IN THE SUPREME COURT OF IOWA

No. 11–1543

Filed April 12, 2013

QWEST CORPORATION,

Appellee,

vs.

IOWA STATE BOARD OF TAX REVIEW,

Appellant.

Appeal from the Iowa District Court for Polk County, Joel D. 

Novak, Judge.

The State appeals from a judgment in a judicial review proceeding 

finding that the disparate tax treatment of the personal property of 

incumbent local exchange carriers, as contrasted with that of competitive 

long distance companies and wireless providers, violates the equal 

protection clause of the Iowa Constitution. DISTRICT COURT 

JUDGMENT REVERSED AND CASE REMANDED.

Thomas J. Miller, Attorney General, Donald D. Stanley, Jr., Special 

Assistant Attorney General, and James D. Miller, Assistant Attorney 

General, for appellant.

Bruce W. Baker of Nyemaster Goode, P.C., Des Moines, Richard G. 

Smith of Hawley Troxell Ennis & Hawley LLP, Boise, Idaho, and Roy A. 

Adkins, Denver, Colorado, for appellee.
2

MANSFIELD, Justice.

This administrative review proceeding requires us to decide 

whether imposing a tax on the Iowa-based personal property of 

incumbent local exchange carriers, but not on that of competitive long 

distance and wireless service providers, violates article I, section 6 of the 

Iowa Constitution. We conclude it does not. The differential tax 

treatment of these enterprises is rationally related to legitimate state 

interests in encouraging the development of new competitive 

telecommunications infrastructure, while raising revenue from those 

providers that historically had a regulated monopoly and continue to 

enjoy some advantages of that monopoly. Accordingly, we reverse the 

judgment of the district court and uphold the Iowa State Board of Tax 

Review’s assessment on Qwest Corporation.

I. Background Facts and Proceedings.

The facts in this case are largely undisputed. A generation ago, the

American Telephone & Telegraph Company (AT&T) had a dominant 

position nationally in both local and long-distance telephone service. In 

Iowa, it did business under the name Northwestern Bell. Most Iowans 

obtained their local and long-distance phone service through 

Northwestern Bell. The company owned and maintained lines that ran 

from Iowa residences and businesses into central offices, where 

switching equipment was used to route phone calls toward their ultimate 

destination. Those Iowans who did not get their phone service from 

Northwestern Bell primarily relied on another local monopoly, such as 

GTE.

As the result of a lengthy antitrust case, a consent decree was 

entered in 1982, which ended AT&T’s national industry dominance. The 

decree took effect in 1984 and required AT&T to divest its local telephone 
3

businesses. This led to the formation of seven independent regional Bell 

operating companies, one of which was U S West, Inc., the predecessor to 

Qwest Corporation. U S West thereafter provided local landline 

telephone service in fourteen states, including Iowa and the rest of the 

former Northwestern Bell territory.

Although the divestiture was the death knell for a single telephone 

company’s predominance in this country, it did leave in place a system 

where local phone service was generally provided by monopoly carriers 

that had the existing infrastructure to do so (e.g., central offices, 

switches, and customer phone lines). To address this situation, 

Congress and the states enacted legislation in the mid-1990s. The 

Telecommunications Act of 1996 (Telecom Act) required incumbent local 

exchange carriers (ILECs) like U S West to provide interconnection to 

their networks and to offer their network elements, such as the 

hardwired phone lines that entered homes, on an “unbundled” basis to 

other carriers (CLECs) that sought to enter the marketplace and compete 

with them. See Telecommunications Act of 1996, Pub. L. 104–104, 110 

Stat. 56 (codified in scattered sections of 47 U.S.C.)

Complementing the Telecom Act was House File 518, which had 

been passed by our general assembly the year before. See 1995 Iowa 

Acts ch. 199 (current version at Iowa Code §§ 476.95–.101 (2013)). Like 

the Telecom Act, House File 518 required any ILEC to provide 

“interconnection” and to make available the “unbundled essential 

facilities of its network.” See id. § 12 (current version at Iowa Code 

§ 476.101(4)(a)(1)). The section entitled “Findings—statement of policy,”

expressly sets forth certain purposes of the act, as follows:

1. Communications services should be available 

throughout the state at just, reasonable, and affordable rates 

from a variety of providers.
4

2. In rendering decisions with respect to regulation of 

telecommunications companies, the board shall consider the 

effects of its decisions on competition in telecommunications 

markets and, to the extent reasonable and lawful, shall act 

to further the development of competition in those markets.

3. In order to encourage competition for all 

telecommunications services, the board should address 

issues relating to the movement of prices toward cost and 

the removal of subsidies in the existing price structure of the 

incumbent local exchange carrier.

4. Regulatory flexibility is appropriate when 

competition provides customers with competitive choices in 

the variety, quality, and pricing of communications services, 

and when consistent with consumer protection and other 

relevant public interests.

5. The board should respond with speed and flexibility 

to changes in the communications industry.

6. Economic development can be fostered by the 

existence of advanced communications networks.

Iowa Code § 476.95. Thus, the legislature’s stated purposes for the act 

can be interpreted as enhancing the availability of affordable 

communication services throughout the state, encouraging competition 

for all telecommunication services, and fostering economic development.

