Title: TIG PREMIER INSUR CO V DEPT OF TREASURY

State: michigan

Issuer: Michigan Supreme Court

Document:

____________________________________________________________________________________________ 
____________________________________________________________________________________________________________________________ 
Michigan Supreme Court
Lansing, Michigan 48909 
C hief Justice 
Justices
Maura D. Corrigan  
Michael F. Cavanagh
Elizabeth A. Weaver 
Marilyn Kelly
Clifford W. Taylor
Robert P. Young, Jr.
Stephen J. Markman 
Opinion 
FILED JULY 3, 2001  
TIG INSURANCE COMPANY, INC., 
Plaintiff-Appellee, 
v 
No. 115915 
REVENUE DIVISION, DEPARTMENT
OF TREASURY, STATE OF MICHIGAN, 
Defendant-Appellant. 
________________________________ 
TIG PREMIER INSURANCE COMPANY, INC., 
Plaintiff-Appellee, 
v 
No. 115916 
REVENUE DIVISION, DEPARTMENT
OF TREASURY, STATE OF MICHIGAN, 
Defendant-Appellant. 
________________________________ 
BEFORE THE ENTIRE BENCH 
CAVANAGH, J. 
These consolidated cases require us to decide whether a  
1988 amendment of the Michigan Insurance Code’s retaliatory  
tax, MCL 500.476a, deprived plaintiffs TIG Insurance Company  
 
and TIG Premier Insurance Company of equal protection of the  
laws under US Const, Am XIV and Const 1963, art 1, § 2, or  
violated the Uniformity of Taxation Clause of Const 1963, art  
9, § 3.  Absent an imposition on a fundamental right or a  
suspect class, tax legislation is reviewed to determine  
whether its classifications bear a rational relation to a  
legitimate state purpose. 
We conclude that the 1988  
amendments of the retaliatory tax, which changed the tax  
calculation, are rationally related to the legitimate state  
purpose of promoting the interstate business of domestic  
insurers, the same legitimate purpose behind the retaliatory  
tax itself.  Thus, the amendments of the retaliatory tax do  
not violate equal protection, and also do not violate the  
Uniformity of Taxation Clause. Accordingly, the judgment of  
the Court of Appeals is reversed.  
I  
This case involves the retaliatory tax that Michigan  
imposes on foreign insurers doing business in Michigan.  Under  
the retaliatory tax, when an insurer’s state of incorporation  
imposes a larger aggregate tax burden on a Michigan insurer  
doing business in that state than Michigan imposes on a  
company from that state doing business in Michigan, the  
foreign insurer must pay Michigan a tax equal to the  
difference in the aggregate tax burdens.  See MCL 500.476a.  
Thus, to compute the retaliatory tax due from a foreign  
insurer, if any, Michigan tallies all the taxes, fines,  
penalties, and other burdens it otherwise imposes on the  
foreign insurer doing business in Michigan.  Michigan then  
tallies the burden a hypothetical Michigan insurer would pay  
2  
 
