well your argument first this morning in case seventeen five thirty in wisconsin central versus the united states mr dupree mr chief justice and may it please the court the railroad retirement tax act levies a payroll tax on railroad employees money remuneration the question presented in this case is whether remuneration in shares of stock is remuneration in money we believe it is not for a simple reason stock is not money the plain meaning of money is a generally accepted medium of exchange and stock is not that you cannot lie about a check we think a check would constitute a medium of exchange justice kennedy it essentially transfers currency there is a legal right to obtain currency on a bank draft so we do think that a check would constitute money remuneration so you and the slippery slope about the point well about a bond of savings one that would not be your honor we don't think a bond remuneration typically the things that would constitute money remuneration obviously would be cash paper notes coins but it would also in compas more modern ways of transferring currency such as direct deposit or a check we think that the plain meaning of money remuneration is also confirmed when this tax provision is viewed in the larger context of the tax code as a whole and that's true both for the tax code is that existed during the great depression when this railroad statute was an act it and also the code as it form has become more frequent and it's the same purpose so why can't one read any form of monetary compensation to include any form of compensation readily convertible into k well justice ginsburg what the historical record shows is that at the time of the great depression the statute was an act that railroad employees were actually compensated through a variety of means both cash based and also non cash based railroads gave their employees everything from in kind benefits free transportation property and so that same issue that presents itself today where railroad employees get a variety of different types and forms of existed back in the great depression and what congress did was it said we recognize that real world employees get a variety of types of remuneration including stock by the way at that time and yet it drew the line in how suddenly stock at that time how common was it it  sufficiently calm there was a report cited in our papers in the national industrial conference that talked about how going back to the nineteenth century many railroads offered stock purchase plans to their employees so it certainly was a well recognized form of remuneration back when the statute was an active and i think if this court were to compare the language that congress chose to put in the railroad statute compared to what it put in fica which was enacted virtually simultaneously in the great depression that under but that can be valued in cash to do pretty in the way you talk about it it's not just that we have to give meaning to the term money i think you're quite right to say that the term we have to look at is money remuneration is that correct that's the key term yes your honor and so that's really money in a compound in a compensation scheme right i mean that's what that means is money liberation that's right so let's even take your own definition which i think there's a lot to be said for your definition tens of money to ends to be the one that's first in the dictionaries so you said a generally accepted exchange but now you put that with the word remuneration and other words in a compensation scheme and then the question becomes is stock a generally accepted medium of exchange in a compensation scheme and i would think that the answer to that is yes i mean we see this all over the place that companies give stock as well as cash in a compensation scheme that it is a generally accepted medium of exchange for compensation well i'm not sure it quite works out that way just as kate in other words remunerate its employees through some form say for example free lunches i don't think it would be right to say well therefore food has now become a medium of exchange i think i mean hardly it's because you know some companies might give free lunches and other companies might not give free lunches and and i mean this is this is a kind instead of getting that shock you're getting stuck employee is just taken in cash forget about the stock so why isn't it just you know you can get it in cash you can get it as a stock option or in stock when that matures it's a generally accepted medium  exchange well i think a generally accepted medium of exchange refers to something that number one has a fixed value in other words it's a measure of value and it's something that any citizen could use to obtain goods or services in an economy in other words cash certainly fulfills that function i can obtain goods and services with cash if my employer that's what i mean in your briefs you keep on saying you can't take a stock option to a grocery store but i think and that's obviously right but i think what i'm saying is that would be a relevant question if all we were asking is what's the definition of money but that's not what we're asking we're asking what's the definition of money remuneration so the fact that you can't take a stock option to a grocery store is irrelevant to that question the question is that when it comes to compensation is a stock option used interchangeably with money and i think in this company and many others it is isn't it well i don't think so certainly in this company the record shows that fewer than half the options at issue were actually promptly exchanged for cash so the record in this case shows that these employees again the majority of options at issue were retained as stock they were not sold for cash and i think under your daughter's question it pretty much anything that could be sold for cash would be swept into the definition of money anything that an employer gives to an employee can be valued and could be sold granted there