ataxingmatter

American pediatrics group addresses children in gay marriages

Just as the Supreme Court is preparing for oral argument regarding the validity under the Equal Protection clause of same-sex marriage restrictions on the 26th (Hollingsworth v. Perry, the ith Circuit case dealing with California Proposition 8) and the 27th (Windsor, the NY same-sex widow's estate tax claim that DOMA is unconstitutional), the American Academic of Pediatrics joined a number of other organizations of experts in family and child welfare to adopt an official policy of endorsing same-sex marriage, for the benefit of children.  See Mary Elizabeth Williams, Doctors prescribe a does of marriage equality, Salon.com (Mar. 21, 2013); Catherine Saint Louis, Pediatrics Group Backs Gay Marriage, Saying It Helps Children, New York Times (Mar. 21, 2013), at A18.

The policy statement adds to the considerable weight of data and expert opinion that the primary rationale that Congress relied on to enact the so-called "defense of marriage act" (DOMA)--to encourage and protect traditional marriage and to ensure that children will be in stable family units protected by marriage --does not justify the legislation.  That argument, and others, have been put forward by various proponents of DOMA, including the Bipartisan Legal Advisory Group (the BLAG), an advisory group to the House leadership which voted 3-2 (on a party line basis) to advise the House to participate in litigation on DOMA and has intervened in Windsor and other cases.  (BLAG does not represent the Congress as a whole, and even the House did not pass a resolution authorizing BLAG to represent it in DOMA legislation under January 2013, too late to actually give BLAG standing to appeal a case to the Supreme Court under traditional "case or controversy" principles.)

First, there is nothing in DOMA that encourages different-sex couples to marry or to have children within marriage.  Different-sex couples receive no benefit from DOMA, nor is in-wedlock childbirth privileged by DOMA over out-of-wedlock childbirth. 

Second, what DOMA does is not to encourage different sex marriages but rather to penalize same-sex marriage.  DOMA singles out same-sex couples to make it more difficult for them to provide the stable, committed relationships that all experts agree is important for children's wellbeing by causing federal law to treat as void same sex marriages that are recognized under state law. 

Third, nothing in DOMA even vaguely encourages states to rewrite their laws to favor only different-sex marriages--they are free to recognize same-sex marriages. 

Fourth, DOMA in some ways preferentially treats same-sex married couples over the different sex marriage that its proponents claim to be wanting to encourage.  Under DOMA, same-sex married couples continue to benefit from the tax laws in some respects that are not open to different-sex married couples (such as the ability to recognize losses on transfers between spouses while maintaining the property within the family unit). 

Perhaps the telling argument, though, is the way proponents of DOMA have tried to use procreation--and the fact that only a man and a woman can unite physically to produce a child--as a "natural" justification for their opposition to same-sex couples having the ability to have the same legal protections as different-sex couples.  Briefs for proponents of DOMA argue that by not recognizing same-sex marriage for federal law purposes, the government is in some way ensuring that accidental procreation (i.e., unguarded sex that produces a child) will more likely take place within a (different-sex) marriage and the stability that offers.  That's wrong on many scores.  As noted, there is nothing in DOMA to encourage different-sex couples to marry or to encourage procreation to take place within a (different-sex) marriage:  lots of accidental procreation happens outside marriage and will continue to do so.  No more takes place within different sex marriage because of DOMA than without it.

Further, those who argue the "accidental procreation" strand of "protect traditional marriage" ignore the real possibility that a partner in a same-sex married couple may be raped, resulting in accidental procreation within that couple.  Isn't it much better that a child of rape would be born into a committed, loving, legally protected marital relationship than that it be doomed to the instability and tensions inherent in a society that picks on same-sex couples to treat them as somehow odd for federal purposes only? The Academy is essentially speaking on this issue.  Whether orphan and unwanted children are adopted by same-sex married couples or born of a rape or result from a surrogate pregnancy on behalf of the couple, those children will be better off if their parents can marry and have all the securities of that marriage than if they cannot.