to that insurer’s home state were the hypothetical Michigan  
insurer doing the same amount of business there.  If the other  
state’s total burden on the hypothetical Michigan insurer  
doing the same amount of business in that state would be  
larger than the burden Michigan imposed on the foreign  
insurer, 
the 
actual 
burden Michigan imposes is subtracted from  
the other state’s burden on the hypothetical insurer, and the  
difference is the retaliatory tax the foreign insurer owes  
Michigan.  These taxes have been common in insurance taxation  
since the nineteenth century, see Western & Southern Life Ins  
Co v State Bd of Equalization, 451 US 648, 668; 101 S Ct 2070;  
68 L Ed 2d 514 (1981), and Michigan has had a form of a  
retaliatory tax since 1871.  See 1871 PA 80, § 4 (adding what  
was then § 28 to the insurance code).  
Until 1987, the retaliatory tax was one of two taxes  
imposed on foreign insurers.  The other was the premiums tax,  
MCL 500.440, repealed by 1987 PA 261, which taxed a percentage  
of the insurers’ business.  However, in 1987, the Court of  
Appeals held that the premiums tax violated equal protection,  
and struck it as unconstitutional. See Penn Mut Life Ins Co  
v Dep’t of Licensing & Reg, 162 Mich App 123, 130-133; 412  
NW2d 668 (1987).  After the Court of Appeals decision in Penn  
Mutual, which was not appealed to this Court, the Legislature  
revised the Michigan Insurance Code tax provisions by  
repealing the premiums tax, subjecting foreign insurers  
instead to the Single Business Tax, MCL 208.1 et seq., and  
repealing and reenacting the retaliatory tax.  See 1987 PA  
261, 262.  The new retaliatory tax, MCL 500.476a, mirrored the  
prior 
retaliatory 
tax.  However, the revision added subsection  
3  
(2), stating that “[T]he purpose of this section is to promote  
the interstate business of domestic insurers by deterring  
other 
states 
from 
enacting 
discriminatory 
or 
excessive 
taxes.”  
In 1988, actual revenue from insurance taxes was below  
the level of projected revenue the Legislature had relied upon  
in enacting 1987 PA 261 and 262.  One of the reasons that  
revenue was lower than expected was that foreign insurers were  
including assessments paid to private insurance associations  
and facilities, such as the Worker’s Compensation Placement  
Facility, among their Michigan burdens when calculating their  
retaliatory taxes.  When these assessments were included in  
the foreign insurers’ Michigan burden, their Michigan burden  
grew larger, and any differences between the Michigan burden  
and the burden the insurers’ home states imposed shrank.  The  
result was less retaliatory tax revenue.  
After these facts were clear, the Legislature enacted  
1988 PA 349.  This provision did not affect the retaliatory  
tax’s scope. 
Instead, it only changed the method of  
calculating the tax by providing that payments to private  
insurance associations and facilities are not counted as part  
of the Michigan burden when calculating retaliatory taxes.  
The resulting statute provides:  
(5) Any premium or assessment levied by an 
association 
or 
facility, 
or 
any 
premium 
or  
assessment of a similar association or facility 
formed under a law in force outside this state, is 
not a burden or special burden for purposes of a 
calculation under section 476a, and any premium or 
assessment paid to an association or facility shall 
not be included in determining the aggregate amount 
a foreign insurer pays to the commissioner under 
section 476a.  
(6) As used in this section, “association or 
facility” means an association of insurers created  
4  
     
 
under this act and any other association or  
facility formed under this act as a non-profit 
organization of insurer members, including, but not 
limited to, the following:  
(a) 
The 
Michigan 
worker’s 
compensation 
placement facility created under [MCL 500.2301 et  
seq.]  
(b) The Michigan basic property insurance 
association created under [MCL 500.2901 et seq.]  
(c) 
The 
catastrophic 
claims 
association  
created under [MCL 500.3101 et seq.]  
(d) 
The 
Michigan 
automobile 
insurance  
placement facility created under [MCL 500.3301 et  
seq.]  
(e) The Michigan life and health insurance 
placement facility created under [MCL 500.7701 et  
seq.]  
(f) 
The 
property 
and 
casualty 
guaranty 
association created under [MCL 500.7901 et seq.] 
[MCL 500.134(5), (6).][1]  
Hence, payments to these and other similar facilities are not  
part of the Michigan burden on foreign insurers, and such  
payments required by other states cannot be considered part of  
those states’ burden when calculating retaliatory taxes.  
The dispute in this case originally involved plaintiffs’  
retaliatory tax returns for 1990, 1991, and 1996.  In those  
years, plaintiffs had made payments to the Worker’s  
Compensation Placement Facility, the Basic Property Insurance  
Association, and the Automobile Insurance Placement Facility.  
Subsections 134(5) and (6), however, required plaintiffs to  
exclude those payments from their Michigan burdens when  
calculating the retaliatory tax they owed. 
Plaintiffs  
initially excluded these payments from their Michigan burden  
1 The Michigan Assigned Claims Facility created under MCL 
500.3171 was subsequently added to the statute as subsection 
6(g). See 1990 PA 256.  
5  
 