Prior to 1995, ILECs in Iowa like Northwestern Bell/U S West had 

been subject to rate-base/rate-of-return regulation. See 1963 Iowa Acts 

ch. 286, § 1 (current version at Iowa Code § 476.8 (2013)). Under this 

system of regulation, the incumbent carrier essentially received a 

guarantee that its costs plus a reasonable rate of return would be 

covered by the tariffs paid by Iowa customers, so long as the company’s 

costs were reasonable. See id. House File 518, however, gave local 

phone companies the option of exiting from this form of regulation by

submitting a “price regulation plan” that, if approved, would set forth the 

price for “basic communications services” subject to permitted 

adjustments. See 1995 Iowa Acts ch. 199, § 8 (current version at Iowa 
5

Code § 476.97). In 1998, U S West opted for such a voluntary price 

regulation plan and, consequently, was no longer subject to ratebase/rate-of-return regulation.

The Telecom Act and its Iowa counterpart resulted in an increased 

CLEC presence in Iowa. From 2000 to 2006, for example, CLEC access 

lines in Iowa increased from 193,000 to 260,000. But, in the meantime, 

other competitors for local residential and business service entered the 

marketplace—cable telephony, voice over internet protocol (VOIP), and 

wireless service. While the record here does not detail the actual inroads 

made by each of these competitors on traditional landline service, it is 

clear that a number of Iowans have swapped their ILEC service for one of 

these three alternatives. From 2000 to 2006, ILEC access lines declined 

from 1,759,000 to 1,422,000—a greater decline than the corresponding 

increase in CLEC lines.

As Iowans know from their personal experience, the wireless 

industry has grown significantly in recent years. From 2000 to 2006, the 

number of wireless service subscriptions in Iowa increased from 975,000 

to 1,821,000. A wireless phone is essentially a two-way radio. Wireless 

communication is based on radio signals as it travels from the handset to 

the cell tower (or vice versa). After reaching the cell tower, the signal 

travels by high-speed data circuit1 to a mobile switching office (MSO). 

The wireless provider’s MSO uses switches to route calls; those switches, 

however, may contain additional functionality that an ILEC’s switches do 

not need to have. From the MSO, the communication may travel on the 

ILEC’s network—and will definitely do so if the person being spoken to is 

an ILEC customer.

 

1Wireless providers do not generally own these data lines but lease them from 

ILECs or CLECs.
6

Historically, Iowa has centrally (i.e., at the state level) assessed for 

property tax purposes both the real and the personal property of 

traditional telephone companies such as Northwestern Bell and its 

successors U S West and Qwest. This system dates back approximately 

a century and continues to this day. See Iowa Code § 1330 (1913) (“Said 

assessment shall include all property of every kind and character 

whatsoever, real, personal, or mixed, used by said companies in the 

transaction of telegraph and telephone business . . . .”); id. § 433.4 

(2013) (containing similar language). Thus, ILECs are required to pay 

property tax in Iowa on the switches, computers, and other equipment 

and personal property they use to provide local telephone service in Iowa. 

Historically, this tax regime applied to “[e]very telegraph and telephone 

company operating a line in this state.” See id. § 1328 (1913) (current 

version at id. § 433.1 (2013)).

As we noted in Heritage Cablevision v. Marion County Board of 

Supervisors, “In times past Iowa statutes provided for an extensive 

personal property tax.” 436 N.W.2d 37, 37 (Iowa 1989). However: “In 

1973 the general assembly adopted a scheme under which most personal 

property would no longer be taxed.” Heritage Cablevision, 436 N.W.2d at 

37; see also 1973 Iowa Acts ch. 255, § 1 (codified as Iowa Code 

§ 427A.11 (1975)) (phasing out personal property tax). Yet this phaseout 

did not apply to telephone companies and certain other enterprises. See

Iowa Code § 427A.1(1)(h) (2013) (indicating that “[p]roperty assessed by 

the department of revenue pursuant to sections 428.24 to 428.29, or 

chapters 433, 434, 437, 437A, and 438” shall be assessed as real 

property). Northwestern Bell, GTE, and other telephone companies 

continued to have to pay property tax on their switches, computers, and 

other equipment and personal property in Iowa. Nonetheless, as Qwest’s 
7

counsel acknowledged at oral argument in this case, so long as the 

telephone company remained subject to rate-base/rate-of-return 

regulation, it was allowed to include those tax obligations in its rate base 

and, thus, ultimately to pass them along to Iowa consumers.

House File 518 in 1995 provided that “competitive long distance 

telephone compan[ies]” (CLDTCs) would not be subject to this property 

taxation scheme. See 1995 Iowa Acts ch. 199, § 1 (current version at 

Iowa Code § 476.1D(10)(b)). Instead, such companies essentially would 

be taxed on their real property only for property acquired after January 

1, 1996. Iowa Code § 476.1D(10)(b). A “competitive long distance 

telephone company” was defined as one where “more than half of the 

company’s revenues from its Iowa intrastate telecommunications services 

and facilities are received from services and facilities that the board has 

determined to be subject to effective competition.” Id. § 476.1D(10)(a). It 

is undisputed that this provision was intended to encourage so-called 

“facilities-based competition,” that is, the deployment of additional 

equipment in Iowa by competitive carriers. Seven carriers have since 

qualified for CLDTC status, including MCI, AT&T, Sprint, McLeod, and a

long-distance affiliate of Qwest.2

Wireless companies have never been subject to the property 

taxation scheme for ILECs because they are not considered to be 

“telegraph and telephone compan[ies] operating a line in this state.” See 

id. § 433.1. Wireless companies are assessed locally (i.e., by the county) 

for the value of their cell towers, which are a form of real property. See 

 

