Same-sex marriage could boost state tax revenues by $185M over the next three years

A 2014 report by the Williams Institute at the UCLA School of Law predicts that the legalization of same-sex marriage could have a combined economic impact across all states of $2.6 billion during the first three years, primarily due to increased spending on weddings by same-sex resident couples and their out-of-state guests. In addition, the report estimates that legalization will boost state and local sales tax revenue by $184.7 million and support more than 13,000 jobs. The potential economic and fiscal impact varies across states.

For the 14 states that did not allow same-sex marriage prior to the June 26 decision by the U.S. Supreme Court, the Williams Institute report estimates a collective economic boost of $546 million over the next three years, generating $50 million in state and local sales tax revenue and creating up to 6,200 jobs. For example, in Texas, increased spending over the next three years could have an economic impact of $181.6 million, increased tax revenue of $14.8 million and generate 523 jobs.  

“Suddenly we have 150,000 same-sex couples that can get married. That has the potential for quite a big boost,” Lee Badgett, a Williams distinguished scholar at the Williams Institute told the International Business Times.

As Elaine Povich points out in a recent Stateline article, that initial boost in business makes the short-term economic impact easier to predict than long-term revenue implications. Povich says that “a wide variance in state tax laws makes it difficult to calculate the effect a greater number of married couples would have on revenue from taxes on incomes, estates and properties”.

There are a lot of factors that will play into the true long-term fiscal impact of legalization, including how a state treats joint income-tax filings or whether or not a state has a so-called “marriage penalty” (when taxes are higher for married couples than they are for single filers). The number of same-sex couples that actually end up tying the knot is also hard to predict.

“Although we try to tease out the data as much as possible, we cannot say that there is one specific factor that contributes more when explaining why some [states] win and why some lose,” J. Sebastian Leguizamon, a Tulane University and co-author of a 2013 report on this topic told Stateline.

Economic impact reports by state (Williams Institute): http://williamsinstitute.law.ucla.edu/economic-impact-reports-by-state/

Tags: