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State Supreme Court Mulls Appeal in Same Sex Tax Case

By | November 15, 2012 - 4:47 pm

Photo courtesy of ACLU of Alaska

Attorneys argued before the Supreme Court of Alaska yesterday whether same-sex couples in the Municipality of Anchorage should be treated the same as married couples when it comes to property taxes. The case involves three same-sex couples denied a senior tax exemption allowed under state law.

In Alaska, there is a tax break for property owners 65 years and older and disabled veterans, which eliminates taxes on the first $150,000 value of property. Lance Nelson with the Alaska Attorney General’s office argued on behalf of the state that the statute and regulation on the books should be interpreted to limit the exemption for same-sex couples so that they only get part of the discount. Nelson based his argument on a tenancy by entirety statute, which presumes that each member of a married couple owns 100 percent of property.

“The legal affect of that is that each member of the tenancy owns 100 percent unapportioned value of the property,” Nelson said. “And that’s why the tax assessors in the state give full benefit to an eligible person who owns and occupies even if his or her spouse may not be eligible.”

But you have to be married. Since same-sex couples can’t legally marry in Alaska, they can’t claim 100 percent of the discount. Nelson says that’s fair because of the marriage amendment, which since it was passed by ballot initiative in 1998, defines marriage as between a man and woman in Alaska.

“You could call it something else and bestow some other kinds of right on something but as far as rights connected to marriage those all were limited by the marriage amendment when it took effect,” Nelson said.

Attorneys representing the three same-sex couples in Anchorage say taxing same-sex couples differently from straight married ones is not fair and does not provide equal protection under the law. Roger Leishman, an attorney with the law firm Davis, Wright and Tremaine argued on behalf of the same-sex couples, saying his clients were being singled out as members of an unpopular minority.

“If you look at the factors that have been traditionally have been applied to identify a suspect classification they are all present here: an identifiable group, a characteristic that should not be lightly changed, if it could be changed at all – like religion. A history of political inability to using the normal democratic process using the democratic process achieve full equality – all of he indiciary are there,” Leishman said.

The case was first heard in Anchorage Superior court in 2010. The superior court ruled in favor of the same-sex couples, saying it was unfair to tax them differently and that doing so violated equal protection. The state filed an appeal in 2011. Julie Schmidt is one of the plaintiffs in the case. She and her partner, Gayle Schuh, say they have lived together for 35 years. Nine years ago they bought a home in Eagle River. When Schmidt turned 65 they applied for the senior tax exemption. It was granted, but not in full. Schmidt explained that the case is not just about money.

“We’re basically about the fairness and the discrimination that is shown to gay and lesbians in the tax structure,” Schmidt said.

Attorney Thomas Stenson with the American Civil Liberties Union of Alaska Foundation says the case highlights a basic injustice.

“The city taxes people who are in same-sex partnerships more than people who are in straight relationships. So when Gayle and Julie applied for the exemption they got a partial exemption but they were still taxed several hundred dollars more each year than a similar situated married couple would be,” Stenson said.

In 2005, the Supreme Court of Alaska decided same-sex couples were eligible under the constitution’s equal protection clause to the same state worker benefits that married couples receive. Stenson says, the decision the court makes in this case could set another precedent. The Supreme Court will likely issue a decision on the case in 2013.

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