-fold. First, the value of deferring the bill is substantial. Second, the cost of the bill several years from now will not have been adjusted for inflation and so its absolute value will have fallen. The amount of this fall (the discount based on inflation), represents a second substantial benefit.
It is difficult to put precise figures on this benefit as its value depends on the worth of the couple's house (and other assets), and the number of years the surviving spouse remains alive. However, it can be pointed out that all homes in Hawaii have appreciated substantially over time; in the three-year 1988- 1990 period, appreciation averaged about $200,000. Taking this example, if a couple owns a house that went through this appreciation period, then each of their capital-gain was about $100,000(75). Upon death, the inheriting spouse, if they did not have the government marriage certificate, could have to pay capital-gains taxes on the deceased spouse's appreciation, a tax which in this case could be $45,000 to $50,0000.
In the example above, often the the surviving spouse is older and does not have the income or liquid assets to make such a payment. Borrowing on the house may also be difficult as an income stream to service the loan may not be available. The result could sometimes be losing the house to pay the tax. The marriage benefit in this case simply allows the surviving spouse to defer paying this tax throughout the balance of their lifetime. As such, the tax-flow to the government is not stopped but simply delayed. Still, the benefit to the surviving spouse is substantial: not having to pay the tax at once, and therefore possibly not having to lose the house. The precise economic benefit, outside of the human side of not losing the house, would be the value of the tax deferral, which would depend on the circumstances of each couple.
13."Tenancy by the Entirety" Benefits
The Commission was able to identify a major legal and economic benefit that was unanimously agreed to. This benefit is the benefit of ownership under tenancy by the entirety. Only a few states have the form of ownership of real estate known as "tenancy by the entirety." It bestows unique legal protections and benefits on a certified couple. The protections and benefits, in turn, cannot be completely replicated by the use of other legal instruments, no matter what price is paid to attorneys in drawing up such instruments(76).
The Commission also recognizes that tenancy by the entirety is a form of protection of the couple's ownership of their house in times of legal attachment. The economic value is difficult to determine with precision, but the Commission finds that it is a major legal and economic benefit.
14.Federal Benefits
The Commission acknowledges that it has previously stated that identifying the benefits beyond the State's jurisdiction is beyond the scope of the task assigned. But as many of the federal benefits are driven by the State definition of marriage, the Commission is obligated to recognize that the State of Hawaii can directly control who is technically certified to receive federal spousal benefits. The Commission therefore finds the State's ability to indirectly award these federal benefits through a valid marriage certificate is a major legal and economic benefit. Specifically these include special spousal rights under the Retirement Equity Act of 1984. This is a "choice" type benefit as the special rights can cut both ways, and the main option of being able to get a certificate is that the couple has the choice of taking out the certificate or not and therefore being covered or not under the REA(77). Another Federal benefit involves Social Security. Certified married couples receive significant advantages in the nation's Social Security programs, particularly in the size of the monthly benefit amount that is paid under the Old- Age and Survivors Insurance Program (OASI), but also under the Disability Insurance Program(78).
The benefits from getting a marriage certified in the OASI Program have several sources. First, when a fully-insured worker retires, his or her legal spouse receives a bonus benefit equal to 50 percent of the retired worker's benefit (unless the legal spouse is entitled to a larger benefit based on his or her own work history). In 1993, the average monthly benefit for the covered spouses was $347, or $4,164 more than the couple would have received if their marriage were not certified. Second, when the retired worker dies, the surviving certified spouse (from age 60 and up), then receives the retired worker's full benefit. In 1993, the average certified surviving spouse in this program received $630 per month, or $7,560 annually, whereas the uncertified surviving spouse receives nothing. Third, when an insured certified spouse dies, the surviving certified spouse is entitled to a one-time death benefit of $255. Finally, when a currently insured (non-retired) worker dies, the surviving certified spouse is eligible for a monthly benefit if the couple had children who are under age 16 (or disabled), and the legal children of the deceased also receives benefits. In 1993, the average survivor in this category received $448 per month or $5,376 annually, and the children in this category received an average of $173 per month or $2,076 annually. In these cases, an uncertified surviving spouse and that spouse's children received nothing.
The Disability Insurance system also favors certified couples. If a disabled worker has a legal spouse who is either age 62 or older (or is caring for a young or disabled child of the worker), then the legal spouse is eligible for a benefit that averaged $156 per month or $1,872 annually in 1993. For an uncertified couple, the spouse would receive nothing.
More detailed studies of the Social Security system show that over time, the numerous benefits awarded by the system to certified couples are significant. Certified couples, even when both legal spouses work, have rates of return on their Social Security taxes that are two to three times higher than the rate of return earned by non-certified married couples with the same income and taxes paid.
In sum, the OASI tax advantages for certified couples generate significant economic benefits that are worth thousands of dollars annually during retirement. In addition, the payments provided to some legal spouses under the Disability Insurance System provides substantial added financial security benefits when a legal spouse becomes disabled.
C.General Benefits
The third economic category of benefits, general benefits, consists of a relatively large class of rights that is of limited economic value when applied singly to the couple, but when taken as a package, these rights are major legal and economic benefits. These benefits include the waiver of conveyance taxes between married individuals, even in divorce(79), allowing the spouse of a non-resident university professor to pay resident tuition fees(80), allowing a member of the immediate family to contribute up to $50,000 to a candidate instead of limiting it to the usual $2,000(81), certain fishing in Hilo Bay(82), and statewide fishing for nehu and 'iao(83).
Appendix B, while not exhaustive, provides a list of four hundred Hawaii laws that bestow intangible, substantive, or general benefits; most of these laws, singly or in groups, fall into the general category. While it is possible to economically assess the value of each of the general benefits, the lack of time and funding limited the Commission to examining the substantial benefit list above and not extending the same level of scrutiny to these myriad of general benefits(84).
A majority of these benefits are conferred on the basis of the definition of family or immediate family. Some statutes specifically define the term, as in the election law, but others must rely on the statutory rule of construction.
V.Summary
In summary, the Commission can not claim that the list of major legal and economic benefits that are extended to different-gender couples but are not extended to same-gender couples as identified above is exhaustive. But the Commission finds that it is complete enough to recognize the magnitude of the benefits conferred as result of the privilege to marry under the law. The Commission believes that an overwhelming number of benefits may be taken for granted on a daily basis by state-certified married individuals.
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