2A CLDTC for section 476.1D(10) purposes can be a CLEC (like McLeod), but it 

cannot be an ILEC. See Iowa Code § 476.1D(10)(b) (stating that a long distance 

telephone company for purposes of the section “means an entity that provides telephone 

service and facilities between local exchanges, but does not include . . . a local exchange 

utility holding a certificate issued under section 476.29, subsection 12”).
8

id. § 441.21; Iowa Admin. Code r. 701—71.15. However, they do not pay 

property tax in Iowa on switches and other equipment or personal 

property that may be located in their MSOs. It is undisputed, however, 

that wireless companies frequently have only one MSO for the entire 

state—rather than a number of central offices per metropolitan area like 

an ILEC.

Although both CLEC service and other forms of telephone service

have made significant incursions into ILEC market share, Qwest 

continues to have a large share of local phone service. As of December 

2007, it still had 730,166 access lines in Iowa. Within its service 

territory, it had seventy-eight percent of the wireline connections; in over 

100 communities, it had at least ninety percent of wireline customers. 

While some customers had “cut the cord” and substituted wireless for 

wireline service, the record indicates that in the Midwest region as a 

whole this would have been only about 15.8% of households as of the 

second half of 2007. Certain demographic and geographic factors 

suggested the number would be even lower in Iowa.

Qwest’s taxable personal property in Iowa includes a substantial 

amount of property (perhaps thirty-five to forty-five percent) that was 

acquired while Qwest was still subject to rate-base/rate-of-return 

regulation. On November 3, 2006, the Iowa Department of Revenue 

issued a notice of assessment to Qwest placing a value on its Iowa 

operating property of $1,028,480,000. Qwest elected to challenge the 

general assembly’s previous decision to tax the personal property of 

ILECs but not CLDTCs or wireless providers operating in Iowa. Thus, 

Qwest responded to the 2006 assessment by filing a protest appealing 

the assessment to the Iowa State Board of Tax Review.
9

On December 11, Qwest filed an amended protest acknowledging 

an agreement between the parties which reduced the total assessed value 

of Qwest’s property to $785,000,000, while preserving Qwest’s 

constitutional arguments. Qwest took the position that the dissimilar 

tax treatment it received in comparison to other similarly situated 

telecommunications companies amounted to unconstitutional 

discrimination.3 Specifically, Qwest argued that the tax scheme which 

taxed ILECs for the value of their personal property, but not CLDTCs and 

wireless providers, violated Qwest’s rights under the Equal Protection 

Clauses of the Iowa and United States Constitutions.

The parties jointly requested transfer of the case to the Department 

of Inspections and Appeals (DIA) for a contested case hearing. 

Subsequently, an evidentiary hearing was held before the DIA over a fiveday period from June 23 to 26 and July 1, 2008. The administrative law 

judge (ALJ) issued a forty-page decision on May 5, 2010, setting forth her 

findings of fact and conclusions of law and rejecting Qwest’s equal 

protection challenge. Regarding the differential treatment of personal 

property owned by CLDTCs and ILECs, she observed:

Qwest concedes that the legislature may pass tax laws to 

stimulate economic development. They argue, however, that 

the state [cannot] provide incentives to one group and deny 

them to another related group. As applied here, they 

contend that the legislature had no legitimate basis for 

offering a property tax incentive to competitive long distance 

companies and excluding incumbent local exchange 

providers.

The record reveals ample justification for the legislature to 

make a distinction between ILECs and telephone service 

providers, including the long distance providers. Qwest and 

other ILECs had been providing local exchange service and 

 

3The parties stipulated that of this assessment, 28 percent (or $220,049,395) 

represents assets that were purchased after January 1, 1995, and that would have 

been exempt if purchased by a CLDTC.
10

operating as sole providers for their service areas under 

sanctioned monopoly status for decades. They owned the 

existing local telephone infrastructure and, prior to the mid1990s were “the local phone company.” ILECs were unlikely 

to reduce their presence in the state or withhold expansion 

in Iowa. More importantly, the ILECs were well-positioned 

not only to withstand competition, but to impede 

competitors.

. . . .

Qwest contends that the offer of tax incentives to competitive 

long distance companies was not rationally related to a 

desire to enhance competition and encourage the 

construction in the local exchange market. The state had a 

legitimate interest in encouraging the development and 

construction of both long distance and local exchange 

facilities in Iowa. H.F. 518 contained other measures 

designed to promote competition in the local exchange 

market. Further, the subsection 476.[1]D(10) exemption 

applied to all newly acquired equipment purchased by 

qualifying CLDCs—not merely equipment used to provide 

long distance service. Thus the exemption provided an 

incentive for established long distance companies to move 

into the local exchange market.

Finally, Qwest argues that even if a rational basis existed to 

support the exemption for newly acquired CLDC property 

when the provision was enacted in 1995, the growth of 

competitive forces within the telecommunications industry 

between 1995 and 2006 has negated the need to provide 

incentives to encourage competitors. However, the record

establishes that although Qwest has lost a portion of its 

market share, Qwest remains the dominant local exchange 

carrier in the markets it serves.