and fully paid their retaliatory tax for each year.  Later,  
though, they filed amended returns that included these  
payments in their Michigan burdens, claiming that requiring  
them to exclude the payments violated the Equal Protection  
Clauses of the state and federal constitutions, as well as the  
Uniformity of Taxation Clause of the Michigan Constitution.  
Plaintiffs, therefore, sought a refund of the alleged  
unconstitutional overcharge. 
Defendant, however, denied  
refunds for all three years.  
Plaintiffs 
appealed the denial of refunds to the Michigan  
Court of Claims, which consolidated their cases.  The Court of  
Claims held that MCL 500.134(5) violates equal protection  
because it was enacted to raise revenue rather than to deter  
other states from imposing discriminatory or excessive taxes  
on Michigan insurers doing business in those other states.  
Also, the court held that plaintiffs’ 1990 and 1991 claims  
were time-barred by MCL 205.27a(6).  The court, therefore,  
ordered defendant to pay plaintiffs refunds consistent with  
their amended 1996 retaliatory tax returns.  
Both 
parties 
appealed, and the Court of Appeals affirmed.  
That Court believed that when the Legislature revised the  
retaliatory tax in 1987, the Legislature did not intend to  
change the definition of “burden,” and later did so only  
because revenues did not meet expectations. Thus, the Court  
concluded that equal protection was violated because it was  
“abundantly clear that 1988 PA 349 was enacted as a stop-gap  
measure to raise funds in response to a projected shortfall in  
insurance tax revenues.  This is not a valid reason for  
discriminating against foreign insurers.” 237 Mich App 219,  
6  
230; 602 NW2d 839 (1999).  The Court of Appeals also affirmed  
the Court of Claims conclusion that plaintiffs’ 1990 and 1991  
claims were time-barred, leaving plaintiffs with a judgment  
for refunds for 1996.  Defendant appealed the Court of Appeals  
conclusion that 1988 PA 349 violates equal protection, we  
granted leave, 463 Mich 905 (2000), and we now reverse.  
II  
The 
United 
States 
Supreme 
Court 
addressed 
the  
constitutionality of retaliatory taxes in Western & Southern  
Life Ins Co v State Bd of Equalization, supra.  In that case,  
California had adopted a retaliatory tax similar to  
Michigan’s, 
and 
an 
Ohio 
corporation 
challenged 
its  
constitutionality.
 The Supreme Court noted that several  
provisions 
of 
the 
constitution 
generally 
limit 
states’ 
ability  
to regulate foreign corporations, but under the Commerce  
Clause, US Const, art 1, § 8, Congress has delegated insurance  
regulation to the states, see 15 USC 1011 et seq., and the  
privileges and immunities clause, US Const, art 4, § 2, does  
not apply to corporations, see Hemphill v Orloff, 277 US 537,  
548-550; 48 S Ct 577; 72 L Ed 978 (1928), leaving only the  
Equal Protection Clause as a basis for the challenge.  Western  
& Southern at 656. After reviewing its prior decisions, the  
Court concluded that a state’s authority to treat foreign  
corporations differently than domestic corporations should be  
upheld if the different treatment bears a rational relation to  
a 
legitimate 
state 
purpose.  California’s retaliatory tax, the  
Court held, had the legitimate state purpose of promoting  
domestic 
insurers 
in 
other states by discouraging other states  
from excessively taxing domestic insurers.  The tax was  
7  
 
reasonably related to that purpose because the California  
Legislature could have believed that the tax would “induce  
other States to lower the burdens on California insurers in  
order to spare their domestic insurers the cost of the  
retaliatory tax in California.”  Id. at 672. 
Thus, the  
Supreme Court confirmed that retaliatory taxes do not violate  
equal protection, and do not violate the constitution.  
In 
light 
of 
Western 
& 
Southern, 
the 
general  
constitutionality 
of 
Michigan’s retaliatory tax is clear.  The  
question in this case surrounds 1988 PA 349. That amendment  
of 
Michigan’s 
retaliatory 
tax 
did 
not 
change 
the  
classification plan drawn by Michigan’s retaliatory tax.  
Rather, it only changed the calculation method of a foreign  
insurer’s Michigan burden by providing that payments to  
certain private insurance associations and facilities are not  
included in the burden.  Whether the amendment violates the  
state or federal Equal Protection Clauses, which are  
coextensive, see Armco Steel v Dep’t of Treasury, 419 Mich  
582, 591; 358 NW2d 839 (1984), or Michigan’s Uniformity of  
Taxation 
Clause, 
which is not discernably different from equal  
protection in cases involving tax statutes, see id. at 592,  
presents a question of law.  We review questions of law de  
novo.  See Tolksdorf v Griffith, 464 Mich 1; ___ NW2d ___  
(2001).  
As Western & Southern declared, rational basis review  
applies in challenges of retaliatory taxes. “Rational basis  
review does not test the wisdom, need, or appropriateness of  
the legislation, or whether the classification is made with  
‘mathematical nicety,’ or even whether it results in some  
8  
 
