By Daniel Hemel, Guest, Supreme Court Of The United States Blog; June 21, 2018
Berkshire Hathaway CEO Warren Buffett has long lamented the fact that he pays a lower tax rate than his secretary. Now, top executives at Berkshire Hathaway-owned BNSF railroad will pay an even lower rate than their counterparts elsewhere.
That is the outcome of the Supreme Court’s 5-4 ruling in Wisconsin Central Ltd. v. United States, which holds that railroad employees are exempt from federal employment taxes on stock-based compensation. The decision delivers a victory for Wisconsin Central and its parent company, Canadian National Railway, which stand to reap a $13 million refund as a result of the ruling, as well as for other large railroads such as BNSF. It’s a setback for the Internal Revenue Service, opening up a new loophole for taxpayers to exploit. And perhaps most significantly, it’s another triumph for a textualist mode of statutory interpretation that prioritizes dictionary definitions over practical consequences.
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