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State, Teachers,
and Local Government Retirees
Military and Federal Government Retirees
Lawsuits 1989 to 2001 |
In March 1989 the U.S. Supreme Court ruled that states could not treat state
employees different from federal and military employees as
North Carolina and 23 other states were doing. In August 1989
a law was passed taking away state employees contractual
retirement benefit of no state income tax so as to continue
the tax against federal and military retirees. In 1998, the
North Carolina Supreme Court held this was an impairment of
the obligations of contract made with state employees since
1939. Retiree claims for $1.156 billion in illegal tax were
resolved in 2000 by a settlement of $799 million.
Bailey (State) and Patton (Federal) cases.
Ultimately, the state plaintiffs received 100% in refunds
and federal and military over 95%.
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