 
inequity when put into practice.” Crego v Coleman, 463 Mich  
248, 260; 615 NW2d 218 (2000).  Rather, it tests only whether  
the legislation is reasonably related to a legitimate  
governmental 
purpose. 
The 
legislation 
will 
pass  
“constitutional muster if the legislative judgment is  
supported by any set of facts, either known or which could  
reasonably be assumed, even if such facts may be debatable.”  
Id. at 259-260. 
To prevail under this standard, a party  
challenging a statute must overcome the presumption that the  
statute is constitutional.  Thoman v Lansing, 315 Mich 566,  
576; 24 NW2d 213 (1946).  Thus, to have the legislation  
stricken, the challenger would have to show that the  
legislation is based “solely on reasons totally unrelated to  
the pursuit of the State’s goals,” Clements v Fashing, 457 US  
957, 963; 102 S Ct 2836; 73 L Ed 2d 508 (1982), or, in other  
words, the challenger must “negative every conceivable basis  
which might support” the legislation. Lehnhauser v Lake Shore  
Auto Parts Co, 410 US 356, 364; 93 S Ct 1001; 35 L Ed 2d 351  
(1973).  
In 
this 
case, 
plaintiffs claim that Michigan has exceeded  
its authority to treat foreign corporations differently than  
domestic 
corporations 
because 
the 
different 
treatment 
does 
not  
bear a rational relation to a legitimate state purpose.  This  
is so, plaintiffs claim, because 1988 PA 349, which excluded  
certain payments from plaintiffs’ Michigan burdens for  
retaliatory tax calculations, converted the retaliatory tax  
from a tax intended to discourage other states from imposing  
excessive levels of taxation on Michigan insurers to a tax  
designed to raise revenue at the expense of foreign insurers.  
9  
 
 
 
Thus, plaintiffs argue that the 1988 amendment of the  
retaliatory tax cannot be constitutional.  
Initially, we emphasize that Michigan’s retaliatory tax  
has never, either before or after the 1988 amendment, treated  
foreign insurers as a single class.  Rather, the subset of  
foreign insurers that must pay Michigan any retaliatory tax is  
actually 
determined 
by 
the 
laws 
of 
other 
states.  
Specifically, the subset is determined by the laws of those  
states that impose more onerous burdens on Michigan insurers  
than Michigan imposes on insurers from those states.  The  
Supreme 
Court 
made 
this same observation about the retaliatory  
tax it held constitutionally permissible in Western &  
Southern, stating that “[t]he retaliatory tax is not imposed  
on foreign corporations qua foreign corporations, as would be  
expected were the purpose of the tax to raise revenue from  
noncitizens; rather, it is imposed only on corporations whose  
home 
States 
impose 
more onerous burdens on California insurers  
than 
California 
otherwise 
would 
impose 
on 
those 
corporations.”  
Western & Southern at 670, n 23.  
Absent a change in the legislative classification, we  
cannot agree with plaintiffs’ claim that a 1988 amendment  
converted the retaliatory tax into a tax designed to raise  
revenue from foreign insurers. 
Rather, the selective  
imposition of the tax on only those insurers incorporated in  
states that tax Michigan insurers more heavily than Michigan  
taxes them indicates that the purpose of the legislation is to  
pressure those states to relieve the tax burden on Michigan  
insurers doing business in those states.  This is the precise  
purpose the Legislature stated for adopting the retaliatory  
10  
 
