West Virginia law exempts state law enforcement retirees, including former policemen and firefighters, from paying income tax on their retirement benefits. But retired U.S. Marshals Service employee James Dawson and others like him had been excluded from that tax advantage. After the Supreme Court's ruling, it will be up to state lawmakers to decide whether to continue the exemption going forward and include those like Dawson or to eliminate the exemption.
Writing for a unanimous court, Justice Neil Gorsuch pointed to federal law that requires states to give equal tax treatment to state workers and their federal counterparts in the state. Gorsuch wrote that because there aren't any significant differences between Dawson's former job responsibilities and those of state law enforcement retirees, the justices had "little difficulty concluding" that West Virginia unlawfully discriminated against Dawson.
West Virginia had argued that it wasn't doing anything wrong and that Dawson was getting the same benefit, a $2,000 income tax exemption, that applies to virtually all retired federal, state and local employees in West Virginia. The state said that only a "surpassingly small" number people who participate in specific, state-managed retirement plans get the exemption Dawson wanted to claim.
"While we are disappointed with the court's ruling, we respect the decision and will work to comply," West Virginia Attorney General Patrick Morrisey said in a statement. The U.S. government had backed Dawson, who served in the U.S. Marshals Service from 1987 to his retirement in 2008. He led the Marshals Service in the Southern District of West Virginia for the past six years.
In 2013, he filed paperwork seeking to amend his tax returns for two years and claim the more favorable tax exemption. Dawson said the state owed him $2,174 for 2010 and $2,111 for 2011. After state tax officials disagreed, Dawson took his case to court.
The case is 17-419, Dawson v. Steager.
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