The rational basis test does not require classifications to be 

narrowly tailored to serve a particular end. If the 

classification has some reasonable basis, it does not offend 

the constitution simply because the classification is not 

made with mathematical nicety or because in practice it 

result[s] in some inequality. The fact that the legislature 

could have crafted a broader or different tax exemption does 

not render section 476.1D(10) unconstitutional.

(Internal citations and quotation marks omitted.)

Turning to the wireless providers, the ALJ concluded:

The state also has ample reason to treat wireless service 

providers differently than wireline providers for purposes of 

property tax assessment. By definition, wireless providers 
11

are not telephone companies. They do not own an 

interconnected state-wide infrastructure and their property 

is not centrally assessed by the department of revenue. 

Although these distinctions impact the question of whether 

wireline and wireless providers are similarly situated, they 

also provide[] a rational justification for taxing wireless 

companies differently than wireline telephone companies.

Wireless communication service is a relatively new industry. 

The first commercial license was issued by the FCC in 1983. 

From the inception of personal wireless service, this segment 

of the market has been highly competitive. Despite market 

competition, wireless service has expanded rapidly 

throughout the state.

. . . Because wireless providers frequently have only one 

mobile [switching] office for the entire state (rather than a 

number of central offices within each service area) it seems 

reasonable to conclude that wireless companies are likely to 

own significantly less property which would fall into the 

traditional “personal property” categories than ILECs own.

. . . .

Wireless providers do not own the type of state-wide 

infrastructure common to centrally assessed businesses. It 

is fully reasonable for the legislature to allow wireless 

providers the same personal property tax exemptions that 

are available to other locally assessed owners of commercial 

property.

Qwest filed a timely appeal to the Iowa State Board of Tax Review. 

The parties stipulated, however, that the ALJ’s decision would be treated 

as that of the Board, subject to Qwest’s right to seek judicial review 

thereon. Accordingly, the Board issued a final order on October 12,

adopting the ALJ’s decision in full.

On November 10, Qwest brought a petition for judicial review in 

the Polk County District Court, raising only its state constitutional 

challenge. After a hearing, the district court reversed the Board’s ruling 

and found that Qwest’s Iowa constitutional rights were violated with 

respect to the tax treatment it received compared to CLDTCs and 

wireless providers. With respect to the CLDTCs, the district court found:
12

Assuming without deciding that at the time [House 

File 518] was enacted there was a rational basis and 

legitimate governmental purpose for the legislation, the 

Court concludes the evidence in the record shows such 

rationale no longer exists. . . . It has been established that 

the wireline and wireless segments of the 

telecommunications industry are in competition for the same 

customers, thus this is the relevant market to look at. When 

this more complete picture of the total telephone market is 

looked at, Qwest’s share of the market it served as of 2006 is 

just under forty percent according to a report by the Board. 

Therefore, it is clear Qwest is no longer dominant in this 

market, as it was fifteen years ago when it was operating 

under sanctioned monopoly status, and the ALJ’s reason for 

rejecting this argument by Qwest is without support in the 

record.

. . . .

In the end the Court returns to the fact the items 

taxed or not taxed (here Qwest’s switches and related central 

office equipment and the personal property purchased after 

1995 by some long distance telephone companies 

respectively) are nearly identical and are for the same main

activity or primary use. . . .

Assuming without deciding there was a rational basis 

for the disparate tax treatment of section 476.1D(10) when it 

was enacted, the Court concludes that rational basis and 

legitimate governmental interests have been vitiated through 

changes in the underlying circumstance[s], passage of time, 

and advancements in technology. Accordingly, Iowa Code 

section 476.1D(10) allowing tax exemption for personal 

property acquired after 1995 by CLDCs but taxing the 

similarly situated “personal” property of Qwest is an 

unconstitutional violation of Iowa’s equal protection 

provision, set forth in Article 1, section 6 of Iowa’s 

Constitution, as applied to Qwest.

(Internal citations omitted.)

Similarly, concerning wireless providers, the district court wrote:

As with the analysis of long distance companies above, 

the Court will assume without deciding there was a rational 

basis for the exemption for wireless companies when it was 

enacted. However, as above, the Court must again conclude 

such assumed rational basis no longer exists. Wireless 

service was a relatively new industry and was not widely 

available in Iowa when the exemption was enacted. The 

record is clear the growth of wireless providers and 

subscribers has exploded over the past ten years to the point 
13

that by 2006 the number of wireless subscribers in Iowa 

exceeded the number of wireline customers. Accordingly, 

the Court concludes any rational basis and legitimate 

governmental interests that once existed for this disparate 

tax treatment have been vitiated through changes in the 

underlying circumstance[s], passage of time, and 

advancements in technology. The provisions in Iowa Code 

chapters 433 and 427A that establish a tax scheme allowing 

a tax exemption for the personal property of wireless 

[providers] but not for the substantially similar switching 

and central office equipment property of Qwest (the only 

property relevant to this issue as detailed above) are in 

violation of Iowa’s equal protection provision, set forth in 

Article 1, section 6 of Iowa’s Constitution, as applied to 

Qwest.

The Board timely appealed to this Court.

II. Standard of Review.

We generally review a district court’s decision on a petition for 

judicial review of agency action for correction of errors at law. 

Timberland Partners XXI, LLP v. Iowa Dep’t of Revenue, 757 N.W.2d 172, 

174 (Iowa 2008). However, in cases such as this, where constitutional 

issues are raised, our review is de novo. Id.