are some things that are more liquid than others well let me ask another question mr dupree just to test this a little bit so let's say a company has two employees and one employee makes two hundred thousand dollars in cash and is granted five million dollars in stock based compensation two hundred thousand plus five million and the other employee is just given two hundred fifty thousand dollars in cash now who makes more money well the in your honour's the context of your honor's question i think money is essentially synonymous with overall wealth or assets and that is a definition answer to my question is of course the guy who gets the five million dollars in stock makes more money but in the context of that question i think that's fair but i think in the context of this tax statute i don't think it's right to say that when one thousand thirty seven congress put the word money into this tax statute it meant in that capacious sense to include the compensation is money well i don't agree with you a bottle of wine a christmas is i don't think going to a baseball game occasionally would be because those are not i don't think of who's richer or not or who's getting a commonly accepted medium of exchange where he went awry in our view is concluding that in the year twenty eighteen stock has become a medium of exchange we don't think that's right he certainly cited no legal or economic authority for that proposition reconvert went into hers right and in our response to that justice ginsburg is that again taken to its logical conclusion it would mean that anything an employee gets is money if an employee is given a car worth ten thousand dollars in an economic sense there may be no difference between getting a car that is worth ten thousand dollars and getting ten thousand dollars in cash but when congress put the word money in the statute it did not mean to sweep in anything as the government says that can be valued or that can be sold that goes way too far but if you're right congress did and i don't thing when it's basically excluded from that that exemption is relevant to this case because in the government's view it essentially renders our definition grander the provisions for plus which under our definition of money remuneration we think that's wrong and the reason why that's a wrong is because when an employee exercises a qualified stock option they always get stock but and this is the critical point and when the government concedes they often get cash as well that is why that twelve exemption is not surplusage under our reading it does work i think it also bears mention that that exemption was enacted in two thousand and four about seventy years after the original money remuneration statute was enacted and i think it would be a little peculiar to say that in two thousand four congress intended to change or to tamper with the definition of money remuneration that by the way has remained in that statute an altar for almost seventy you prefer going to look back as you're encouraging us to do what that regulation says and this is the original i r s regulation of the statute is it says that the i r s is going to construe money to include money or anything and this is the critical language anything that can be used in lieu of money and then they provide a host of examples most of which are salary bonuses commissions cash payments so we think that that original regulation strongly supports our view because it underscores the i r s s original understanding of the medium of exchange requirement that's what the words used in lieu of stock is never been used in lieu of money what if we read it more broadly you would you have any further response well if you read it more broadly i don't think you could read it more broadly to encompass stock sure you don't but let's just suppose we did that more well then i would say that that regulation was impermissible conflict with this is actually what do we do with history i wasn't talking about  four regulation by treasury and you have your company and many others have this tax without saying anything until very recently what point do we say that history supports one review as opposed with another as the government points out yes you can perhaps change meaning with later regulation but the later regulation could be a reflection of what everyone has understood to be right and just a sort of my aura i think it's fairly clear and i don't think the government disputes this point that for the vast majority of this railroad statutes existence the railroads were not in fact paying tax on stock the government certainly hasn't said we have evidence from the one nine hundred fifty s and one nine hundred sixty s that this was being done in fact under the regulation that justice gorsuch mention it would not be included what the rate of the government has identified in your honor alluded to this is that real retirement board regulation that actually first was issued by way of a decision in one nine hundred thirty eight and we think that's very telling because what the real retirement board says is it says under the statutory language we will only treat stock as remuneration if the party the employer and employee agreed to do so and that they can value it in advance none of that happened here so if the government is right that this court should look to the real retirement board's historic treatment of stock we think that strongly supports our position in fact under a plain straightforward application they must have been if they were paying for twenty years they must have been something that triggered the inspiration and if i could add to that question the employer well it was who well i think what through the mid ninety's is a general matter the railroads were not paying tax on this as far as what changed in one nine hundred ninety four the i r s came out with a new regulation it's the one that's currently on the books which is a peculiar regulation in all honesty because it basically says we are going to treat