The City of San Francisco is considering a proposal which would compensate gay workers receiving domestic partner benefits for the extra tax they pay.

Employer-provided health benefits offered to the partners of gay workers are counted as taxable income by the IRS (unless the partner is considered a dependent). Such benefits are not considered taxable income for married heterosexual employees.

On Wednesday, the Budget and Finance Committee of the San Francisco Board of Supervisors unanimously approved the proposed ordinance to the full Board of Supervisors. If approved, San Francisco would become the largest city to date to institute such a policy.

At least 38 companies, including Google and Facebook, and at least two cities, Cambridge, Massachusetts and Hallandale Beach, Florida, have recently adopted similar policies for their employees.

A report released in 2007 by M. V. Lee Badgett, research director at the Williams Institute, found that gay employees with partners pay, on average, $1,069 per year more in taxes than would a married employee with the same coverage.