III. Analysis.

A. Equal Protection Under the Iowa Constitution. We now 

address Qwest’s claim that the State’s property tax scheme for 

telecommunications companies violates the equal protection clause of 

the Iowa Constitution.4 Article I, section 6 of the Iowa Constitution 

states: “All laws of a general nature shall have a uniform operation; the 

General Assembly shall not grant to any citizen, or class of citizens, 

 

4For the sake of consistency with our more recent precedent, we will refer to 

article I, section 6 as the “equal protection clause” of the Iowa Constitution. See L.F. 

Noll Inc. v. Eviglo, 816 N.W.2d 391, 392 (Iowa 2012) (referring to the “equal protection

clause” of the Iowa Constitution); NextEra Energy Res. LLC v. Iowa Utils. Bd., 815 

N.W.2d 30, 44 (Iowa 2012) (referring to the “equal protection provision found in article I, 

section 6 of the Iowa Constitution”); King v. State, 818 N.W.2d 1, 22 n.18 (Iowa 2012); 

Judicial Branch v. Iowa Dist. Ct., 800 N.W.2d 569, 578 (Iowa 2011) (querying whether 

“the Equal Protection Clause of the Iowa Constitution has been violated”); Rojas v. Pine 

Ridge Farms, L.L.C., 779 N.W.2d 223, 229 (Iowa 2010) (same).
14

privileges or immunities, which, upon the same terms shall not equally 

belong to all citizens.” Like its federal counterpart, our equal protection 

clause “is essentially a direction that all persons similarly situated 

should be treated alike.” Varnum v. Brien, 763 N.W.2d 862, 878 (Iowa 

2009) (citation and internal quotation marks omitted); accord Judicial 

Branch v. Iowa Dist. Ct., 800 N.W.2d 569, 578 (Iowa 2011).

Social and economic legislation, such as the tax provisions at issue 

here, is reviewed under the rational basis test. See King v. State, 818 

N.W.2d 1, 27 (Iowa 2012); accord Sanchez v. State, 692 N.W.2d 812, 817 

(Iowa 2005). This is “a very deferential standard.” Varnum, 763 N.W.2d 

at 879; accord King, 818 N.W.2d at 27; Ames Rental Prop. Ass’n v. City of 

Ames, 736 N.W.2d 255, 259 (Iowa 2007). “Under rational-basis review, 

the statute need only be rationally related to a legitimate state interest.” 

Sanchez, 692 N.W.2d at 817–18. “[T]he [s]tate does not have to produce 

evidence, and only a plausible justification is required.” King, 818 

N.W.2d at 28; see also Varnum, 763 N.W.2d at 879. The challenging 

party “has the heavy burden of showing the statute unconstitutional and 

must negate every reasonable basis upon which the classification may be 

sustained.” Varnum, 763 N.W.2d at 879 (citation and internal quotation 

marks omitted); accord King, 818 N.W.2d at 28; Sperfslage v. Ames City 

Bd. of Review, 480 N.W.2d 47, 49 (Iowa 1992) (“The statute will . . . be 

upheld under the rational basis standard if we find the legislature could 

reasonably conclude that the classification would promote a legitimate 

state interest.”). The fit between the means and the end can be “far from 

perfect” so long as the relationship “is not so attenuated as to render the 

distinction arbitrary or irrational.” Varnum, 763 N.W.2d at 879 & n.7

(citation and internal quotation marks omitted); see also King, 818 

N.W.2d at 28.
15

When we have applied the rational basis test to tax laws, they have 

generally been upheld without much difficulty. “The rational basis 

standard is easily met in challenges to tax statutes.” Hearst Corp. v. 

Iowa Dep’t of Revenue & Fin., 461 N.W.2d 295, 306 (Iowa 1990); accord

Heritage Cablevision, 436 N.W.2d at 38 (“It is widely recognized that the 

rational basis standard is easily satisfied in challenges to tax statutes.”);

City of Waterloo v. Selden, 251 N.W.2d 506, 508–09 (Iowa 1977) (“An iron 

rule of equal taxation is neither attainable nor necessary.”).5 In Hearst, 

we held that it violated neither federal nor state equal protection

guarantees for the legislature to exempt newspapers but not magazines 

from Iowa’s sales and use tax. 461 N.W.2d at 304–06. We noted that “in 

tax matters even more than in other fields, the legislature possesses the 

greatest freedom in classification.” Hearst, 461 N.W.2d at 305. Among

other things, we accepted the state’s argument that Iowa’s tax scheme 

served the state’s interest in “enhancing the general knowledge and 

literacy of its citizenry.” Id. at 306.

By subsidizing the price of newspapers through the 

“newspaper” exemption the State makes newspapers 

available to those of even moderate to low means; an action 

deemed to be in the public interest. With this exemption, 

newspapers will remain an inexpensive source of public 

information which most people will be able to afford.

Id. It went without saying that the exemption applied regardless of

whether the buyer of the newspaper was a person of moderate to low 

means and did not apply even if the magazine would have been a 

 

5The United States Supreme Court has taken a similar view. See Armour v. City 

of Indianapolis, ___ U.S. ___, ___, 132 S. Ct. 2073, 2080, 182 L. Ed. 2d 998, 1005 (2012) 

(“[W]e have repeatedly pointed out that [l]egislatures have especially broad latitude in 

creating classifications and distinctions in tax statutes.” (Citation and internal 

quotation marks omitted.)).
16

similarly inexpensive source of public information for people of moderate 

to low means.

