District court finds marital status distinction for senior tax relief discriminatory
An Anchorage District Superior Court has ruled that the state of Alaska and the city of Anchorage are in violation of the State Constitution’s equal protection requirements in their senior citizen real property tax exemption program that discriminates against same-sex couples.
The September 19 decision by Judge Frank A. Pfiffner was heavily based on the Alaska Supreme Court’s 2005 decision that, as he summarized, “a marital classification in a state employment benefits scheme violated the Alaska Constitution’s equal protection clause” because it denied equal benefits to cohabiting same-sex partners of public employees.
The 2005 ruling led to the adoption of domestic partner programs in state agencies and many municipalities in Alaska, and this latest ruling suggests that courts there may be disposed to broaden access to partnership rights for gay and lesbian couples beyond the public employment arena.
At issue in this case is a program intended to help seniors and disabled veterans stay in their homes by allowing them to exclude $150,000 in assessed valuation on their primary residence in the calculation of their real estate taxes. A married person may exempt the full value of their property, but someone who co-owns property with a person who is not their spouse may exclude only the proportionate value of their ownership interest. For same-sex couples in which only one member is a veteran or is over 65, the available tax savings is only half that for married couples. Even when both members of the couple qualify, the value of the exemption if taken by just one partner could well exceed the value if both must take only their proportionate share. In a variety of contexts, then, unmarried co-owners are at a disadvantage under this scheme.
The American Civil Liberties Union, which won the 2005 employee benefits case, also represented the plaintiffs here. Each of them were deprived of several hundreds of dollars in tax savings due to Alaska’s prohibition on same-sex marriage.
“The Tax Exemption challenged here is constitutionally similar to the employment benefits scheme challenged” in the 2005 case, Judge Pfiffner wrote. “Therefore, the Tax Exemption is similarly unconstitutional.”
Pfiffner rejected the state’s argument that the plaintiffs’ claim must be rejected because of the state’s constitutional amendment banning same-sex marriage. The state argued that implicit in the amendment was a ban on same-sex couples enjoying any of the “benefits” of marriage. That, however, is not what the amendment says, the judge ruled.
State law in Alaska does expressly exclude same-sex couples from enjoying “the benefits of marriage,” but statute does not trump the equal protection requirement of the State Constitution.
“As the plaintiffs point out,” Pfiffner wrote, “this statute ‘cannot acquire constitutional dimension because of the Marriage Amendment, and cannot supersede or supplant the constitutional right to equal protection.’”
The state also tried to argue that because married couples can own property as tenants by the entirety (each member jointly owning the entire property) while unmarried couples can only own as tenants in common (each having half ownership), same-sex couples are not legally “similarly situated” to married couples. Pfiffner rejected that argument, finding that how the property is owned is irrelevant to the intent and implementation of the exemption.
Finding that the distinction between married and unmarried couples is, on its face, discriminatory, Pfiffner concluded that the distinction made could not even survive the least demanding level of judicial review –– the court could see no justification at all, in light of the exemption’s purpose, to treat cohabiting seniors differently than married seniors.
Pfiffner easily swatted away the state’s claim that the amount of money at stake for any individual plaintiff was not substantial enough to impose an unconstitutional burden, writing, “If the additional amount of the exempted value is important to help keep seniors in their homes, then an additional value of several hundred dollars is not negligible.”
Pfiffner, in fact, concluded the state’s rationale for the tax exemption program supported extending it to same-sex couples because Alaska was unable show how “the marital classification… fairly and substantially helps seniors and disabled veterans remain in their homes.”
The court also rejected the argument that the administrative costs of determining which same-sex couples qualified to be treated as domestic partners were unduly burdensome, noting that the public employee domestic partnership experience showed otherwise.