Davis v. Michigan Department of the Treasury (1988)
- Docket
- 87-1020
- Decided
- 1988-01-01
Summary
Question: Did Michigan violate federal law when it exempted state and local government pensions from taxation but levied taxes on federal government pensions? Conclusion: Yes. Justice Anthony M. Kennedy delivered the opinion for an 8-1 court. The Court emphasized the principles of intergovernmental tax immunity, which work to keep one part of the government from hindering the operations of another part. Section 111 allows a state to tax income paid by the federal government "if the taxation does not discriminate against the officer or employee because of the source of the pay or compensation." Because the Court found no "significant differences between the two classes [federal and state employees]," it held that the Michigan tax distinguished between employees solely on "the source of the pay."