Similarly, in Sperfslage, we upheld a state regulation that required 

all buildings with three or more living units to be classified as 

commercial properties for property taxation purposes while allowing all 

buildings with one or two units to be classified as residential even when 

used as a commercial venture. 480 N.W.2d at 48–49. We reiterated that 

the rational basis test “is easily satisfied in challenges to tax statutes.” 

Sperfslage, 480 N.W.2d at 49. We then found the regulation 

constitutional because it was “far more likely that an owner occupier 

would purchase one-unit or two-unit rental properties than three-unit 

property for use as a residence.” Id. Again, this rough correspondence 

between the asserted state interest and the classification was enough. It 

did not matter that in a particular case, the single or double-unit 

property never had a residential purpose.

And in Home Builders Ass’n of Greater Des Moines v. City of West 

Des Moines, we rejected a federal constitutional challenge to a parks fee 

imposed on residential but not commercial developers, and based on the 

geographic size of the parcel, without regard to the anticipated density of 

the proposed subdivision. 644 N.W.2d 339, 352–53 (Iowa 2002). We 

noted that the city had “the freedom in economic matters to encourage 

one type of property usage over another by differentiating the fees 

imposed on different usages” and was “free to encourage commercial 

development by relieving it from payment of the parks fee.” Home 

Builders, 644 N.W.2d at 352–53. We added that the City “may 

reasonably assume that commercial users of property generate less need 

for park facilities than do residential developers.” Id. at 353.
17

In Racing Ass’n of Central Iowa v. Fitzgerald (RACI II), following 

remand from the United States Supreme Court, we concluded that the 

legislature’s decision to tax racetrack gross gambling receipts at a rate of 

thirty-six percent and riverboat gross gambling receipts at a rate of 

twenty percent violated article I, section 6 of the Iowa Constitution. 675 

N.W.2d 1, 15–16 (Iowa 2004).

6 We explained our application of the 

rational basis standard in the following terms:

[T]his court must first determine whether the Iowa 

legislature had a valid reason to treat racetracks differently 

from riverboats when taxing the gambling revenue of these 

businesses. See Fitzgerald v. [Racing Ass’n of Cent. Iowa, 

539 U.S. 103, 107, 123 S. Ct. 2156, 2159, 156 L. Ed. 2d 97, 

103 (2003)] (requiring “ ‘a plausible policy reason for the 

classification’ ” (citation omitted)). In this regard, “the 

statute must serve a legitimate governmental interest.”

Glowacki v. State Bd. of Med. Exam’rs, 501 N.W.2d 539, 541 

(Iowa 1993). Moreover, the claimed state interest must be 

“realistically conceivable.” Miller v. [Boone Cnty. Hosp., 394 

N.W.2d 776, 779 (Iowa 1986)] (emphasis added). Our court 

must then decide whether this reason has a basis in fact.

See Fitzgerald, 539 U.S. at [107], 123 S. Ct. at 2159, 156 L.

Ed. 2d at 103 (requiring that legislature could rationally 

believe facts upon which classification was based are true). 

Finally, we must consider whether the relationship between 

the classification, i.e., the differences between racetracks 

and excursion boats, and the purpose of the classification is 

so weak that the classification must be viewed as arbitrary.

See id. (requiring that “ ‘the relationship of the classification 

to its goal [not be] so attenuated as to render the distinction 

arbitrary or irrational’ ” (citation omitted)); accord Chicago 

Title Ins. Co. v. Huff, 256 N.W.2d 17, 29 (Iowa 1977)

(requiring rational relationship between classification and a 

legitimate state purpose or governmental interest).

RACI II, 675 N.W.2d at 7–8 (footnotes omitted).

 

6RACI II was the last decision in a series. We had originally struck down the tax 

differential in 2002 as violating both the Federal and Iowa Equal Protection Clauses, 

without performing a separate analysis under the Iowa Constitution. Racing Ass’n of 

Cent. Iowa v. Fitzgerald (RACI I), 648 N.W.2d 555, 562 (Iowa 2002). The United States 

Supreme Court then granted certiorari, reversed our ruling that the tax scheme violated 

federal equal protection, and remanded to us for further proceedings. Fitzgerald v. 

Racing Ass’n of Cent. Iowa, 539 U.S. 103, 110, 123 S. Ct. 2156, 2161, 156 L. Ed. 2d 97, 

105 (2003). This led to our 2004 decision in RACI II under the Iowa Constitution alone.
18

In two separate footnotes, we elaborated on what we meant by the 

phrases “realistically conceivable” and “basis in fact.” With respect to the 

former, we said:

The requirement of “ ‘a plausible policy reason for the 

classification’ ” may be the aspect of equal protection 

analysis most susceptible to differing conclusions in 

application. See generally Fitzgerald, 539 U.S. at [107], 123 

S. Ct. at 2159, 156 L. Ed. 2d at 103 (emphasis added) 

(citation omitted) (stating requirements of Equal Protection 

Clause). The dictionary gives two synonyms for the word 

“plausible”: “specious” and “credible.” Webster’s Third New 

International Dictionary 1736 (unabr. ed. 2002). Certainly a 

“specious” reason should not pass constitutional muster.