tax, see MCL 500.476a(2), and the same purpose the Supreme  
Court found “not difficult to discern” in Western & Southern  
at 668.  Further, in Western & Southern, the Supreme Court  
held, without discussing the means a state may adopt to  
calculate the retaliatory tax, that states are reasonable to  
suppose that a retaliatory tax will induce other states to  
lower their insurance tax rates. Id. at 672. Even with the  
change in the method of calculation of the burden of  
Michigan’s 
retaliatory 
tax, 
the 
tax 
remains 
rationally 
related  
to this legitimate purpose, and plaintiffs cannot prevail.  
However, even presuming that 1988 PA 349 can somehow be  
viewed separately from Michigan’s retaliatory tax structure,  
the Legislature could have rationally decided to exclude  
payments 
to 
certain 
insurance 
associations 
and 
facilities 
from  
Michigan’s retaliatory tax burden.  The three facilities in  
this case, the Worker’s Compensation Placement Facility, the  
Automobile Insurance Placement Facility, and the Basic  
Property Insurance Association, exist to provide insurance  
coverage to insureds that may be unable to “procure the  
insurance through ordinary methods.”  MCL 500.2301(a); see  
also MCL 500.3301(a) and MCL 500.2925 (describing eligibility  
for Basic Property Insurance).  Because high risk or otherwise  
uninsurable insureds are provided for outside the normal  
insurance 
market, 
insurers doing business in Michigan need not  
bear the risks of insuring them, at least arguably benefitting  
such insurers.  The Legislature could have believed that if it  
did not require payments to these facilities not to be  
excluded from the retaliatory tax burden, other states would  
not be discouraged from establishing similar facilities to  
11  
     
grant the same benefit to insurers doing business in those  
states, 
including 
Michigan insurers.  Indeed, if another state  
had 
facilities 
and 
associations 
that 
paralleled 
the 
facilities  
and associations mentioned in MCL 500.134, then any  
retaliatory tax that insurers from the other state may owe  
Michigan would not be affected by 1988 PA 349 at all.2  Again,  
then, the Legislature could have had the permissible purpose  
of promoting domestic insurers abroad, the same purpose it  
stated in the retaliatory tax legislation. Because it is at  
least debatable that excluding payments to such facilities  
from Michigan’s retaliatory tax burden would encourage other  
states to establish such facilities, the 1988 amendment is  
rationally related to a legitimate purpose, and is not  
constitutionally infirm.  
Plaintiffs maintain, however, that the 1988 amendment  
conflicts with the Supreme Court’s decision in Western &  
Southern 
because 
it 
was designed entirely “to generate revenue  
at the expense of out-of-state insurers.”  As we have  
explained, the tax does not affect foreign insurers as a  
single class.  Further, though, plaintiffs overlook the  
presumption of constitutionality, and cannot account for the  
legitimate 
bases 
of 
the legislation.  Instead, plaintiffs seek  
one 
possible 
illegitimate 
basis 
for 
the 
legislation.  
Plaintiffs’ approach conflicts with Supreme Court precedent  
because they have not shown that the legislation rests “solely  
on reasons totally unrelated to the pursuit of the State’s  
2 We note that several other states similarly exclude 
payments to special associations and facilities from their 
retaliatory tax burdens.  See, e.g., Conn Gen Stat, 12-211; 
215 Ill Comp Stat, 5/444.1(2).  
12  
 
