Originally published on Forbes.com.
Edith Windsor, whose Supreme Court case overturned the Defense of Marriage Act, just died. You can get many of the details of her life from the New York Times obituary by Robert McFadden. The New York Times does a bang-up job on obituaries. New York Times analysis of tax issues can sometimes be weak, but Mr. McFadden nailed those pretty well.
One of the features of my blog is seeing if celebrities have an interesting bit of tax history worthy of remembering when they pass. My last two victims in that regard were David Rockefeller and Jimmy Breslin. Edith Windsor is special. Her celebrity springs from her being the prevailing party in a Supreme Court tax decision.
The estate of her spouse had been denied an estate tax marital exemption, because of the Defense of Marriage Act. Under DOMA marriages recognized under state law were not recognized under federal if the spouses were of the same sex. The Supreme Court determining that DOMA was unconstitutional was viewed as a major LGBT victory. And it is on an issue that I followed with more intensity than most of the tax blogosphere.
Some Coverage
The coverage on Ms. Windsor and her life and significance to LGBT history is too extensive to review. I’ll just mention one piece. Rhea Butcher wrote for NYT – Edie Windsor Gave Me My Wife. And My Life.
Two days after the court ruling, which overturned the Defense of Marriage Act, I asked Cameron to marry me. She said yes — for me, a win on the level of Edie’s — and became my fiancée, though we both preferred to call each other Beyoncés. We do the same job, standup comedy, and we spent those two years traveling the country doing shows together: I opened and she headlined.
That sent me to youtube to check out the comedic work of Rhea Butcher and Cameron Esposito, but this is a tax blog, so that’s enough of that.
One Of My Longer Arcs
What I find interesting about the Supreme Court decision that made Edith Windsor iconic is that the struggle over the constitutionality of the Defense of Marriage Act is about the only long story arc that I have followed that actually resolved. I picked it up in 2010 following not only the legal struggle but also the practical implications giving bits of advice here and there. DOMA, of course was not just a tax story.
It was often noted that there were over a thousand rights or benefits tied to marital status that were denied to legally married same sex couples. (There is an amusing note about those thousand plus rights. We’ll get to that.) Nonetheless, tax issues probably affected the largest number of people and Edith Windsor’s beef was a tax issue. Her Canadian marriage was recognized under New York state law, prior to New York marriage equality, but on the death of her spouse, there was no federal estate tax marital exemption.
Rhea Butcher’s view of the decision is more visceral, compelling and likely interesting, but here is how the struggle was viewed by a tax geek, who likes to salt in element of practical advice and humor.
The Ironies
I have to start out by noting that there is an irony in the sweeping nature of Edith Windsor’s victory. It denies her the place in tax history that others such as D. Clifford Crummey or George M Cohan attained. Estate planning attorneys will not be drafting Windsor trusts and there will be no Windsor rule.
The other irony is that reactions to Windsor and the Obergefell decision, which tends to overshadow it, reinforce my belief that there are few constitutional purists left if there ever were any, to begin with. The same four justices voted against both decisions Roberts, Alito, my fellow Son of Xavier the late Antonin Scalia, and my fellow Crusader Clarence Thomas. The Windsor decision was decided on Fifth Amendment grounds a deprivation of the equal liberty of persons noting that:
By history and tradition the definition and regulation of marriage has been treated as being within the authority and realm of the separate States.
In Obergefell, it was the Fourteenth Amendment:
The Fourteenth Amendment requires a State to license a marriage between two people of the same sex and to recognize a marriage between two people of the same sex when their marriage was lawfully licensed and performed out-of-State
I am not a constitutional purist myself and pragmatically like both decisions. Lots of people pragmatically like or dislike both decisions. It does strike me, though, that someone who cared intensely about federal supremacy would like Obergefell and not like Windosr and that someone who cared intensely about “states rights” would like Windsor and not like Obergefell, but I have not found that person. Frankly, I have not tried that hard preferring to savor the irony. Regardless, here is the struggle over DOMA as I saw it.
