479 U. S. 27
November 4, 1986
This is it: the very first opinion ever published by the inimitable and irrepressible Justice Scalia. As is often the case for new Justices writing their first opinion, Scalia wrote for a unanimous Court in a short and uncontroversial case. An agreement between the United States and Panama provided that American citizens whose work related to the Panama Canal were exempted from certain taxes. Precisely which taxes formed the basis for the dispute.
O’Connor, and other Americans in Panama, contended that the plain language of the agreement – “shall be exempt from any taxes, fees or other charges on income” – entitled them to freedom from American as well as Panamanian taxation. The US government disagreed, saying that the agreement was only intended to apply to Panamanian taxation. Scalia sided with the government. Against O’Connor’s reliance on the literal language, Scalia looked at contextual clues, Panama’s understanding and the pattern of international enforcement, and drafting history.
Scalia’s debut in United States Reports began with a whimper rather than a bang. It’s not a memorable opinion, and I was sad to see him side against the tax protestors. I guess I have a soft spot for anyone who finds a good tax loophole. They don’t win often because the government can usually come back with an argument that essentially boils down to ‘that’s not what we meant when we wrote that!’ While the government’s contextual case is strong and reasonably persuasive, I would have loved to have seen O’Connor triumph on the basis of the literal text.