See generally id. at 2187 (defining “specious” in relevant part 

as “apparently right or proper: superficially fair, just or 

correct but not so in reality: appearing well at first view: 

PLAUSIBLE”). Rather, the policy reason justifying a 

particular classification should be “credible.” See generally 

id. at 532 (defining “credible” as “capable of being credited or 

believed: worthy of belief . . . : entitled to confidence: 

TRUSTWORTHY”). Our court’s statement in Miller that the 

reason offered in support of a classification must be 

“realistically conceivable” reflects the latter understanding of 

a “plausible” reason. 394 N.W.2d at 779 (emphasis added). 

It implicitly rejects a purely superficial analysis and implies 

that the court is permitted “to probe to determine if the 

constitutional requirement of some rationality in the nature 

of the class singled out has been met.” Greenwalt v. Ram 

Restaurant Corp., 71 P.3d 717, 730–31 (Wyo. 2003)

(considering validity of statutory classification under the 

equal protection guarantees of the United States and 

Wyoming constitutions).

Id. at 7 n.3. Concerning the latter, we stated:

Although this element of equal protection analysis does not 

require “proof” in the traditional sense, it does indicate that 

the court will undertake some examination of the credibility 

of the asserted factual basis for the challenged classification 

rather than simply accepting it at face value.

Id. at 8 n.4. Thus, we made clear that actual proof of an asserted 

justification was not necessary, but the court would not simply accept it 

at face value and would examine it to determine whether it was credible 

as opposed to specious.
19

We also reiterated that a party bringing a rational basis challenge 

must “negat[e] every reasonable basis that might support the disparate 

treatment.” Id. at 8. Yet we added that when “a classification involves 

extreme degrees of overinclusion and underinclusion in relation to any 

particular goal, it cannot be said to reasonably further that goal.” Id. at 

10 (citation and internal quotation marks omitted).

Applying these standards, we rejected four asserted justifications 

in RACI II for the disparate taxation—promoting economic development of 

river communities, protecting the reliance interests of riverboat 

operators, aiding the financial positions of the riverboats, and 

maintaining riverboats in Iowa. Id. at 9–15. Concerning the first 

asserted state interest, we noted that there were river communities with 

racetracks and nonriver communities with riverboats. Id. at 10. Thus, 

the justification was “illogical.” Id. It involved “extreme degrees of 

overinclusion and underinclusion.” Id. (quoting Bierkamp v. Rogers, 293 

N.W.2d 577, 584 (Iowa 1980)). We then rejected the asserted reliance 

interest of riverboat operators because the taxation lines drawn had 

nothing to do with the time of investment. Id. at 11. “[T]he differential 

tax is triggered not by whether the business engaged in gambling prior to 

the implementation of the new tax rates, but [by] whether the gambling 

takes place on a floating casino.” Id. at 12.

We also concluded that aiding the financial position of riverboats 

was an insufficient justification by itself. If that were so, “any differential 

tax would be constitutional because a lower tax always benefits the 

financial situation of the taxpayer subject to the lower rate.” Id. at 13. 

Finally, we could not accept the State’s contention that a thirty-six 

percent tax on gross gambling receipts of racetracks (much higher than 

the tax rate recommended by the legislative study committee) was 
20

designed as an incentive to keep riverboats in Iowa. Id. at 15. As we put 

it, “[T]he legislature could not reasonably have believed that taxing 

racetracks at thirty-six percent rather than at the twenty-four percent 

rate recommended by the committee would have any impact on the 

competitive position of the excursion boats vis-à-vis their out-of-state 

counterparts.” Id. “There [wa]s simply no rational connection between 

this conceivable legislative purpose and the discriminatory tax rate 

imposed on the racetracks.” Id.

With the preceding principles in mind, we now turn to the personal 

property tax scheme at issue in this case.

B. Application of Rational Basis Review to Qwest’s Claims. 

The State vigorously argues that Qwest is not “similarly situated” with 

the CLDTCs and wireless providers. Therefore, the State initially 

contends, we do not need to reach the question of whether the more 

favorable tax treatment of CLDTC and wireless provider personal 

property has a rational basis. See Timberland, 757 N.W.2d at 175 (“If . . . 

the court is unable to identify[] a class of similarly situated individuals 

who are allegedly treated differently under the challenged statute, the 

plaintiff has not satisfied the first step of an equal protection analysis,

and the court need not address whether the statute has a rational 

relationship to a legitimate government interest.” (Citation and internal

quotation marks omitted.)). There is some risk of succumbing to a 

tautology if we decide an equal protection claim on this ground, however. 

Varnum, 763 N.W.2d at 882–83. No two groups are identical in every 

way, and “nearly every equal protection claim could be run aground onto 

the shoals of a threshold analysis if the two groups needed to be a mirror 

image of one another.” Id. at 883. We will assume, therefore, that the 

groups are similarly situated here.
21

Nonetheless, we agree with the Board’s conclusion that a rational 

basis exists for the legislature’s decision not to tax the post-January 1, 

1995 investments by CLDTCs in personal property in this state. This 

was a reasonable way for the legislature to encourage the deployment of 

new infrastructure that would foster competitive wireline networks and 

result in lower prices for consumers. The legislature could have 

rationally believed that the ILECs had a powerful built-in competitive 

advantage based on their existing facilities, whose development had been 

underwritten by Iowa ratepayers over the past century.