Community Property
My first foray into same sex couples and taxes in 2010 was remarking on a then pretty obscure ruling – CCA 201021050. It held that registered domestic partners in California (and by an easy logical leap same sex married couples) should be splitting their income under community property laws. I titled the post “Windfall for “Unmarried Couples””. More often than not, being able to split income and file two single returns will produce a better result than filing a joint return. (You could come up with scenarios where that might not be the case). Here we had a situation where thanks to DOMA, some same sex couples were getting a better deal than couples whose marriages were recognized for federal income tax purposes. I expanded on this notion not long afterward.
Be Careful What You Wish For
I had actually been thinking a lot about same sex couples for a long time. I remember doing an estate return in the eighties and noting the aggravation created by the unavailability of a marital exemption. The thought of some sort of due process claim actually crossed my mind. I don’t think it would have gotten too far. You have to keep in mind Reilly’s First Law of Tax Planning – It is what it is. Deal with it. I started reflecting on the advantages that a committed couple might gain by not being married. The result of all that pondering was Just Because They Won’t Let You Do it Doesn’t Make it a Good Idea. In that post Robin and Terry, the hypothetical couple of indeterminate gender and orientation, became a fixture on my blog. Their role is to finesse pronoun problems. I noted several other advantages besides the marriage penalty that an unmarried couple can take advantage of.
Focus On The Practical
I next touched on the subject in November 2010 with Should Mass Same Sex Couples Consider Amending Returns?. I was referring to Gill V OPM. In that decision the Massachusetts District Court found DOMA to be unconstitutional. (The First Circuit affirmed the District Court nearly two years later.) Boston based GLAD was big force in getting that decision. So I was just a tad disappointed that it was Windsor rather than Gill that became the landmark Supreme Court decision. My focus was the practical one, generally neglected by other commentators, on whether and when protective refund claims need to be filed.
In October, I started my broken record routine on this issues reminding couples who might have benefited on an extended 2006 return that the clock was ticking on getting in a refund claim. I went further into the amending issue in February 2011, when the Obama administration announced that it would no longer defend DOMA. In that post I referred to Patricia Cain’s Same Sex Tax. Professor Cain is probably the only tax blogger who covered the issue more thoroughly than I did. After all, she didn’t have to worry about Kent Hovind and the parsonage exclusion.
And Me Being Silly
In March 2011 I had what I thought was a big break in my blogging career. One of my DOMA posts was reprinted by Bay Windows, a major LGBT publication in Boston. It was in this post that I got into the habit of pointing out that I had attended the same high school as Justice Scalia. Soon after I noted that Congress taking up the baton in defense of DOMA was effectively a subsidy for same-sex marriage.
So, there is a very respectable conservative argument for repealing Section 3 of DOMA (States rights) and continuing the court fight means that same sex married couples, in the aggregate will be paying less federal tax. Is this the working of the vast left wing conspiracy ? Is the vast right wing conspiracy shooting itself in the foot ? Or is much of the world run by random knee jerk reactions without much long term thought ? To me when it comes to tax law my motto is “It is what it is. Deal with it.” How it gets that way is a little mysterious and of little practical importance.
The silliness on my part turned into an obsession with my work leading to an interview by Ellen Degeneres. It started in September 2011 with my hundredth post on forbes.com.
Starting At Forbes
By a remarkable stroke of good luck New York marriage equality corresponded with my debut on forbes.com in June 2011 making it easy for me to select the topic of my first post – New York Marriage Equality – Tax Implications, I had Robin and Terry living in Greenwich Village for that one. In July 2011, I did a short piece on GLAD – Boston Not For Profit Leads Fight Against DOMA. GLAD is a source of regional pride for me.
In August 2011 the New York State Department of Taxation and Finance dropped the other shoe on New York Marriage equality. It was a ruling that was heartening to the idealistic and a nightmare to the practical as New York indicated it would recognize couples as married for New York tax purposes DOMA to the contrary notwithstanding. My friend Alan Jacobs, who would later identify himself as my go to guy on all matters gay, suggested I title the post – Florists and Caterers are Happy with marriage Equality. Oh Yeah, It’s Also a Boon For Accountants. One of my former partners was happy at the prospect of having to run five federal returns for same sex married couples in order to comply with the ruling. He was with a high end firm. For small timers it was probably a nightmare.
On the same theme Hawaii announced in December 2011 that Hawaiian civil unions would be treated as marriages for Hawaiian income tax purposes.
In December 2011 when I did a round-up of LGBT tax developments, it was mainly about DOMA.
The Odd Alaskan Case
In October 2011, I covered an Alaska case which had rather a surprising result. Unmarried same sex couples were granted a property tax exemption. The reasoning was that because the Alaska Constitution prevented them from getting married, any provision favoring married couples was therefore a violation of Alaska’s equal protection guarantee.
And Windsor
I picked up the Windsor case in June 2012 with her District Court victory. I noted that there had also been a California district court decision – Dragovich V Department of Treasury that had declared DOMA unconstitutional. On this one I summed up my puzzlement with the conservative embrace of DOMA
The Windsor decision comes on top of Dragovich v. Dept of Treasury, another District Court decision and a First Circuit decision, which I discussed here. I’m still wondering why conservatives are sticking with this particular fight. Who is or is not married has always been a state issue.Generally conservatives are concerned with the federal government overreaching. Here they are cheering it on. And losing.
In August 2012 I covered Pederson V OPM from the Connecticut District Court. I indicated that the Bipartisan Legal Advisory Group that had stepped in when the Justice Department decided DOMA was unconstitutional was starting to look like Perry Mason’s adversary Hamilton Burger. Now that I think about it the Washington Generals might have been a more apt comparison.
In February 2013 I got into planning in anticipation of the Windsor decision which was predicted to be coming out in June.
Stop The Insanity
In October 2012 I covered IRS FAQs for registered domestic partners and same-sex couples in community property states. I stole some lines from Robert Flach indicating that the situation was a “mucking fess” but not the IRS’s fault. We needed to blame the “idiots in congress”. I argue there as I still do that life would be simpler if the individual income tax were actually a tax on individuals rather than on families.
About All Those Rights
In March 2013 I covered Ellen Degeneres having drafted an amicus brief for the Windsor case. She referred to the many rights that same-sex couples are deprived of.
But even though Portia and I got married in the short period of time when it was legal in California, there are 1,138 federal rights for married couples that we don’t have
That trope had often reminded me of the scene in Gettysburg where Tom Chamberlain asks a prisoner what he is fighting for.
I just had to track down what all those rights were. As it turns out, there was a little bit of exaggeration there. The number came from reports analyzing the Federal Code for anything affected by marital status. Among the things included are separate sections on pensions for the Civil War, the Indian Wars and the Spanish American War.
Another one of my favorites Suze Orman weighed in in April. She thought there were 1,100 provisions in the Tax Code affected by marital status. Of course, you and I both know it was in the entire US Code.
And Finally
My post on the Windsor decision was a little late on June 27, 2013. It was quite satisfying to have something long term finally resolve on my watch. In another bit of irony, I saw as I went through my posts that a new obsession was taking shape. On June 24th I had posted on the IRS Scandal. It was Day 46.
Thoughts
It is a good thing that people were honoring Edith Windsor this week. Her story was rather compelling. I’m going to resist the temptation to try to track down Nancy Gill to find out if she is jealous that it is not her name that is on the Supreme Court decision. I’ll continue to think that conservatives probably should have rolled over on DOMA to show consistency on the issue of states rights. Of course, they don’t seem to be doing that on marijuana either. On another sad note, my friend Alan Jacobs also recently passed away. As I noted above he was giving me insight as I followed along.
Looking at it as an amateur historian, I have to say that the triumph of the gay rights movement with Windsor and Obergefell coming back to back in the lifetime of people such as Edith Windsor and my friend Alan Jacobs who had to be, as they used to say, “in the closet” in their youth is rather remarkable when compared to the struggle for racial and gender equality, which have much longer histories.