Many of the briefs in the Windsor case asking the Supreme Court to uphold DOMA focus on an argument not well made when Congress adopted the law--that Congress was interested in creating a uniform definition of marriage.  But DOMA essentially undoes the uniform definition that existed--one that relied on the state law definition (and expected states to give "Full Faith and Credit" to each others' determination when a person moved from one state to another).  And the definition DOMA imposes is a spiteful one that appears born out of animus to a group that has historically suffered discrimination in this country, whose identifying characteristic doesn't in any way impair the group members' ability to function in society yet is one that manifests itself in the very context of issues that lead to discrimination, and who is rendered politically powerless to prevent that discrimination.  Those are the four factors that support strict scrutiny under the 1985 City of Cleburne case, and suggest that Windsor may have a strong claim, even before this court on which a majority of Justices are Roman Catholic, a religion in the news just this month for a new Pope who has condemned same-sex marriage as being against God's plan.

Statements in the record certainly suggest a strong element of animus towards gays at the time of passage of DOMA.  What is good to see is that this is gradually falling away. Bill Clinton, who signed DOMA into law in September 1996, and Hilary, who opposed gay marriage during her campaign for the presidential nomination, have now both come out in support of it.  Even Sen. Portman, a conservative Republican, has acknowledged he was wrong to oppose it.  Many Republicans who voted for it in 1996 now say they were wrong.  And many organizations, like the pediatrics academy, have done an about face to recognize that facts support same-sex marriage as a societal support for children.

Related articles

Same-Sex Marriage In Illinois? No Basis for Objection

Gay Marriage Legal In New Mexico, Santa Fe Mayor David Coss Argues

Majority supports U.S. benefits for same-sex couples: Reuters/Ipsos poll (Reuters)

Bill Clinton says anti-gay marriage law he signed should be overturned

DOMA Gives Gay Politicians 'Free Pass' On Ethics, Says Watchdog

CREW: DOMA Allows Ethical Violations For Gays, Lesbians

Same-Sex Marriage In Illinois? No Basis for Objection

In the US today, 9 states and the District of Colombia have legalized same-sex marriages and 9 states (counting Colorado, where the legislature passed a civil union bill on March 13) have legalized some form of civil union or domestic partnership for same-sex couples. Now one of the civil union states--where same-sex couples have everything that married couples have except for the stigma of not being permitted to call their union a marriage--is on the verge of recognizing the hatefulness of that stigma and enacting a same-sex marriage statute.  Illinois's Senate has passed the legislation.  Illinois's House executive committee has said it supports it.  and Illinois's governor has said he will sign it.  See Geoffrey R. Stone, Same-Sex Marriage in Illinois--Now is the Time, Huffington Post (The Blog), Mar. 15, 2013.

As Stone points out, we have come a long way in a few short years, with a majority of Americans now supporting the concept of same-sex marriage.

[W]e have changed as a society. We have come to understand that people around us -- good, kind, decent, loving people -- are themselves gays and lesbians. And with that awareness of individual gays and lesbians, the social view of homosexuals generally has gradually changed.

 Further, any state that has created an "in all but the name" civil union equivalent of same-sex marriage has recognized the injustice of not permitting same-sex couples to have the kind of legal, committed relationship that different-sex couples can have.  But that difference--in all but name--is not insignificant.  As Stone notes:

 Imagine if African-Americans could enter into civil unions but not marriages. Imagine if Catholics could legally enter into civil unions but not marriages. Imagine if mixed-race couples could enter into civil unions but not marriages. The insult, the indignity, the discrimination would be apparent to all. The same is true for same-sex couples.

And there really isn't a good argument for refusing to remove this last indignity for same-sex couples.  Most of the arguments against gay marriage are along the following lines--we have to uphold traditional (meaning different-sex) marriage; we want to encourage traditional marriage to encourage procreation and cprovide the "right" environment for children; we want to further the traditional "moral values" of society, etc.  These arguments don't hold water as far as the well-being of children or the needs of society are concerned or even whether there is a relationship between refusing marriage to same-sex couples and accomplishing those goals.  They frequently amount to arguments from the religious views of those who cling to conservative religious perspectives of homosexuality as bad and same-sex marriage as prohibited by God.  Stone makes the point the following way.

