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Davis v. Michigan Department of Treasury, 489 U.S. 803 (1989), is a case in the Supreme Court of the United States holding that states may not tax federal pensions if they exempt their own state pensions from taxation. [1] In the 1930s, the federal and state governments began to charge income tax on salaries paid to each other's employees.
The court first rejected appellant's claim that 4 U.S.C. § 111 invalidated the State's tax on appellant's federal benefits. Noting that § 111 applies only to federal "employees," the court determined that appellant's status under federal law was that of an "annuitant," rather than an employee.
Facts of the case. Paul Davis, a resident of Michigan, worked for the federal government and upon retirement received benefits. Michigan law exempts state retirement benefits from state taxes. Smith unsuccessfully petitioned for a refund on the state taxes he paid on his federal retirement benefits. He then filed suit in the Michigan Court of ...
Davis v. Michigan Department of Treasury. 489 U.S. 803. Case Year: 1989. Case Ruling: 8-1, Reversed and Remanded. Opinion Justice: Kennedy. FACTS. Michigan's revenue code provided that retirement benefits paid to individuals by the state or any of its political subdivisions were exempt from state income taxes.
After the State denied appellant's request for refunds, he filed suit in the Michigan Court of Claims, alleging that the State's inconsistent treatment of retirement benefits violated 4 U.S.C. § 111, which authorizes States to tax
In Davis v. Michigan Department of Treasury,' the Supreme Court held that a Michigan state statute, which imposed taxes on retirement benefits paid by the. federal government to its retirees, but not retirement benefits paid by the Michigan.
Paul S. Davis (plaintiff) was a Michigan resident who had worked as a federal employee and who received federal retirement benefits. Under Michigan state law, retirement benefits other than those received from state or local governments were included in a taxpayer’s gross income for tax purposes.
