Barclays to Reimburse Gay Workers for Taxes on U.S. Benefits

Barclays Plc, the third largest bank in the United Kingdom, is joining the likes of Google by offering to reimburse gay workers for the taxes they pay on health benefits provided to their domestic partners. Good for Barclays, but shame on the government for continuing inequitable practices. Legally married same-sex couples are still not able to file a joint federal tax return, potentially costing them thousands in tax savings.

Bloomberg reports

The aim is to offset the tax on benefits for same-sex partners that doesn’t apply to spouses in heterosexual marriages because same-sex partnerships aren’t recognized as marriages under U.S. law, the London-based bank said today in a statement. The change will take effect Jan. 1, according to the bank, which bought the U.S. business of bankrupt Wall Street firm Lehman Brothers Holdings Inc. in 2008.

Barclays may be leading the U.S. financial-services industry in offering such tax-equalization payments. Google, in Mountain View, California, Cisco Systems Inc., based in San Jose, California, and San Francisco-based Kimpton Hotels & Restaurants are the only other for-profit companies to publicly disclose such reimbursement benefits, according to the Washington-based Human Rights Campaign.

“We are introducing this payment to proactively offset the additional tax,” Mark Lane, a spokesman for Barclays Capital, said in an e-mailed statement. “We believe that by offering this, we will further our efforts to promote an inclusive environment.” Barclays will reimburse employees through a separate payment rather than an increase in base salary, Lane said.

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US Clashes With UK Over New Tax Proposal

The United States and United Kingdom usually agree on economic policies, according to Tax Girl leaders from each countries have publicly taken different views on a proposal to tax financial transactions to fund banking rescues.

UK Prime Minister (for now) Gordon Brown is in favor of such a tax, referred to as a so-called “Tobin Tax”, as a way to take the burden off taxpayers in the midst of financial crisis. The idea would be to implement a tax or levy, also characterized as an insurance fee, to be implemented across the board on financial institutions in all economic centers including the US, Europe, Asia, and the Middle East. Brown described it as a “just distribution of risks and rewards.”

But US Treasury Secretary Timothy Geithner has said he would not support such a tax, adding that it should not be the position of those today to pay for future risks. He did not, however, rule out the idea of any responsibility by banks to pay for the economic crisis – he just apparently feels that it’s too soon to consider a tax in the face of other alternatives.

Interestingly, Russia appeared to be in agreement with the US with Russian finance minister, Alexei Kudrin, also voicing skepticism over the tax. Canadian Finance Minister Jim Flaherty also expressed concern over the tax.

However, Max Lawson, the senior policy adviser for Oxfam was enthusiastic about the UK proposal, saying:

Gordon Brown today signaled that payback time for banks could be just around the corner. A tax on banks would be a major step towards clearing up the mess caused by their greed.

While the two day G20 Summit has ended, the matter is far from over. The International Monetary Fund is already looking into this very issue with an eye towards what it’s calling a financial sector tax. One way or the other, we’ll see further discussion on this…

Source: Tax Girl