 In a nation committed to the separation of church and state, the government can never deny rights to some in order to appease the religious beliefs of others. During the civil rights struggle, for example, segregationists frequently invoked biblical authority for the separation of the races. The Rev. James E. Burks of Bayview Baptist Church in Norfolk, Virginia, for example, insisted that God had separated the races and that "when man sets aside the plain teachings" of the Bible and "disregards the boundary lines God Himself has drawn, man assumes a prerogative that belongs to God alone." Similarly, discrimination against women was often justified by reference to "divine ordinance." Such arguments have no place in the American constitutional system.

I understand and respect the strong and sincere feelings of those who think that the marriage of same-sex couples is incompatible with their religious beliefs. But they cannot legitimately or with a proper respect for the American system of law and justice attempt to impose those beliefs on those who disagree. They have every right not to marry a person of the same-sex and they have every right not to officiate at the marriage of a same-sex couple, but they have no right -- no right -- to attempt to prevent the government from recognizing such marriages because they offend their religious beliefs.

In my view, we Americans are too often afraid to address these points of religious bigotry, perhaps from a long association of religious groups with the struggle FOR civil rights and our knowledge that not all religions join in this charade (see link to article below, for example), perhaps from the long connection of religious leadership in communities with the communities' political and social leadership.  People don't like to stand out, to fail to conform to the views of those around them, so where these fundamentalist religious views dominate, people may find it hard to go against them.  Perhaps it is also because we so often  misunderstand our own Constitutional protections--for rights to bear arms, for rights to avoid unreasonable searches, and especially for the free exercise of religion. Religious liberty protections are intended to ensure that no person is denied the right to exercise his/her religious views, so long as those religious views don't cause real harm to others. But the Free Exercise Clause is not meant to protect religious institutions by allowing them to impose narrow dogmas on society in order that  their leaders and practitioners avoid the "offense" of others'  differing religious views. 

]Aside:  This is one reason that I think the Supreme Court's ruling in the ministerial exception is wrong, the Tax Code provisions excluding certain income of ministers from taxation is wrong, having a federal "faith-based organizations" office is wrong, as is the concept recently in the news in connection with Obamacare that Catholic institutions shouldn't have to provide the same health care--including abortion and birth control coverage--to all its employees who want it as other entities must do. ]

The Free Exercise Clause protects each American as an individual to provide that person the liberty to exercise his/her faith as s/he sees it (or not).   But not to impose his/her views on others. 

Related articles

The Inequality Gap

Illinois Senate OKs Same-Sex Marriage Proposal

Colorado lawmakers approve civil unions for same-sex couples

Sen. Portman backs same-sex marriage

Illinois same-sex marriage faces obstacles

Illinois U.S. Reps Send Letter In Support Of Same-Sex Marriage

Illinois Same-Sex Marriage Bill Endorsed

Marriage Equality Could Be A Major Boost For Illinois' Struggling Economy

Same-sex marriage divides churches

DOMA and same-sex marriage

Although expectations were high that a Supreme Court conference last Friday might result in the Supreme Court taking on the various same-sex marriage cases that are before it on cert. petitions, there's been no action yet.  See Jess Bravin, Supreme Court Does Not Act on Gay-Marriage Cases, Wall St. J. Law Blog (Nov. 30, 2012). [Hattip Prof. Murphy]  Since the issue was on the agenda for the conference and decisions were announced on other items discussed at the conference, speculation is that the Justices will discuss the issue again at this Friday's conference before a decision is made. 

The cert. petitions cover:

1) challenges to DOMA, where the  Second and First circuits found it unconstitutional

2) challenge to Califorinia's Proposition 8, where the Ninth Circuit fiynd the voter initiative limiting marriage unconstitutional in light of the California Supreme Court decision that the state constitution protects gay marriage rights

3) challenge to Arizona's Section O, where the Circuit found it violated the equal protection clause.

