The Federal Court of Appeals for the First Circuit has ruled in the two cases from Massachusetts in a single opinion unanimously holding that DOMA is unconstitutional. This is the first appellate decision to so hold. What does this mean for same-sex married taxpayers?
It means nothing yet. The court stayed the effect of the holding until further review of the case. Everyone expects this case to go to the U.S. Supreme Court which is the final arbiter of the constitutionality of this statute. In my view, the opinion is exactly right in its analysis. The Court did not opt for heightened scrutiny under equal protection but it did not apply traditional deferential rational basis review either. In fact, the Court admits that under traditional deferential treatment, DOMA is probably constitutional. Why? Because even though it turns out to be false that DOMA imposes costs upon the government, Congress could have rationally believed that to be the case.
Instead, the Court emphasized other low-level scrutiny cases that have involved laws that burdened unpopular groups as well as cases in which the Supreme Court has scrutinized more closely legislation that raises federalism concerns. All of these cases apply an analysis that is called rational basis but takes a closer look at the justifications for the statute. Some people call this “rational basis with a bite.” Since DOMA both burdens an unpopular group and interferes with a state’s right to determine a matter traditionally relegated to the states (the federalism concern), it is a statute worthy of a closer look at the justifications offered to defend it. And the Court finds there are no good justifications. That is sufficient. The Court does not have to rely on the claim that the legislation stemmed from bias or animus. In fact the Court specifically says that it refuses to attribute the expressions of prejudice by a handful of Congressional members to all the other persons who supported the bill – or to President Clinton who signed the bill. In addition, the Court makes it clear that nothing in its decision can be relied upon to make the claim that same-sex couples have a constitutional right to marry. This opinion is merely about federal acknowledgement of state-recognized marriages. The arguments made by the Court are brilliantly crafted to appeal to Justice Kennedy.
I think there is a very good chance that the Supreme Court will uphold the First Circuit ruling. It is conceivable that the petition for certiorari could be granted in time for the Court to hear the case next term. That means we would have a decision in 2013.
What does this mean for taxpayers? If DOMA is struck down in 2013, same-sex married couples will file federal tax returns as married for tax year 2013. That will be good news for many couples and bad news for others. The bad news is for couples who will be subject to the marriage tax penalty. If you do your own taxes using Turbo Tax, you already know what that penalty is. When you complete your mock federal joint return, look and see what tax would have been due. Compare that to the tax you actually paid on your two single returns. By my calculations, some taxpayers at the high income level could find their taxes increase by $20,000 or so. It would be advisable to start planning for that increased expense now.
For a copy of the First Circuit opinion go here.