goals . . . .”  Clements at 963.  Because there is at least  
one conceivable rational basis that might support the  
legislation, 
plaintiffs 
have 
not 
“negative[d] 
every  
conceivable 
basis 
which might support” it, and cannot prevail.  
Lehnhauser at 364.  
In response, plaintiffs have argued that they need not  
negate every conceivable basis for the legislation. This is  
because, they claim, in equal protection cases, the Court  
“need not . . . accept at face value assertions of legislative  
purposes, when an examination of the legislative scheme and  
its history demonstrates that the asserted purpose could not  
have been a goal of the legislation.” 
Weinberger v  
Weisenfeld, 420 US 636, 648, n 16; 95 S Ct 1225; 43 L Ed 2d  
514 (1975).  However, as discussed, an examination of the  
legislative scheme in this case indicates that the asserted  
purpose could well have been the goal of the legislation.  For  
plaintiffs to prevail, they must negate every conceivable  
basis of the legislation. Because plaintiffs have not, they  
cannot prevail.  
Finally, 
plaintiffs 
attempt 
to 
distinguish 
this 
case 
from  
Western & Southern by arguing that the tax revenue generated  
in that case was “relatively modest,” see Western & Southern  
at 669, but under the amendment, Michigan’s retaliatory tax  
immodestly generates over a third of Michigan’s insurance tax  
revenue.
 As a preliminary point, the fact that the  
retaliatory tax raises revenue does not prove that raising  
revenue was the state’s goal in adopting the tax.  On rational  
basis review, this Court only considers whether the  
legislation 
is 
reasonably related to a legitimate purpose, and  
13  
 
 
does not test for “some inequity when [the legislation is] put  
into practice.”  Crego at 260. 
But further, though the  
Western & Southern Court’s statement strikes us simply as an  
observation and not, as plaintiffs contend, as the linchpin of  
the Court’s analysis, even if it is an important point, this  
case is distinguishable. 
Michigan’s retaliatory tax may  
generate a third of Michigan’s insurance tax revenue, but the  
Supreme Court did not state that the retaliatory tax it  
approved raised a relatively modest amount of insurance tax  
revenue, just that it raised a modest amount of revenue.  The  
joint 
appendix 
shows 
that 
although 
Michigan 
raised  
approximately $67 million annually in retaliatory taxes for  
the years 1991 through 1995, for example, when compared with  
Michigan’s overall tax revenue for that period, which ranged  
from $10.5 billion to $17.2 billion annually, see Michigan  
Dep’t of Treasury, Annual Report of the State Treasurer  
(1996), 
p 
25, 
retaliatory tax revenue is certainly “relatively  
modest.”
 Thus, even if retaliatory tax revenue must be  
modest, as compared with Michigan’s overall tax revenue,  
retaliatory tax revenue is not immodestly large, and  
plaintiffs again have not shown Michigan’s retaliatory tax or  
1998 PA 349 to be unconstitutional.  Again, plaintiffs cannot  
prevail.  
III  
In 
conclusion, 
neither 
Michigan’s 
retaliatory 
tax 
nor 
the  
1988 amendment of that tax violates the state or federal  
constitutions, 
which 
are 
coextensive 
in 
their 
equal 
protection  
provisions.  The retaliatory tax, and the amendments of it,  
are rationally related to the legitimate governmental purpose  
14  
 
of promoting Michigan insurers in other states. Because the  
tax and its amendment do not violate equal protection, they  
also do not violate the Michigan Constitution’s Uniformity of  
Taxation Clause, which is not discernibly different from the  
Equal Protection Clause when the constitutionality of a tax  
statute is being reviewed.  Plaintiffs have not carried their  
considerable burden, and the judgment of the Court of Appeals  
is reversed.  
CORRIGAN, C.J., and WEAVER, TAYLOR, YOUNG, and MARKMAN, JJ.,  
concurred with CAVANAGH, J.  
15  
S T A T E O F M I C H I G A N  
SUPREME COURT  
TIG INSURANCE COMPANY, INC., 
Plaintiff-Appellee, 
v 
No. 115915 
REVENUE DIVISION, DEPARTMENT
OF TREASURY, STATE OF MICHIGAN, 
Defendant-Appellant. 
____________________________________ 
TIG PREMIER INSURANCE COMPANY, INC., 
Plaintiff-Appellee, 
v 
No. 115916 
REVENUE DIVISION, DEPARTMENT
OF TREASURY, STATE OF MICHIGAN, 
Defendant-Appellant. 
____________________________________ 
KELLY, J. (concurring). 
While I agree with the conclusion reached by the  
majority, I write separately to state my disagreement with  
certain of the reasoning it employs.  Whereas the majority  
articulates what would be legitimate purposes for adoption of  
the 
amendment, 
it 
completely ignores the evidence presented by  
plaintiffs.
 This evidence throws into doubt whether the  
Legislature's actual purpose was legitimate, as it has to be  
in order to conform with precedent from the United States  
 
