Statement of NARFE National President Ken Thomas on the Supreme Court’s Consideration of Discriminatory State Tax Law

ALEXANDRIA, Va. (December 3, 2018) – NARFE was in attendance today at the U.S. Supreme Court for oral arguments in the case of Dawson v. Steager, in which a retired federal U.S. Marshal is challenging a state law in West Virginia that unfairly taxes his federal retirement annuity. NARFE National President Ken Thomas issued the following statement:

“NARFE continues to follow Dawson v. Steager closely, as a ruling on it will have far-reaching implications for federal employees, retirees and their spouses. Adopting the West Virginia Supreme Court’s incorrect interpretation of both 4 U.S.C. §111 and the Supreme Court’s prior ruling in Davis v. Michigan would jeopardize the tax treatment for 2.6 million federal annuitants nationwide, not just retired federal marshals in West Virginia. If the current West Virginia law is permitted to stand or if the protections of Davis v. Michigan are stripped away or greatly narrowed, it would undermine the guarantee of equal tax treatment, and federal annuitants – with their modest retirement income – will likely see their tax burdens rise. We urge the Supreme Court to reverse the judgement of the Supreme Court of Appeals of West Virginia.”

Background

NARFE previously weighed in through an amicus curiae brief, one of only two in this case, in support of the retired federal marshal. NARFE presented statistics and arguments showing that adopting the West Virginia Supreme Court of Appeals’ decision would risk unfair tax treatment and cause serious financial hardship for more than 2.6 million federal annuitants nationwide.

In Davis v. Michigan Department of Treasury, the Supreme Court held that under 4 U.S.C. §111, state tax schemes cannot impose a “heavier tax burden” on retired federal government employees than on retired state and local government employees unless there are “significant differences between the two classes.” This ensured that all federal annuitants do not face discrimination from state governments in the taxation of their retirement benefits.

James Dawson worked as a deputy U.S. Marshal and was later appointed U.S. Marshal for the Southern District of West Virginia. He now receives a retirement annuity through the Federal Employees Retirement System (FERS) and has sought an exemption from state taxation for all of his FERS annuity income. West Virginia law allows state law enforcement retirees to exempt from state income taxation all benefits received from four West Virginia retirement plans. Currently the state only allows Dawson to exempt a portion of his FERS income from state taxation.

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The National Active and Retired Federal Employees Association (NARFE), one of America’s oldest and largest associations, was founded in 1921 with the mission of protecting the earned rights and benefits of America’s active and retired federal workers. The largest federal employee/retiree organization, NARFE represents the interests of 5 million current and future federal annuitants, spouses and survivors.

CONTACT:
Jill Talley
NARFE Deputy Director, Public Relations
jtalley@narfe.org
(703)838-7760