Related articles

Another Court Strikes Down DOMA

High court delays action on same-sex marriage cases

Supreme Court Takes No Action On Same-Sex Marriage

Prop 8, DOMA Cases Go Before Supreme Court On Friday

Almost There: Supreme Court to Decide Whether to Hear DOMA, Prop 8 Cases

DOMA--the good (case before Second Circuit--and Supreme Court?); the bad (discriminatory treatment because of DOMA); the ugly (Congress's unwillingness to remedy its own mistake)

Today is the next front in the struggle for equality for gay couples, as the Second Circuit Court of Appeals hears arguments in the case of Edith Windsor, an 83-year-old woman who suffered  discrimination under DOMA.  Windsor married her long-time partner in 2007 in Toronto, but her spouse died in 2009.  Because the federal estate laws do not recognize a gay spouse as a spouse, Windsor had to pay almost $400,000 in estate taxes that would not otherwise have been due.  She claims that DOMA's discrimination against her violates the Equal Protection clause of the U.S. Constitution.  See NY Appeals Court Hears Challenge to DOMA, NewsMax (Sept. 26, 2012).

Even though six states have now legalized same-sex marriage, the so-called "defense of marriage act" (DOMA) does not allow recognition of such couples as spouses or married for federal law purposes, including joint filing of federal income taxes, estate taxes, pension benefits, and similar issues important to couples that are an economic unit.

Let's imagine a story that could be happening right now all over the country.  You are a professor at a small college in your forties and have hoped against hope that you'd someday find Mr. Right.  You finally meet him at an orientation session for new faculty--he's come to you!  Over the next few years, you two get to know each other and realize that you want to be in a committed relationship for the rest of your lives.  You excitedly arrange events--an engagement party with all the trimmings, a wedding shower that your mother hosts, a wedding in your home church, and announcements to your friends all over the world.  You head out on your honeymoon, for which you've saved enough to manage a month-long trip to the Alaskan hinterlands, your dream vacation.  Finally, you are back home going through the reams of mail (mostly junk) that have arrived during this hectic time.  You open a letter from TIAA-CREF, through which you have your retirement savings.  Here's what it says:

The State of Illinois adopted 750 ILCS 75/1 konwn as The Religious Freedom Protection and Civil Union Act ("The Act").  The Act became effective for policies and contracts issued on or after June 1, 2011.  The Act creates a legal relationship between two persons of the same or opposite sex that form a civil union legally entered into in the State of Illinois and other jurisdictions.  Parties to a civil union are entitled to the same legal obligations, responsibilities, protections and benefits that are afforded or recognized by the laws of the State of ILlinois to spouses.

Pursuant to Section 3 of the Federal Defense of Marriage Act ("DOMA"), same-sex marriages and civil unions are not recognized for purposes of federal law.  Therefore, the favorable income-deferral options afforded by federal tax law to an opposite-sex spouse under Internal Revenue Code sections 72(s) and 401(a)(9) and "spousal continuation" rights are currently not available to a party to a civil union.

Civil union partners who own  or are considering the purchase of annuity products that provide benefits based upon status as a spouse should consult a tax advisor.  To the extent that an annuity contract or certificate grants to spouses other rights or benefits that are not affected by DOMA, civil union partners remain entitled to such rights or benefits to the same extent as any annuity holder's spouse.  TIAA-CREF "Notice Regarding Civil Unions in the State of Illinois", A13531 (3/12).

Imagine, now, your feelings as you read this.  Through the joy you had let yourself forget that your union, a civil union under the law of your state and a marriage in your church, would not be treated as a real marriage and union for any federal law purposes.  But this reminds you of that stark fact, strikingly pointing out the discrimination that you suffer from the federal government based on nothing other than the fact that you are a gay man married to a gay man.

When is the United States Congress going to recognize that perpetuating discriminatory laws based on some people's religious values is not appropriate, just as perpetuating discriminatory laws based on the Southern "culture" of slavery was not appropriate?  With the current Congressional makeup, one expects it will take some time. 

I suspect the Second Circuit will join others in finding DOMA unconstitutional--I certainly hope so.  And it is vitally important that the Supreme Court act to confirm the many lower-level court cases that have found DOMA unconstitutional. 