fica wages and our r t a compensation to mean the same thing except where they differ but the i r s never to this day it never has issued a regulation saying that stock options and stock is taxable under the railroad retirement tax act it is never said that so in one thousand nine hundred four the iris changed its position it got rid of its longstanding historic understanding that money stock and it issued this new regulation at that point there were several years where i think parties frankly didn't quite know what the state of the law was i do think it's right that there were some railroads that paid tax i suspect that may have been just a judgment that rather than litigate the question it was easier to pay the tax for a few years but in our case the petitioners in this case we didn't issue stock until one thousand nine hundred six and that stock obviously the options take years to vest it can be up to a ten year term in instances and in this case we are seeking refunds beginning with the two thousand and six tax year so to the extent there was a period in time where railroads were paying taxes that reflect historical practice i think the answer is no at most it might have been a handful of years in the overall seventy five to eighty year sweep of this railroad tax statute we think that if this court construes the railroad statutes language against fica that strongly supports our interpretation because we are asking you to give meaning to the textual difference in the two statutes which are inactive virtually simultaneously in the great depression congress deliberately chose very different language in establishing the tax base and even though the railroad statute and fica hav about the taxed but about reasons and purposes what would be your best reason for why there should be a distinction between fica and the railroad system with respect to stock options absolutely just think that the reason why is going back to history and why congress made that decision that it did it often is this court knows legislate specifically for the railroad industry the railroads unlike all other industries had an existing pension system and so the distinction was written into the law to reflect the historic practice in the railroad industry when congress made the decision to federalize these railroad pensions it said we are going to federalize it but we will maintain the existing cash based pension when i understand the government to be saying that that did exclude certain kinds of things that were clearly not cash based but you know lunches or something like that but that's a different question from the one i'm asking i'm just saying look at this thing stock options and say why why would congress want it to be taxable and fake but not taxable in the railroad system that because the railroad system retirement system is fundamentally different in key respects from social security it has much higher tax rates on the railroad combined tax rate is north of thirty percent whereas fica is about fourteen percent the railroad retirement system also provides for much more generous benefits to retirees so the are two fundamentally different retirement systems are there similarities yes is there overlap yes and i guess i'm still waiting for a difference that would would would match why congress would make this different treatment of stock options well i think the different treatment of stock options traces back to the original decision that congress made and that his maintain now in the statutory tax for seventy plus years the distinction between a broad wage based tax system in fica that encompasses pretty much everything the employee gets and the far from narrow or tax base that the railroad system utilizes so i think it's just a natural function that when congress designed t tax basis for these two retirement systems among many other differences between the two regimes it formulated the tax base in a much narrower manner that's why today there are different treatments for certain things such as the stock options in this case i pension structure in the new federal regime is it could address questions of solvency simply by adjusting benefits and tax rates in other words it wanted to preserve the overall structure but it would adjust benefit levels it would adjust tax rates and of course there move to giving out more stock options and less cash well and wouldn't that put the system into economic difficulty it would not you're on a number of points i guess with regard to last point about putting the system in economic difficulty the railroad system actually has a statute a provision that self adjusts based on the money coming in in the benefits going out to ensure that the system remain solvent so the short answer to your honest question is who gets minimum wage or something close to the and the people who receive a lot more in stock options paying less and i know i don't i don't think that's right in other words the stock options in this case first of all we're not confined to a narrow group of senior executives they were issued to rank and file employees as well as senior executives the other point is that the r r t a has a wage cap much like social security does so only the first portion of a employee is actually subject for the most part to tax so as a practical matter it doesn't have a dramatic impact on overall tax revenues in this case the amount of tax don't understand if you get less money into the system how are you going to pay on the same bear and my point is that it may not be the less money going into the system is your honor is positing and that's because if you have an executive who is receiving a large salary and stock options they already exceed the compensation cap by virtue of their salary alone so the fact that they are getting stock on top of that makes no difference because they're already maxing out on the  tax that's the point i think also just as a practical matter i don't think railroads could move to a pure stock based compensation