Cite as: 509 U. S. 86 (1993)
O'Connor, J., dissenting
Yet, for that $32 million to $48 million error, the Court now allows the imposition of liability well in excess of $400 million dollars. Such liability is more than just disproportionate; it is unconscionable. Finally and perhaps most important, this burden will not fall on some thoughtless government official or even the group of retirees that benefited from the offending exemption. Instead the burden falls squarely on the backs of the blameless and unexpecting taxpayers of the affected States who, although they profited not at all from the exemption, will now be forced to pay higher taxes and be deprived of essential services.
Petitioners, in contrast, would suffer no hardship if the Court refused to apply Davis retroactively. For years, 23 States enforced taxation schemes like the Commonwealth's in good faith, and for years not a single taxpayer objected on intergovernmental immunity grounds. No one put the States on notice that their taxing schemes might be constitutionally suspect. Denying Davis retroactive relief thus would not deny petitioners a benefit on which they had relied. It merely would deny them an unanticipated windfall. Because that windfall would come only at the cost of imposing hurtful consequences on innocent taxpayers and the communities in which they live, I believe the substantial inequity of imposing retroactive relief in this case, like the other Chevron factors, weighs in favor of denying Davis retroactive application.
III
Even if the Court is correct that Davis must be applied retroactively in this case, there is the separate question of the remedy that must be given. The questions of retroactivity and remedy are analytically distinct. American Trucking Assns., Inc. v. Smith, supra, at 189 (plurality opinion) ("[T]he Court has never equated its retroactivity principles with remedial principles"). As Justice Souter explained in James B. Beam, supra, at 534, retroactivity is a matter of choice of law "[s]ince the question is whether the court
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