 For readers interested in reading more about the intersection of federalism, same-sex marriage laws, and Constitutional protections, you may enjoy  Mae Kuykendall, The Converging Logic of Federalism and Equality in Same-Sex Marriage Recognition, American Constitution Society Issue Brief (Sept. 2012).

Michigan nixes public employee benefits for partners unless married

Gov. Snyder signed a law depriving Michigan public employees of the ability to enroll their partners, unless married, in health insurance or other benefit programs. See Dawson Bell, No Health Care for Domestic Partners under Michigan Law Signed Today by Snyder, Detroit Free Press, Dec. 27, 2011.

One has to ask whether the gain to the state (saving whatever cost the state incurs in providing benefit programs to public employees) is worth the negatives--(i) cost--having couples who can't afford routine medical care now using emergency room services (much more expensive) or doing without until terribly ill (much more expensive) and (ii) unfairness.   As noted in the Free Press article, this was especially aimed at same-sex couples, since same-sex couples regrettably cannot marry in Michigan, though it also would affect unmarried different-sex couples.  Same sex couples are deprived of a benefit based on the prejudice against same-sex marriage among Michiganders.  While attitudes nationally seem to be changing, it is glacially slow.  And Michigan, like so many other states, backs its prejudices with economic hardship for those discriminated against. 

This is particularly unfair as it plays out in Michigan.  Snyder interprets the law not to apply to public university employees, since they have constitutional autonomy.  One group is saved harmless, and the other group--public school teachers, firefighters, police and other municipal employees-- is forced to forfeit existing health insurance.  Meanwhile, the state has cut taxes on businesses while using an emergency financial manager law to take over various cities and bust their public employee unions. 

Whatever happened to the idea of a community working together for the common good of all?  It seems that in many states and localities these days, there is a strong "anti" sentiment--anit-union and anti-public employee that tracks with the ultra-favorable views towards business that we've identified as the corporatist agenda.  Thus, tax cuts for business and the wealthy (under the purported claim that it is the wealthy who are the "job creators") and benefit cuts, wage cuts and job loss for ordinary folk.  At what point will people who are on the short end of these changes rise up and say "no more"?

Same-Sex Marriage and the (so-called) "Defense of Marriage Act"

I have always thought that the (so-called) Defense of Marriage Act (DOMA) represented a perversion of the fundamental constitutional concept of equal protection under the law, because it singles out one type of personal relationship entered into by individuals and provided for under state law (marriage) as protected when the individuals are a man and a woman and as unprotected when the individuals are two men or two women.  It epitomizes gender discrimination and anti-gay bias.

The federal government's refusal to recognize this one particular type of state contractual relationship has substantial impacts on the individuals thus treated as "single for federal law purposes even though married under state law".  One of those impacts is that those married couples are not treated as spouses under the Internal Revenue Code--e.g., for the rules governing the tax impact of divorce (section 71 under the Code on alimony, etc.) or for filing a joint return or for determining what amount of the gain from a sale of a home qualifies for exclusion under section 121. Teaching federal income tax--especially the 'baby tax' introductory course--thus requires mention of the way the tax references to marriage and spouse/husband/wife will be interpreted under DOMA.  

I might add that DOMA is one of those provisions that shocks the conscience of anyone who thinks that this country should have advanced beyond the prejudices and biases so often reflected in legal systems.  Under an adequate interpretation of our constitutional protections for individual liberties, it cannot be that one group (mostly religious fundamentalists) should have the right to impose their moral system on everyone else when it relates to such a basic gender-related aspect of one's identity as one's identification as "gay" or "straight".    Not recognizing the gay marriage of two individuals X and Y has absolutely nothing to do with the validity and worth of the non-gay marriage of another two individuals A and B.  If A and B go to a church that does not sanction gay marriage, then A and B will be united in that setting with others of their same view.  Their views will be amply supported by their fellow parishioners, and that church could legitimately refuse to sanction any marriages other than those between a man and a woman and refuse to admit to membership anyone who is married under state law in a marriage that does not comport with the church's rules.  But there is no justification for imposing that view on X and Y, who perhaps are equally religious and belong to a denomination that sees nothing wrong with gay marriage, and in fact celebrates the commitment that marriage implies between partners, whatever their sexual orientation.  A and B's narrow scope view of marriage should not limit the possibilities for X and Y, either socially or legally.

