Dawson v. Steager

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Supreme Court of the United States
Dawson v. Steager
Term: 2018
Important Dates
Argument: December 3, 2018
Decided: February 20, 2019
Outcome
West Virginia Supreme Court of Appeals reversed and remanded
Vote
9-0
Majority
Chief Justice John G. Roberts • Clarence Thomas • Ruth Bader Ginsburg • Stephen Breyer • Samuel Alito • Sonia Sotomayor • Elena Kagan • Neil Gorsuch • Brett Kavanaugh

Dawson v. Steager is a case argued before the Supreme Court of the United States on December 3, 2018, during the court's 2018-2019 term. The case concerned federal retirement benefits and state income taxes.

In a unanimous opinion, the court reversed and remanded the opinion of the West Virginia Supreme Court of Appeals, holding that "the West Virginia statute unlawfully discriminates against Mr. Dawson as §111 forbids. A State violates §111 when it treats retired state employees more favorably than retired federal employees and no 'significant differences between the two classes' justify the differential treatment."[1][2]

HIGHLIGHTS
  • The case: James Dawson retired from the U.S. Marshal Service in 2008. West Virginia allows some state and local retired law enforcement officers to exempt their retirement benefits from the state income tax. Dawson, receiving benefits from the Federal Employee Retirement System, sought to exempt his retirement income from the state income tax. The tax commissioner denied the exemption. The West Virginia Supreme Court of Appeals reversed a lower court's decision, ruling that the state's tax on Dawson's retirement income was not in conflict with U.S. law.
  • The issue: Whether this Court's precedent and the doctrine of intergovernmental tax immunity bar states from exempting groups of state retirees from state income tax while discriminating against similarly situated federal retirees based on the source of their retirement income.[3]
  • The outcome: The Supreme Court reversed and remanded the opinion of the West Virginia Supreme Court of Appeals, holding that "the West Virginia statute unlawfully discriminates against Mr. Dawson as §111 forbids. A State violates §111 when it treats retired state employees more favorably than retired federal employees and no 'significant differences between the two classes' justify the differential treatment."[2]


    • You can review the lower court's opinion here.[4]

    Timeline

    The following timeline details key events in this case:

    Background

    James Dawson retired from the U.S. Marshal Service in 2008. Section 12(c)(6) of the West Virginia code allows some state and local retired law enforcement officers to exempt their retirement benefits from the state income tax. Dawson, receiving benefits from the Federal Employee Retirement System, sought to similarly exempt his retirement income from the state income tax. The tax commissioner denied the exemption.

    Dawson argued that the state's refusal to allow federal marshalls the exemption provided in Section 12(c)(6) was illegal in view of 4 U.S.C. § 111. This federal law allows states to tax federal retirement benefits only "if the taxation does not discriminate . . . because of the source of the pay or compensation."[4] Since there is not a significant difference between the duties of state, local, and federal law enforcement officers, he contended, he was being discriminated against on the basis of the source of the compensation. Dawson appealed to the Office of Tax Appeals, which ruled in favor of the tax commissioner.

    Upon appeal, the Circuit Court of Mercer County ruled in favor of Dawson. The tax commissioner appealed that decision, arguing that Section 12(c)(6) was not intended to discriminate against retired federal employees. The West Virginia Supreme Court of Appeals reversed the lower court's decision, ruling that the state's tax on Dawson's retirement income was not in conflict with U.S. law.[5]

    The state supreme court of appeals' decision read, in part, "The total structure of West Virginia’s system for taxing personal income does not discriminate against retired members of the United States Marshals Service in violation of 4 U.S.C. § 111. Section 12(c)(6) gives a benefit to a very narrow class of former state and local employees, and that benefit was not intended to discriminate against former federal marshals."[4]

    Dawson appealed to the U.S. Supreme Court, which agreed to hear the case on June 25, 2018.

    Question presented

    The petitioner presented the following question to the court:[3]

    Question presented:
    • Whether this Court's precedent and the doctrine of intergovernmental tax immunity bar states from exempting groups of state retirees from state income tax while discriminating against similarly situated federal retirees based on the source of their retirement income.

    Audio

    • Audio of oral argument:[6]

    Transcript

    • Read the oral argument transcript here.

    Outcome

    Decision

    Justice Neil Gorsuch delivered the unanimous opinion of the court. The court reversed and remanded the opinion of the West Virginia Supreme Court of Appeals, holding that "the West Virginia statute unlawfully discriminates against Mr. Dawson as §111 forbids. A State violates §111 when it treats retired state employees more favorably than retired federal employees and no 'significant differences between the two classes' justify the differential treatment."[2]

    Opinion

    In his opinion for the court, Justice Gorsuch wrote,

    “ A State violates §111 when it treats retired state employees more favorably than retired federal employees and no 'significant differences between the two classes' justify the differential treatment. Davis, 489 U. S., at 814–816 (1989) (internal quotation marks omitted); Phillips Chemical Co., 361 U. S., at 383. Here, West Virginia expressly affords state law enforcement retirees a tax benefit that federal retirees cannot receive. And before us everyone accepts the trial court’s factual finding that there aren’t any 'significant differences' between Mr. Dawson’s former job responsibilities and those of the tax-exempt state law enforcement retirees. Given all this, we have little difficulty concluding that West Virginia’s law unlawfully 'discriminate[s]' against Mr. Dawson 'because of the source of [his] pay or compensation,' just as §111 forbids.[7] ”

    Text of the opinion

    • Read the full opinion here.

    See also

    External links

    Footnotes

    1. ↑ Supreme Court of the United States, "17-419 Dawson v. Steager," accessed November 2, 2018
    2. ↑ 2.0 2.1 2.2 2.3 United States Supreme Court, "Dawson v. Steager," Opinion, February 20, 2019
    3. ↑ 3.0 3.1 Supreme Court of the United States, "QPReport 17-419 Dawson v. Steager," accessed November 2, 2018
    4. ↑ 4.0 4.1 4.2 SCOTUSblog, "Dawson v. Steager," accessed November 2, 2018
    5. ↑ Oyez, "Dawson v. Steager," accessed November 2, 2018
    6. ↑ Supreme Court of the United States, Dawson v. Steager, argued December 3, 2018
    7. ↑ Note: This text is quoted verbatim from the original source. Any inconsistencies are attributable to the original source.
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