  
Supreme Court.  
The states cannot impose more onerous taxes or other  
burdens 
on 
foreign 
corporations 
than 
on 
domestic 
corporations,  
unless they bear a rational relation to a legitimate state  
purpose. 
Western & Southern Life Ins Co v State Bd of  
Equalization, 451 US 648, 667-668; 101 S Ct 2070; 68 L Ed 2d  
514 (1981).  A retaliatory tax act, like that in question,  
makes of foreign corporations a special classification of  
taxpayers.  
In evaluating the constitutionality of a challenged  
classification, we must consider two separate issues.  First,  
whether the statute in question advances a legitimate purpose  
and, second, whether, in passing it, the Legislature  
reasonably could have believed that the classification would  
promote that purpose. Id. at 668. Only after a legitimate  
purpose is ascertained does a rational relationship between  
the classification and purpose become relevant. 
See  
Metropolitan Life Ins Co v Ward, 470 US 869, 881; 105 S Ct  
1676; 84 L Ed 2d 751 (1985).  
While this two-step inquiry does not require that the  
Legislature articulate its purpose in forming the challenged  
classification, it does require that a conceivable or  
reasonable purpose exist.  Nordlinger v Hahn, 505 US 1, 15;  
112 S Ct 2326; 120 L Ed 2d 1 (1992).  The United States  
Supreme Court rejected the proposition that promotion of  
domestic industry is always a legitimate purpose, reasoning  
that 
it 
"eviscerate[s] 
the 
Equal 
Protection 
Clause."  
Metropolitan Life, supra at 882. The Court stated that, if  
2  
    
 
this proposition were accepted, any discriminatory tax would  
be upheld if it could be shown that it was reasonably  
"intended to benefit domestic business." Id.  
This appears to be the rationale used by the majority in  
upholding the amendment at issue.  The majority does not  
discuss the evidence presented by plaintiffs or how this  
evidence is insufficient to overcome the presumption of the  
amendment's constitutionality.  Rather, it concludes that the  
purpose of the amendment may have been the same as the purpose  
stated in the underlying retaliatory tax act.  That was to  
promote domestic insurers abroad, a permissible purpose.  
It seems unlikely that was the Legislature's purpose  
because, as stated by the majority, the amendment appeared  
when the Legislature discovered that retaliatory tax revenue  
was far less than expected.  See slip op at p 4. 
If  
sufficient evidence had been presented by plaintiffs that the  
purpose was to cover the shortfall, the legitimate purposes  
opined by the majority would not necessarily carry the day.  
Therefore, this Court should state explicitly that the  
rational basis test, while deferential, does not ensure that  
all taxation legislation will pass constitutional muster.  In  
this case, plaintiffs presented evidence that employees from  
the Department of Management and Budget and the Department of  
Treasury advocated the amendment for a purpose that was  
impermissible.
 This evidence does not overcome the  
presumption 
of 
constitutionality 
because 
it 
does not  
explicitly demonstrate that the "classification is a hostile  
3  
  
 
and oppressive discrimination." Lehnhausen v Lake Shore Auto  
Parts Co, 410 US 356, 364; 93 S Ct 1001; 35 L Ed 2d 351  
(1973).  But this is not to say that, in another case, the  
burden in overcoming the presumption of constitutionality  
cannot be met.  
In failing to address this fact, it appears that the  
majority would uphold any classification, regardless of  
evidence demonstrating an actual improper purpose for it. The  
majority's scant treatment of the evidence presented seems to  
eliminate 
any 
possibility 
of 
future 
litigants 
demonstrating 
an  
improper purpose for a challenged classification. It reduces  
the 
test 
for 
evaluating 
the 
constitutionality 
of 
a  
classification to no more than abstract judicial imaginings  
with little or no apparent basis in fact.  Moreover, it  
elevates a plaintiff's burden of proof to insurmountable  
heights.
 Such reasoning is contrary to the United States  
Supreme Court precedent of Western & Southern Life and  
Metropolitan Life.  
4