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Should Alaska gay couples qualify for same property tax exemption as straights?

Suzanna Caldwell
Aaron Jansen illustration

The Alaska Supreme Court heard oral arguments Wednesday questioning whether it should uphold a lower court's ruling that would entitle same-sex couples to the same property tax exemptions that straight, married couples are offered.

Attorneys for the state want the lower court ruling overturned. Their position: same-sex couples shouldn't get the tax exemption. And that's not a violation of constitutional equal protection since the issue at hand deals with a regulation and how it's applied.

Plaintiffs disagree, saying basic civil rights and a previous state Supreme Court ruling clearly show discrimination.

"They get taxed more than heterosexual couples," said American Civil Liberties Union of Alaska legal director Tom Stenson. "That's the story at the end of the day."

But the ACLU stopped short of the altar. Plaintiffs' attorneys avoided discussing same-sex marriage, which has been illegal in Alaska since 1998, when voters amended the state constitution to traditionally define marriage as between a man and a woman.

"This isn't a marriage issue, it's a fairness issue," Stenson said.

And yet same-sex rights come back before the Alaska Supreme Court just one week after a watershed election for gay rights. Maine, Maryland and Washington voted to legalize gay marriage. Minnesotans on election night repealed their anti-gay marriage statute -- the first state to do so.

While a sea-change might be happening across the nation, Alaska has been slower to embrace marriage equality. In April, voters in Anchorage rejected a proposition that would have extended discrimination protection to residents "regardless of sexual orientation or gender identity.”

With the political landscape of Alaska, and America, changing, can Alaskans expect to see more same sex marriage challenges going into the future? “Stay tuned,” said Stenson. “I don't think anyone looks at the legal landscape of America and thinks things are where they should be.”

Assessing value and property taxes

It will be months before the Alaska Supreme Court issues a ruling, yet there's a long history of decisions regarding gay rights. 

The tax case was decided in 2011 by an Anchorage Superior Court judge who ruled that same-sex couples are entitled to the same exemptions on local property taxes as married couples after three Alaska couples challenged the tax exemption, which applies to the first $150,000 of assessed value of someone's primary residence. Currently, state regulations offer exemptions for disabled veterans or those 65 and older.

But the regulation taxes same-sex couples differently. Married couples can receive the full property tax exemption whether the property is held in one name or both. If one partner is eligible, both receive the full benefit. A same-sex couple can only exempt value proportionate to the amount of the house he or she owns.

Take for example plaintiffs Julie Schmidt and Gayle Schuh. In 2011, Schmidt was over 65 and eligible for the exemption but Schuh was not. Despite owning a home together and being in a committed relationship for 33 years, the state assessed that Schmidt occupied half of the Eagle River home the two shared and that the exemption would only cover her part. If the two were married, they could have taken a larger exemption and saved several hundred dollars.

In that ruling superior court judge Frank Pfiffner said both same sex and married couples were “similarly situated” and that same sex couples were due equal protection under the state constitution.

But Wednesday, the state said applying the exemption could cause significant burden to the state in trying to verify whether same sex couples qualify for the exemption. Alaska Senior Assistant Attorney General Lance Nelson also told the justices the group being denied the tax exemption is small and temporary, since eventually both couples will age into the requirement.

The issue isn't about constitutional rights, the state argued, it's about the reading of the statute.

“It's a very insignificant tax group,” Nelson said.

Some in the gallery snickered at the suggestion. Roger Leishman, who argued on behalf of the plaintiffs, called them “very unattractive arguments.”

“It's important to these people,” he said. “Saving $350, $500 a year isn't the point. It's the principle that's important.”

Plaintiffs believe a 2007 state Supreme Court decision, which said the state cannot deny same-sex couples employment benefits they would offer to married spouses, applies here, too. The 1998 amendment prohibits marriage but it does not permit the government to treat them differently in other ways.

Leishman said when the Supreme Court decided ACLU v. Alaska, it gave parties a “roadmap” for the courts in moving forward with other same sex cases. 

“The court can reiterate guidance in that road map,” he said.

Looking at the amount of money being saved, or number of stakeholders involved isn't the issue, he said.

“It's that members of a still unpopular minority have been treated as a strangers to the law,” he said. “These laws warrant examination today.”

Leishman noted that the tax exemption was created to help senior citizens stay in their homes. He countered that the state should consider the previous ruling in the case, specifically the context, to make sure its applied fairly.

Contact Suzanna Caldwell at suzanna(at)alaskadispatch.com