system for a number of reasons one is you have collective bargaining agreements in place but more broadly than that the stock would have to come from somewhere if a corporation said we are now going to start printing more shares in order to compensate our employees in stock that would massively dilute the value of the share and there's no way shareholders would ever tolerate something like that i think is if you're not going you tell me just as a  matter in this case are these stocks always listed as a list price that everyone knows yes these are publicly traded stocks could there be instances where there might be small satellite corporations that railroad that is not publicly traded issues stock and then you would have extremely forney valuation problems because it's one thing to say we can calculate the value of the stock based on market price but it's not publicly to crdit is any accounting textbook will tell you it can be a seventeen i'm not aware that you're out of the way that their options in this case work is that the exercise price is determined at the moment the option is issued so if in years zero the stock is trading at one hundred dollars that's the so called strike price that you can purchase the stock fo five six seven eight years down the road and i think frankly that also this strike price always equivalent to the price on the day the option is issued yes yes the day the auction is issued that's when they set the strike price and i think just to conclude my answer to one kagan's earlier questions i think that's yet another respect in which stock is fundamentally different from money it's an investment property the value fluctuates when these options were issued no one had any idea what they would be worth maybe they'd be worth nothing five ten years down the road when the option has vested and it's exercised stalks our investment property with fluctuating value stands in sharp contradistinction to cash which has a fixed value for those reasons we asked the court to reverse the judgment blow all reserve my time thank you confident mr chief justice in that for three parts of the statute demonstrate that the phrase any form of money remuneration refers to those payments that can be readily valued in or convert to cash the first is the statutes text a contains exclusions for particular kinds of stock options and for in kind benefits that only makes sense if the statute money remuneration language is given a broad scope seconder the contemporaneous interpretations of the statutes both predecessor light legislation and the agency's early regulations considered any form of money remuneration broadly to reach non cash benefits like the stocks here and the third is the statutes objective of providing a financially stable so if supporting retirement system for our workers that objective would be undermined if employers could avoid taxes by paying employees in stock a highly liquid asset that serves as the functional equivalent of exercises it and i think it's a really important point that goes to what mr du pree was just discussing which is that stock options are only treated as compensation at the moment when they have a readily discernible cash value so not at the moment that they're issue but only at the moment that the employee exercises them and at that moment they have a one hundred percent certain cash value and you can see that by looking at the record in this case an employee at the company in this case when they exercised the stock option there's a one page is exhibit seventy eight in the record below if they simply want cash instead of stock they just check a box on the form and say please deposit the cash value of this option to my bank account so these options are only valued at the moment when  readily discernible cash equivalent if i can just go to a few of the issues that mr dupree discussed mean the first is the qualified stock option exemption and this exemption was added to the statute by congress and it exempt one particular type of stock option so it is obviously signaling that congress was understanding that other kinds of stock options were going to be subject to taxation under the are in what circumstances do you think we are allowed to look at what is clearly the natural import of that exemption in other words that exemption came about later so do we have to find that money remuneration is an ambiguous phrase in order to look at it or do we take the statute as a whole just generally i think you know what this court has said about this in west virginia university hospitals versus casey is that the court adopts the permissible meaning that fits most logically and comfortably with both the previously enacted and the subsequently inactive provision so here we think the only meaning that fits with both i mean mr dupree acknowledged when he stood up that money can have this broader reading that readily encompasses stock and that's the only meaning that fits with the qualified stock option exemption it's also the only meaning that fits with many other exemptions that congress added for things that just aren't cash like for lodging like for health care benefits like for employee achievement awards intangible property these exceptions only makes sense cases that recount this history we do know that some employees have been paying taxes on stop auctions for quite some time so union pacific is one example they start issuing options in one nine hundred eighty one and they pay taxes until two thousand and seven when they file suit and eleven is the first time that we see a suit challenging whether stock options are taxable under the r t a and you know pacific in other words or know what to do with the fact that we're having generally when you have two different descriptions of words you have to give them two different meanings of some sort so what do i do with that you're now equating money  safety gear on the job and an unlimited nontransferable sort of lifetime use of the rails travel benefits so these