 Finally, we have an attorney general who has studied the issue of the constitutionality of DOMA and concluded that the DOMA classification based on sexual orientation "as applied to same-sex couples who are legall married under state law, violates the equal protection component of the Fifth Amendment."  See   CNN, The 1600 Report, Kapp, Attorney General Declares DOMA Unconstitutional, Feb. 23, 2011 (providing text of Holder letter to Congress); see also Savage, Obama orders end to defense of federal gay marriage law, New York Times, Feb. 23, 2011 (discussing AG Holder's letter to Congress).   This decision references Section 3 of DOMA, which states as follows (footnoted in the letter):

 “In determining the meaning of any Act of Congress, or of any ruling, regulation, or interpretation of the various administrative bureaus and agencies of the United States, the word ‘marriage’ means only a legal union between one man and one woman as husband and wife, and the word ‘spouse’ refers only to a person of the opposite sex who is a husband or a wife."

Holder points out that previous defenses of DOMA have been in jurisdictions where circuit courts of appeal have ruled that classification based on sexual orientation are only subject to "rational basis" review--this means that Congress can get away with discriminatory laws so long as there is some rational basis for Congress thinking the law makes sense, a very low hurdle to get over.  The Supreme Court, however, has not ruled definitively on the appropriate level of scrutiny on this issue.  New lawsuits are in jurisdictions without such binding precedent.  To defend those suits, the Justice Department would have to argue affirmatively that rational basis is the appropriate standard for review.  In contrast, applying the criteria for determining whether heightened scrutiny is required, "the President and [AG Holder] have concluded that classifications based on sexual orientation warrant heightened scrutiny, and that, as applied to same-sex couples legally married under state law, Section 3 of DOMA is unconstitutional."  CNN Report (text of Holder letter).  In the analysis of the various factors that the Supreme Court has considered in adopting heightened scrutiny in other contexts, Holder notes that gays have been discriminated against, that sexual orientation is an immutable characteristic, that numerous examples exist of the limited political power enjoyed by gays, and that "there is a growing acknowledgment that sexual orientation 'bears no relation to ability to perform or contribute to society.'"  Further, Holder concludes that the rationales used to justify lower scrutiny do not hold water--whether it be the ability to criminalize same-sex sodomy (overruled in Lawrence), the importance to marriage of procreation (already determined to be unreasonable as a basis for discrimination), or claims treating sexual orientation as  a personal choice rather than an immutable characteristic (not reconcilable with recent scientific understanding).  Because the legislative record for DOM "contains numerous expressions reflecting moral disapproval...precisely the kind of stereotype-based thinking and animus the Equal Protection Clause is designed to guard against", Holder concludes that DOMA cannot withstand heightened scrutiny. 

Accordingly, the Justice Department will not defend the statute in the two cases pending in New York and Connecticut:  Windsor v. United States, No. 1:10-cv-8435 (S.D.N.Y.); Pedersen v. OPM, No. 3:10-cv-1750 (D. Conn.).  There is a gigantic caveat, however--the Executive Branch will "continue to comply with DOMA, unless and until Congress repealse it or the judicial branch renders a definitive verdict against the law's constitutionality."

Vote No on Proposition 8 (California)

[Edited 10/31/08 11:47am to correct link]

As readers of this blog know, my topic is "democratic egalitarianism"--all those issues of economics and democratic sustainability that are worthy of our consideration as we struggle to sustain our democracy in the face of a corporatist agenda (i.e., an agenda that privatizes and deregulates; that grants control over much of what matters to us in our daily lives to multinational corporations with no loyalty to our country or our people or the public good; that makes greed good, redistribution upwards meritorious, and redistribution to care for public needs and those who need  a safety net to protect them somehow morally questionable). 

