Wisconsin Central Ltd. v. United States

JUSTICE GORSUCH delivered the opinion of the Court.¶

As the Great Depression took its toll, struggling railroad pension funds reached the brink of insolvency. During that time before the modern interstate highway system, privately owned railroads employed large numbers of Americans and provided services vital to the nation’s commerce. To address the emergency, Congress adopted the Railroad Retirement Tax Act of 1937. That legislation federalized private railroad pension plans and it remains in force today. Under the law’s terms, private railroads and their employees pay a tax based on employees’ incomes. 26 U. S. C. §§3201(a)–(b), 3221(a)–(b). In return, the federal government provides employees a pension often more generous than the social security system supplies employees in other industries. See Hisquierdo v. Hisquierdo , 439 U. S. 572, 573–575 (1979).¶

Our case arises from a peculiar feature of the statute and its history. At the time of the Act’s adoption, railroads compensated employees not just with money but also with food, lodging, railroad tickets, and the like. Because railroads typically didn’t count these in-kind benefits when calculating an employee’s pension on retirement, neither did Congress in its new statutory pension scheme. Nor did Congress seek to tax these in-kind benefits. Instead, it limited itself to taxing employee “compensation,” and defined that term to capture only “any form of money remuneration.” §3231(e)(1).¶

It’s this limitation that poses today’s question. To encourage employee performance and align employee and corporate goals, some railroads (like employers in many fields) have adopted employee stock option plans. Typical of many, the plan before us permits an employee to exercise stock options in various ways—purchasing stock with her own money and holding it as an investment; purchasing stock but immediately selling a portion to finance the purchase; or purchasing stock at the option price, selling it all immediately at the market price, and taking the profits. App. 41–42. The government argues that stock options like these qualify as a form of taxable “money remuneration” under the Act because stock can be easily converted into money. The railroads reply that stock options aren’t “money” at all and remind us that when Congress passed the Act it sought to mimic existing industry pension practices that generally took no notice of in-kind benefits. Who has the better of it? Courts have divided on the answer, so we agreed to take up the question.¶

We start with the key statutory term: “money remuneration.” As usual, our job is to interpret the words consistent with their “ordinary meaning . . . at the time Congress enacted the statute.” Perrin v. United States , 444 U. S. 37, 42 (1979). And when Congress adopted the Act in 1937, “money” was ordinarily understood to mean currency “issued by [a] recognized authority as a medium of exchange.” Webster’s New International Dictionary 1583 (2d ed. 1942); see also 6 Oxford English Dictionary 603 (1st ed. 1933) (“In mod[ern] use commonly applied indifferently to coin and to such promissory documents representing coin (esp. government and bank notes) as are currently accepted as a medium of exchange”); Black’s Law Dictionary 1200 (3d ed. 1933) (in its “popular sense, ‘money’ means any currency, tokens, bank-notes, or other circulating medium in general use as the representative of value”); Railway Express Agency, Inc. v. Virginia , 347 U. S. 359, 365 (1954) (“[M]oney . . . is a medium of exchange”). Pretty obviously, stock options do not fall within that definition. While stock can be bought or sold for money, few of us buy groceries or pay rent or value goods and services in terms of stock. When was the last time you heard a friend say his new car cost “2,450 shares of Microsoft”? Good luck, too, trying to convince the IRS to treat your stock options as a medium of exchange at tax time. See Rev. Rul. 76–350, 1976–2 Cum. Bull. 396; see also, e.g., In re Boyle’s Estate , 2 Cal. App. 2d 234, 236 (1934) (“[T]he word ‘money’ when taken in its ordinary and grammatical sense does not include corporate stocks”); Helvering v. Credit Alliance Corp. , 316 U. S. 107, 112 (1942) (distinguishing between “money and . . . stock”).¶

Nor does adding the word “remuneration” alter the calculus. Of course, “remuneration” can encompass any kind of reward or compensation, not just money. 8 Oxford English Dictionary 439. But in the sentence before us, the adjective “money” modifies the noun “remuneration.” So “money” limits the kinds of remuneration that will qualify for taxation; “remuneration” doesn’t expand what counts as money. When the statute speaks of taxing “any form of money remuneration,” then, it indicates Congress wanted to tax monetary compensation in any of the many forms an employer might choose—coins, paper currency, checks, wire transfers, and the like. It does not prove Congress wanted to tax things, like stock, that aren’t money at all.¶

The broader statutory context points to the same conclusion the immediate text suggests. The 1939 Internal¶

Revenue Code, part of the same title as our statute and adopted just two years later, expressly treated “money” and “stock” as different things. Consider a few examples. The Code described “stock of the corporation” as “property other than money.” §27(d). It explained that a corporate distribution is taxable when distributed “either (A) in [the company’s] stock . . . or (B) in money.” §115(f)(2). And it discussed transfers of “money in addition to . . . stock or securities.” §372(b). While ultimately ruling for the government, even the Court of Appeals in this case conceded that the 1939 Code “treat[ed] ‘money’ and ‘stock’ as different concepts.” 856 F. 3d 490, 492 (CA7 2017).¶