are things that we have been hard to value and we think the use of money cars those out of the r t a words that were carved out  that stock is more volatile than a publicly traded stock but it has a certain value on the day you exercise the option that's the only value that you look to somebody's going to have to value that privately traded asset for the purpose of income tax they're going to have to declare and still not clear what you do with privately held stock that is not readily there's no liquid market value that you can look to at any point in time sure so with respect to the first point we think that options like those that are issued in this case on we have a market value at the time that they are exercised and that's because there tend to be limitations on the options like almost anything can be valued though i mean anything can be reduced to money so what why why wait other than it's convenient for the government now we think it's a matter of whether it has a readily ascertainable market value and there's a pretty big body of law on the issue of when options satisfy that it starts with this court's decision in commissioner versus libby you and it's also the same set of principles that are applied for valuing options under the income tax code and that's your body of law says for the kinds of options that are issued here in the employment context there are just too many conditions and conditions contingencies on whether you're going to be able to exercise the option at all and what its value will be at the time of exercise to assign to the once a best is different there's no question you will be able to exercise it's just when you may choose to exercise it years later but it best so you mediately at that point in two points that you look to and the iris is generally assessed at the point that the option is already elations ok fine what do we do about the more general problem though that lots of companies issue lots of things to their employees that are forms of compensation that can be minimum we think the second which is what you have here and not in those other cases suffices so if it's something that you can easily convert into cash here just by search checking a box on the form when you exercise the option we think at a minimum those kind of things qualify as money remuneration which is sort of what the court of a certain circumstances in which a person could buy or sell bush's away but certainly the employee who receives a bushel of wheat in their compensation if that were to occur can readily converted into cash in the same way that they can convert an option i mean i said ok if they give you a little  readily converted to cash if you if you do get to the point where we're talking about it that you that you have a readily ascertainable market value i think it's a pretty helpful example because if you look to the one nine hundred thirty eight regulation the justice courses was alluding to it gives it a pretty expansive definition of money remuneration and it indicates that it includes things like merchandise orders which i think is perhaps somewhat equivalent to the bushels of wheat voucher it's something that you could exchange for for a commodity at the company store i mean that kind of thing is less liquid than stock which anybody can convert to cash in which is used as a means of exchange in a variety of circumstances it's a predominant medium of exchange now in many corporate contexts and employee compensation matters miss covenant was your answer to the chief justice is question be different of if a company said you can take a bushel of wheat or it's equivalent to the cash value yes your honor may i think there it's and that's i think more analogous to here where essentially the employee can check a box on a form and they're just receiving cash it's essentially instantaneous conversion into cash it i mean and i think going to the purpose of the statute and what i think you know this court is indicated in the united states versus so is how the statute should be construed i mean this is a statute that's intended to mr mr priest first response was that the tax rates for just under the r t a that's true for the second tier of the or to the sort of supplemental pension benefit system it's not true for tear one which is the fundamental equivalent of social security for to one you've got the same tax rate as fica and you're guaranteed the seam benefits levels fica so i think it's very strange to measure that congress would have thought you could have the same tax rate and the same benefits but a much smaller tax tax base and i think the other thing that mr  said as to why it's not going to undermine the or system is that high level employees are going to max out on their compensation so it's not really going to matter how their options are how stock based compensation is treated and i don't think that's exactly right for two reasons the first is only part of the tax maxes out the part that funds medicaid does not max out and the second is that there's nothing to stop and an employer from converting all of their words common station of a high level executive to cashman it's not uncommon for a c e o to get one dollar in cash and the rest of their payment in stock it's a third possibility that the employee waits until after he or she retires and employees over the duration of their career that takes the form of stock is not taxable that's posing a threat to the or in retirement then the exam and then the exceptions that congress added to the statute are really incompatible with particular definition and then the contemporaneous interpretations of the statute by both the and the treasury department are both broad and congressmen's the statute repeatedly against the backdrop of those interpretations so whatever doubt one has about the you know whether those interpretations were to board to begin with once congress repeatedly amends the statute and doesn't change that base definition of compensation so much or how the