Accordingly, I write not just about the economy and taxes, but about the importance of developing democratic institutions that acknowledge all groups, that respect each individual and provide opportunities for self-fulfillment to all.  California's recent recognition of gay marriage as a constitutional right under the state's constitution is one of those wonderful moments when one's faith in fellow citizens to finally get it right is renewed.  Gay marriage provides no threat to straight couples like my husband and me.  Our marriage is just as strong after Massachusetts' and California's recognition of gay marriage as it was before. Gay marriage does provide a benefit to gay couples--they are permitted to enjoy the legal blessing of their commitment in the same way that straight couples can, to know that their legal rights are understood and defined in the same way, so that others, such as their children, will also have clearly defined rights. 

Here's a story in the Orange County News that sets the record straight on Proposition 8:  a "no" vote is necessary to preserve the wonderful progress that California has made.  I've quoted an excerpt of the article, below.

Fifty years from now, we will surely look back, with shame, at society's mistreatment of people who are lesbian, gay, bisexual and transgendered ("LGBT"). It is an unfortunate feature of democracies that the majority can pass laws that disfavor minority groups. This country's history of legally sanctioned segregation, "separate but [supposedly] equal" education and bans on interracial marriage were products of democratic institutions not yet ready to fully integrate racial minorities into society.

This country, however, was not built on the premise that majority will should rule on all matters; on the contrary, the American legal system was fashioned specifically to protect against the tyranny of the majority. ... In recognizing that same-sex couples have a right to marry, the California Supreme Court took a step toward equality, recognizing that the state constitution guarantees equal protection to same sex couples.

Word Games: Bankruptcy Returns

As someone who trained as a linguist, I cannot resist commenting on a Seventh Circuit decision from late 2005, In Re: John Howard Payne, about a discharge of a federal income tax liability in bankruptcy.  The bankruptcy judge and district court below found that a debtor could discharge a federal income tax liability even though no return had been filed until after the IRS assessed the tax due.  Posner, writing for the appellate panel, concluded that the discharge could not be upheld.  The opinion rests on Posner's definition of a return for the specific provision at issue. 

The facts of the case are relatively simple.  Payne did not timely file his 1986 tax return. In 1990, the IRS assessed Payne for the tax due for 1986, possibly with the assistance of a tip from another taxpayer.  Payne finally filed a 1986 return in 1992 but did not pay the tax due.  Five years later, Payne filed for bankruptcy and successfully discharged his 1986 tax liability. 

The problem is that section 523(a)(1)(B)(i) of the Bankruptcy Code prohibits discharging federal income tax liabilities for which a return should have been, but was not, filed.   The government argued that a post-assessment return was not a "return" within that statute, and therefore Payne's 1986 tax liability could not be discharged.

Posner cites Zellerbach Paper Co, which states that a return must "evince an honest and genuine endeavor to satisfy the law" and concludes that a return doesn't fulfill the self-assessment function, and therefore is not a "return,"  when it is filed after the government has figured out the taxpayer's tax burden on its own.

This is a difficult conclusion, since a fraudulent tax return, which clearly doesn't fulfill the self-assessment function, is equally clearly a return under the Internal Revenue Code.  Posner gets around this obstacle by claiming that the word "return" in the fradulent return context has a different meaning than the word "return" in the cited Bankruptcy Code provision!  He says "there is no reason why the word 'return,' undefined in either the Bankruptcy Code or the Internal Revenue Code, should carry the same meaning regardless of context." 

To prove his point, Posner compares a return intentionally mailed to a wrong address (Arlington National Cemetery) and one in which a taxpayer claims a pet cat as his dependent mother. He asserts that the first is not a return, because it isn't intended to satisfy tax obligations, while the latter is, even though it isn't intended to satisfy tax obligations.  The reason--because it is necessary in the latter case to acknowledge the return as a return since it is the submission of the return that is intended to be punished by the fraudulent return statutes.  He then goes on to assert a similar distinction for bankruptcy. 