That’s not all. The same Congress that enacted the Railroad Retirement Tax Act enacted a companion statute, the Federal Insurance Contributions Act (FICA), to fund social security pensions for employees in other industries. And while the Railroad Retirement Tax Act taxes only “ money remuneration,” FICA taxes “ all remuneration”including benefits “paid in any medium other than cash.” §3121(a) (emphasis added). We usually “presume differences in language like this convey differences in meaning.” Henson v. Santander Consumer USA Inc. , 582 U. S. ___, ___ (2017) (slip op., at 6). And that presumption must bear particular strength when the same Congress passed both statutes to handle much the same task. See INS v. Cardoza-Fonseca , 480 U. S. 421, 432 (1987). The Congress that enacted both of these pension schemes knew well the difference between “money” and “all” forms of remuneration. Its choice to use the narrower term in the context of railroad pensions alone requires respect, not disregard.¶

Even the IRS (then the Bureau of Internal Revenue) seems to have understood all this back in 1938. Shortly after the Railroad Retirement Tax Act’s enactment, the IRS issued a regulation explaining that the Act taxes “all remuneration in money, or in something which may be used in lieu of money.” 26 CFR §410.5 (1938). By way of example, the regulation said the Act taxed things like “[s]alaries, wages, commissions, fees, [and] bonuses.” §410.6(a). But it nowhere suggested that stock was taxable. Nor was the possibility lost on the IRS. The IRS said the Act did tax money payments related to stock“[p]ayments made by an employer into a stock bonus . . . fund.” §410.6(f). But the agency did not seek to extend the same treatment to stock itself. So even assuming the validity of the regulation, it seems only to confirm our understanding.¶

To be sure, the regulation also lists “scrip and merchandise orders” as examples of qualifying mediums of exchange. §410.5. For argument’s sake, too, we will accept that the word “scrip” can sometimes embrace stock. But even if “scrip” is capable of bearing this meaning, at the time the IRS promulgated the regulation in 1938 that was not its ordinary meaning. As even the government acknowledged before the Court of Appeals, “scrip” ordinarily meant “company-issued certificates” that employees could use in lieu of cash “to purchase merchandise at a company store.” Brief for United States in Nos. 16–3300 etc. (CA7 2017), p. 37. This understanding fits perfectly as well with the whole phrase in which the term appears; both “scrip and merchandise orders” were frequently used at the time to purchase goods at company stores. See, e.g., Webster’s New International Dictionary 2249 (defining “scrip” as a “certificate . . . issued to circulate in lieu of government currency” or “by a corporation that pays wages partly in orders on a company store”); Keokee Consol. Coke Co. v. Taylor , 234 U. S. 224, 226 (1914) (company gave its employees “scrip . . . as an advance of monthly wages in payment for labor performed” that could be used to purchase merchandise at the company store); Gatch, Local Money in the United States During the Great Depression, 26 Essays in Economic & Bus. History 47–48 (2008).¶

What does the government have to say about all this? It concedes that money remuneration often means remuneration in a commonly used medium of exchange. But, it submits, the term can carry a much more expansive meaning too. At least sometimes, the government says, “money” means any “property or possessions of any kind viewed as convertible into money or having value expressible in terms of money.” 6 Oxford English Dictionary 603. The dissent takes the same view. See post, at 3 (opinion of BREYER, J.). But while the term “money” sometimes might be used in this much more expansive sense, that isn’t how the term was ordinarily used at the time of the Act’s adoption (or is even today). Baseball cards, vinyl records, snow globes, and fidget spinners all have “value expressible in terms of money.” Even that “priceless” Picasso has a price. Really, almost anything can be reduced to a “value expressible in terms of money.” But in ordinary usage does “money” mean almost everything ?¶

The government and the dissent supply no persuasive proof that Congress sought to invoke their idiosyncratic definition. If Congress really thought everything is money, why did it take such pains to differentiate between money and stock in the Internal Revenue Code of 1939? Why did it so carefully distinguish “money remuneration” in the Act and “all remuneration” in FICA? Why did it include the word “money” to qualify “remuneration” if all remuneration counts as money? And wouldn’t the everything-is-money interpretation encompass railroad tickets, food, and lodging—exactly the sort of in-kind benefits we know the Act was written to exclude ? These questions they cannot answer.¶

To be sure, the government and dissent do seek to offer a different structural argument of their own. They point to certain of the Act’s tax exemptions, most notably the exemption for qualified stock options. See 26 U. S. C. §3231(e)(12); post, at 6 (BREYER, J., dissenting). Because the Act excludes qualified stock options from taxation, the argument goes, to avoid superfluity it must include other sorts of stock options like the nonqualified stock options the railroads issued here. The problem, though, is that the exemption covers “ any remuneration on account of ” qualified stock options. §3231(e)(12) (emphasis added). And, as the government concedes, companies sometimes include money payments when qualified stock options are exercised (often to compensate for fractional shares due an employee). Brief for United States 30. As a result, the exemption does work under anyone’s reading.¶