regulations help you in the more recent regulations says effectively that money is whatever money is under the statutes that doesn't do much work it seems to me and the fact that the i r s chose to replace the one nine hundred thirty eight regulation that might or might not be more helpful to the government we could debate that seems to me a lost opportunity for the government no i mean i think that if the regulation had provided a lot greater clarity and discussed stock in particular obviously that would have been helpful we think the government sure so the existing regulation talks about specific limitations in the statute as being the way in which the r t a and fica differ today and we think the only reasonable way to read specific limitations is that it's talking about the which are different under the statute if you look at the preamble i mean that's what the agency explains that it's doing it's saying that now there are all these exceptions have come into the statute which deal with the kinds of hard to value benefits that were being addressed by money in the first instance the statutes really have parallel meaning and i think the agency also points out that the statutes now function in parallel in that they guarantee the same level of benefits under tear one and have the same tax rate under under tier one so it makes sense to construe those things you don't know that doesn't help me because if you're equating as the current regulations to the railroad money renumeration with fica is wages what are we  when you yourself have recognized the major difference so we think that option should be treated the same under fica as they are under the r that's easy because it's publicly traded it's the known value but the way fica and the r t a is now basically covered by enumerated exemptions under fica so basically congress comes in and they add exceptions for things like diminished benefits and fringe benefits the kinds of things that were generally falling in that but of course the court doesn't need to reach the question of whether all kinds of in kind benefits are treated exactly the same under fica on the r t a all this case presents is whether stock options which are a form of remuneration that are readily convertible to cash qualify wouldn't if we were to agree with you we would have to assume that whoever wrote this statute was told we want you to include money remuneration and stock remuneration and he said well a good way to do and the broader use thinking compas of stock and i think some ways the court can see that that existed is looking not only to dictionary definitions but also to the predecessor versions of what nash i'm not saying there isn't a broader use and someone might understand it but i think if you wanted to be even through the text of the provisions that congress put forward in the various versions so there were versions that included a carve out for various in kind benefits and the enacted one thousand thirty five version of the statute also included a carve out for want to kind of income benefits for  minus of the draft you know obviously if if if congress had spoken directly to stock one way or the other either set a teen or it's out we wouldn't be here today but i think the only reasonable interpretation of the word money as it was used in the statute particularly given the talking about the regulations your idea was it was a reasonable one and we think that it's the only reasonable ones a bit of a stretch fair enough we think it's certainly the most reasonable reading of the statute in light of its language in light of what happened since and light of congress's objective in providing a self is that when this court interprets statutes if there's an ambiguous term in the early statute and then later provisions get an act to that shed light and make clear that congress is acting on the understanding that it's the broader form of the of the term that was used then you construe the statutes together you adopt a reading that makes sense to book provisions rather than adopting a reading that would make the second an act make no sense so the what is the answer to my question does it change the meaning it resolves an ambiguity in the meaning of the if you could just go back to some answers you gave to prior questions about how to work this on privately listed companies did i get it right that you're just saying that the how and  exactly the method by which this is understood is taxable in this context is the same as in the income tax context is that right that's right these things are going to be valued for purposes of the income tax nobody disputes that and we think that points the first is this court obviously needs to construe this tax provision in the context of the code as a whole we identify numerous provisions in the code both as it existed during the great depression but also as it exists today that makes clear that when congress uses the word money a tax statute it does not mean stock i think that if this court were to reach the conclusion that in the context of the tax statute the word money can encompass a stock i think that could have pretty significant spillover effects to the dozens if not hundreds of places in the in money which of course begs the question as to well what's money and our point is that when congress puts the word money in a tax statute it unambiguous excludes stock there's no question about that in the current code and the code as it existed back in the great depression the second point is to the extent the government argues that anything that can be valued and sold for cash falls within this capacious definition of money is wrong because i can think of many things that can be sold faster for cash at a much lower transaction cost for example baseball tickets if i have two tickets to the nationals and rockies game i can sell those and change those into cash a lot faster than i could find a broker and sell my shares of stock on a market the third point i would make and i think it's