[Return] can mean a different thing in a bankruptcy case and in a fraudulent-return case.  In the latter setting, a dishonest return is classified as a return in order to discourage fraud; in the former case, a return that does not meet the 'honest and reasonable endeavor' standard is denied the status of a return in order to discourage people from using bankruptcy law to avoid having to satisfy one's tax liabilities.

(The implication is also that there is factual evidence that Payne was trying to use the filing of a return to avoid taxes.  But as Easterbrook points out, that was a factual question not argued by the Service.)

Once Posner distinguishes return and "return", he happily concludes that the discharge was inappropriate because no return had been filed.  The problem, which Easterbrook points out, is that returns and the filing of them are two separate concepts.  Congress fixed the Bankruptcy Code in this regard in the 2005 legislation, by prohibiting discharges in connection with untimely filed returns.  Thus, Easterbrook argues, the document Payne filed was a tax return; the Service didn't argue that the return was fraudulent, so the Bankruptcy Code provision refusing discharges of taxes with respect to which a taxpayer filed a fraudulent return was not at stake; and Payne filed the return more than 2 years before the bankruptcy case commenced, so the related taxes should have been eligible for discharge.

Posner's approach in this tax/bankruptcy case may provide ammunition to those aggressive interpreters of the Internal Revenue Code who invent sham tax shelters by manipulating the text of provisions to support transactions clearly outside the scope contemplated by drafters.  Now, they can just redefine a term at random, claiming that the word need not have a meaning that is the same as its meaning in other contexts.  Such an approach discounts the importance of structural coherence.  Judges should be cautious in deciding tax cases by ascribing such disparate meanings to simple terms.

New Ideas

Ted Seto, a tax professor at Loyola-LA, has written an interesting article that is posted on the Social Science Research Network, here.  Many of the pieces written about gay marriage are focused on discrimination against gays and the claim that gays should be treated in the same way as heterosexuals, including being able to enjoy the legal benefits of state-sanctioned union that heterosexual couples enjoy.  Professor Seto's article calls to our attention that discrimination against gays may sometimes actually work to their benefit, and the tax Code provides some examples. 

The article looks at the effect of the Defense of Marriage Act (DOMA), the federal statute that recognizes only marriages between a man and a woman for all federal statutory purposes.  It studies how that act and the tax Code interact to give special advantages to gay couples.  The tax Code includes various provisions that treat persons differently based on their status as married or single, such as the section providing the rates at which income will be taxed.  For all those purposes, the DOMA definition of marriage applies, and none of the provisions applying to married persons can be considered to apply to gay couples, even if they are living in a committed relationship and even if that committed relationship has been blessed by a state like Massachusetts that permits gay marriages.

DOMA applies, but, as a direct consequence, many  provisions in the Code that guard against abusive transfers between related parties do not!  For example, transfers between spouses are essentially disregarded for tax purposes, preventing an interspousal transfer of a loss asset from providing an opportunity for the transferring spouse to recognize a loss without actually transferring the asset outside the family unit.  But that provision wouldn't apply to prevent a gay couple from engaging in the same gambit.  In other words, Seto argues, by cutting gay couples out of marriage and the relationship-based provisions of the Code, DOMA effectively created a two-tier tax system--one for married couples and one for gay couples.  On balance, he says, the married couples are the losers.

Seto's solution, as stated in the abstract for the article, will unsettle some, but it seems to follow logically from the coherent structure of the anti-abuse provisions of the Code that prevent individuals from using their close relationships with others to arbitrage the system.

"Ultimately, the paper concludes that the only way to ensure that gay couples will be taxed no more favorably than heterosexual married couples is to list gay marriage as one of the proxy relationships that automatically invokes pertinent anti-abuse rules - in other words, to treat gay marriage as marriage for federal income tax purposes. Even this by itself, however, will not be enough. A formal spousal relationship must be made available to gays, and it must be attractive enough to induce gay couples to undertake it voluntarily - just as heterosexual couples marry despite the tax costs. In the absence of an attractive formal status that then invokes related-party anti-abuse rules, well-advised gay couples are, and will continue to be, permitted to pay systematically lower federal income taxes than heterosexual married couples - a result unlikely to be acceptable to a majority of Americans in the long run."