Tax stuff I think is interesting. It is either copied from my primary blog on forbes.com http://www.forbes.com/sites/peterjreilly/ or stuff that I did not put there because being on forbes is a good gig and they have, you know, standards. Also some guest posts.
Thursday, August 21, 2014
Same-Sex Couples Allowed Equal Rights In Alaska Despite Marriage Amendement
Originally Published on forbes.com on October 18th,2011
A seemingly insignificant property tax case in Anchorage, Alaska may have a profound effect on one of the techniques used to combat marriage equality. Alaska has a marriage amendment in its Constitution which provides that a marriage can only be between a man and a woman. The Alaska Constitution also has strong equal protection guarantees. The tension between these concepts is played out in the case of Julie Shmidt et.al, v The State of Alaska and Municipality of Anchorage.
The plaintiffs are three same sex couples with similar stories. Here is one. Julie Schmidt was 67 and her partner Gayle Schuh was 62. They owned a home together. The assessed value of the home is $254,200. If they were married they would have been entitled to a $150,000 property tax exemption because Ms. Schmidt is over 65. Since they were not married, the exclusion is limited to $127,100 (half the assessed value). That cost them $359.31.
The case makes an interesting read, although it is on what I call the lawyerly side. The bottom line is that the couples all won including one couple where the partner who was over 65 did not have any ownership at all in the house. The reason they won is what is interesting and might have profound consequences for marriage equality. The Court ruled that because of the marriage amendment, any law that benefits married couples facially discriminates on the basis of sex.
The challenged Tax Exemption allows seniors over the age of sixty-five and disabled veterans to exclude from their real property tax the first $150,000 of the assessed value of their primary residence. An eligible person who is married may exempt the full value of his or her property. 7 However, if an eligible person co-owns or co-occupies property with a person to whom the eligible person is not married (such as a same-sex domestic partner, a friend, or a relative) the eligible person may exclude only the value proportionate to his or her ownership interest. The statute’s implementing regulation provides that a married person may claim the full $150,000 exemption “regardless of whether the property is held in the name of the husband, wife, or both.” Therefore, married people can receive a larger benefit from the Tax Exemption than unmarried property co-owners or cohabitants.
The marital classification prevents co-owners or co-occupants from obtaining the full value of the exemption when one person qualifies for the exemption and the other does not. If both people qualify for the exemption, then each person could exempt one-half of the property’s assessed value and they would receive, in combination, the exemption’s full value. If unmarried people co-own or co-occupy property with an assessed value greater than $300,000, the marital classification does not prevent the eligible person from obtaining the full benefit. At that point, the eligible person’s one-half ownership interest is greater than $150,000 — the maximum value of the tax exemption.
As the plaintiffs point out, this statute “cannot acquire constitutional dimension because of the Marriage Amendment, and cannot supersede or supplant the constitutional right to equal protection.” In ACLU, the Alaska Supreme Court explained that though the amendment “effectively prevents same-sex couples from marrying,” it “does not automatically permit the government to treat them differently in other ways.” Therefore, the Marriage Amendment does not preclude the court from considering plaintiffs’ claims.
Here, the law is a restriction for couples who would be able to claim the exemption but for their inability to marry due to sexual orientation. The added benefit that the Tax Exemption confers on married couples is irrelevant for people who would not marry if given the option. People who co-own or co-occupy property but are not in domestic partnerships have not made a commitment equivalent to that of married couples or same-sex domestic partners, and are not similarly situated with the plaintiffs and married couples.
The court concludes that the Tax Exemption’s marital classification violates the Alaska Constitution’s equal protection clause.
So at least in Alaska, the marriage amendment has created a curious paradox when combined with the state’s equal protection guarantees. Apparently, the only benefit that same sex couples can be denied by the marriage amendment is …….. I was going to say the right to say they are married, but, of course, we have that freedom of speech thing over in the federal constitution.
The advocates for marriage equality may not appreciate it – and I don’t blame them – but I have to make the following observation. The implication of this decision is that same sex couples have to get all marriage benefits available under Alaska law. Unmarried opposite sex couples do not get the same benefit, because they could get married if they wanted to.