During my first year of law school, one of my professors told us that the B students become judges. Maybe he was right. You see, it’s been reported that a Pennsylvania Superior Court Judge has taken a stand on statutory pay for judges – but her tax analysis seems to be a little off.
Out of our sister city of Pittsburgh, PA, comes the news that Judge Joan Orie Melvin returned her entire paycheck this week to the Commonwealth because of an issue related to the much-disputed pay raise for judges and legislators. For those of you outside of the Commonwealth, the issue involved a substantial pay raise that many legislators felt entitled to give themselves in mid-2005 despite concerns about rising taxes and budget shortfalls. Voters were not amused. The pay raise was eventually thrown out a few months later, though judges kept their raises.
Judge Joan Orie Melvin, a Pittsburgh native and graduate of the Duquesne University School of Law, was the benefactor of a $17,000 raise. She filed suit in order to not take the raise, which I have to say was quite admirable. However, Court Administrators insist that she take the full salary, claiming that the salary was set by law. Judge Orien Melvin, however, has declined to take the full amount and this week actually returned her entire paycheck. According to an account posted by the Pittsburgh Tribune-Review, Orie Melvin won’t accept the checks because she does not want to pay taxes on them, claiming “Our accountant told us this was the safest way to do it.”
Did someone explain to the accountant that isn’t how the Tax Code works? Income is income when received, or when constructively received. The idea of constructive receipt is, more or less, that you are taxed on income when it’s made available to the taxpayer. You cannot avoid taxation by giving your paycheck to another person, squirreling away checks and not cashing them or, ostensibly, mailing them back to your employer. The technical tax term is that an individual may not “turn his back on income” in order to avoid tax on that income.
Like many tax cases, this will probably hinge on the facts, which, granted, I have only gleaned through articles from sources like the Pittsburgh Tribune-Review and Philadelphia Inquirer. But one fact really stands out: that quote from the Tribune-Review attributed to Orie Melvin’s brother who stated that she returned the check because she didn’t want to pay taxes on the amount. That fact, on its face, is a loser for Orie Melvin. You can’t return income as a means to not pay taxes.
All of that said, I admire Orie Melvin’s chutzpah. She apparently took a stand and she’s willing to stick to her guns. Bravo. I just don’t think she has the tax part exactly right. I suspect unless there’s something yet we don’t know, that she is going to be responsible for the tax on the entire amount of her statutory pay. But thanks, Judge Orie Melvin, for trying to do the right thing by returning the check. I suspect voters will appreciate it come next year.
A judge that doesn’t want a raise and filed a suit not to take it. Something is wrong with that picture. A person in a high profile job that doesn’t want a raise due to the rising of taxes and budget shortfalls. Alesson for all to learn.