The government replies that Congress would not have bothered to write an exemption that does only this modest work. To have been worth the candle, Congress must have assumed that stock options would qualify as money remuneration without a specific exemption. But we will not join this guessing game. It is not our function “to rewrite a constitutionally valid statutory text under the banner of speculation about what Congress might have” intended. Henson , 582 U. S. , at ___ (slip op., at 9). Besides, even if the railroads’ interpretation of the statute threatens to leave one of many exemptions with little to do, that’s hardly a reason to abandon it, for the government’s and dissent’s alternative promises a graver surplusage problem of its own. As it did in 1939, the Internal Revenue Code today repeatedly distinguishes between “stock” and “money.” See, e.g. , §306(c)(2) (referring to a situation where “money had been distributed in lieu of . . . stock”). All these distinctions the government and dissent would simply obliterate.¶

Reaching further afield, the government and dissent point to a 1938 agency interpretation of another companion statute, the Railroad Retirement Act of 1937. See post, at 8–9 (BREYER, J., dissenting). Here, the Railroad Retirement Board suggested that the term “money remuneration” in the Railroad Retirement Act could sometimes include in-kind benefits. Again we may assume the validity of the regulation because, even taken on its own terms, it only ends up confirming our interpretation. The Board indicated that in-kind benefits could count as money remuneration only if the employer and employee agreed to this treatment and to the dollar value of the benefit. 20 CFR §222.2 (1938). That same year, the Board made clear that stock was treated just like any other in-kind benefit under this rule: “stock cannot be considered as a ‘form of money remuneration earned by an individual for services rendered'' unless part of an employee’s “agreed compensation” and awarded “at a definite agreed value.” Railroad Retirement Bd. Gen. Counsel Memorandum No. L–38440, pp. 1–2 (1938). Later, the Board provided fuller explanation for its longstanding view, stating that these conditions are necessary because, unlike FICA, the Act does not cover “ ‘remuneration . . . paid in any medium.'' Railroad Retirement Bd. Gen. Counsel Memorandum No. L–1986–82, p. 6 (1986). For decades, then, the Board has taken the view that nonmonetary remuneration is “not . . . included in compensation under the [Act] unless the employer and employee first agree to [its] dollar value . . . and then agree that this dollar value shall be part of the employee’s compensation package.” Ibid. None of these preconditions would be needed, of course, if the Act automatically taxed in-kind benefits as the government and dissent insist.¶

Finally, the government seeks Chevron deference for a more recent IRS interpretation treating “compensation” under the Act as having “the same meaning as the term wages in” FICA “except as specifically limited by the Railroad Retirement Tax Act.” 26 CFR §31.3231(e)–1 (2017). But in light of all the textual and structural clues before us, we think it’s clear enough that the term “money” excludes “stock,” leaving no ambiguity for the agency to fill. See Chevron U. S. A. Inc. v. Natural Resources¶

Defense Council, Inc. , 467 U. S. 837, 843, n. 9 (1984). Nor does the regulation help the government even on its own terms. FICA’s definition of wages—“ all remuneration”is “specifically limited by the Railroad Retirement Tax Act,” which applies only to “ money remuneration.” So in the end all the regulation winds up saying is that everyone should look carefully at the relevant statutory texts. We agree, and that is what we have done.¶

The Court of Appeals in this case tried a different tack still, if over a dissent. The majority all but admitted that stock isn’t money, but suggested it would make “good practical sense” for our statute to cover stock as well as money. 856 F. 3d, at 492. Meanwhile, Judge Manion dissented, countering that it’s a judge’s job only to apply, not revise or update, the terms of statutes. See id. , at 493. The Eighth Circuit made much the same point when it addressed the question. See Union Pacific R. Co. v. United States , 865 F. 3d 1045, 1048–1049 (2017). Judge Manion and the Eighth Circuit were right. Written laws are meant to be understood and lived by. If a fog of uncertainty surrounded them, if their meaning could shift with the latest judicial whim, the point of reducing them to writing would be lost. That is why it’s a “fundamental canon of statutory construction” that words generally should be “interpreted as taking their ordinary, contemporary, common meaning . . . at the time Congress enacted the statute.” Perrin , 444 U. S., at 42. Congress alone has the institutional competence, democratic legitimacy, and (most importantly) constitutional authority to revise statutes in light of new social problems and preferences. Until it exercises that power, the people may rely on the original meaning of the written law.¶

This hardly leaves us, as the dissent worries, “trapped in a monetary time warp, forever limited to those forms of money commonly used in the 1930’s.” Post, at 3 (opinion of BREYER, J.). While every statute’s meaning is fixed at the time of enactment, new applications may arise in light of changes in the world. So “money,” as used in this statute, must always mean a “medium of exchange.” But what qualifies as a “medium of exchange” may depend on the facts of the day. Take electronic transfers of paychecks. Maybe they weren’t common in 1937, but we do not doubt they would qualify today as “money remuneration” under the statute’s original public meaning. The problem with the government’s and the dissent’s position today is not that stock and stock options weren’t common in 1937, but that they were not then—and are not nowrecognized as mediums of exchange.¶

The judgment of the Seventh Circuit is reversed, and the case is remanded for further proceedings consistent with this opinion.¶

It is so ordered.¶