The district court assumed for the sake of argument that section 

476.1D(10)’s tax exemption may have served a rational purpose in 1995, 

but found that it does not do so now because Qwest “is no longer 

dominant.” We have said before that “when applying a rational basis test 

under the Iowa Constitution, changes in the underlying circumstances 

can allow us to find a statute no longer rationally relates to a legitimate 

government purpose.” State v. Groves, 742 N.W.2d 90, 93 (Iowa 2007)

(citing Bierkamp, 293 N.W.2d at 581).7

 

7Neither of these cases involved a tax exemption. In Groves, we considered a 

substantive due process challenge to a statute prohibiting sex offenders from residing 

within two thousand feet of a school or a child care facility. 742 N.W.2d at 92. We 

noted that two years before, both our court and the Eighth Circuit had rejected similar 

constitutional challenges to these residency restrictions. Id. at 93 (citing State v. 

Seering, 701 N.W.2d 655, 662–65 (Iowa 2005), and Doe v. Miller, 405 F.3d 700, 709–16 

(8th Cir. 2005)). Citing Bierkamp, we said that “changes in the underlying 

circumstances can allow us to find a statute no longer rationally relates to a legitimate 

government purpose.” Id. (citing Bierkamp, 293 N.W.2d at 581). But we noted that 

Groves had “failed to present any evidence that would cause us to retreat from our 

decision in Seering.” Id. Thus, we rejected his rational basis challenge. Id.

In Bierkamp, we found no rational basis for Iowa’s automobile guest statute and 

held it could not withstand constitutional attack under article I, section 6. 293 N.W.2d 

at 585. At the outset of our rational basis review, we stated that “changes in underlying 

circumstances may vitiate any rational basis” and “the passage of time may call for a 

less deferential standard of review as the experimental or trial nature of legislation is 

less evident.” Id. at 581. However, it is unclear that we even applied these principles in 

that case. Immediately after stating them, we went on to discuss jurisprudence 

overturning automobile guest statutes in other jurisdictions. Id. at 581–82. Thus, if
22

However, in this case, we disagree with the district court’s 

conclusion. To find that Qwest “is no longer dominant,” the district court 

considered Qwest’s percentage of total wireline and wireless connections. 

But this assumes that wireless and wireline are substitutes, when the 

record before the Board showed that most wireless customers (eighty-five 

percent or more during the time period covered by this proceeding) 

continue to pay for wireline service. Thus, one can plausibly argue that 

there remains a distinct demand and, therefore, a separate market for 

wireline service, and that Qwest is still dominant in that market. See, 

e.g., Eastman Kodak Co. v. Image Tech. Servs., Inc., 504 U.S. 451, 469–

82, 112 S. Ct. 2072, 2083–90, 119 L. Ed. 2d 265, 285–94 (1992) (finding 

that the existence of cross-elasticity of demand does not prevent product 

markets from being treated as separate for antitrust purposes). For 

rational basis purposes, this “realistically conceivable” justification,

which does not involve “extreme degrees of overinclusion and 

underinclusion,” is a sufficient basis to uphold the legislature’s linedrawing. RACI II, 675 N.W.2d at 10.

Additionally, to the extent there is a separate market for wireline

services in which the ILECs have monopoly power, a legislature could 

_____________________________________

anything, the Bierkamp decision’s reference to “changes in underlying circumstances”

contemplates evolving legal trends. There have been no comparable developments of 

which we are aware in property tax jurisprudence.

Notably, the Eighth Circuit case on which we relied in Groves indicates that 

elected policymakers are better suited to reevaluate the basis for legislation over time. 

See Doe, 405 F.3d at 715 (“The legislature is institutionally equipped to weigh the 

benefits and burdens of [legislation], and to reconsider its initial decision in light of 

experience and data accumulated over time.”). Still, the United States Supreme Court 

recognized that a property taxation scheme can become constitutionally invalid if it fails 

to account for changes in value due to the passage of time. Allegheny Pittsburgh Coal 

Co. v. Cnty. Comm’n of Webster Cnty., 488 U.S. 336, 343–46, 109 S. Ct. 633, 637–39, 

102 L. Ed. 2d 688, 697 (1989) (striking down a county’s assessment of property taxes 

primarily on the basis of purchase price, with no adjustments over time, such that new 

property owners were assessed at roughly 8 to 35 times the rate of those who had 

owned their property longer).
23

reasonably conclude that taxing the ILECs’ personal property is an 

appropriate way to capture some of their monopoly rent. See FCC v. 

Beach Commc’ns, Inc., 508 U.S. 307, 319–20, 113 S. Ct. 2096, 2104, 124 

L. Ed. 2d 211, 225 (1993) (justifying a regulatory exemption for satellite

service covering commonly owned or managed buildings, but not 

separately owned and managed buildings, on the ground that an

operator in the latter situation is more likely to have unchecked 

monopoly power).8

Turning to the differential treatment of personal property owned by 

ILECs and wireless providers, we note at first the district court’s 

irrefutable observation: “[T]he growth of wireless providers and 

subscribers has exploded over the past ten years to the point that by 

2006 the number of wireless subscribers in Iowa exceeded the number of 

wireline customers.”

9 Yet, this observation is helpful only in so far as it

goes. To the extent that separate wireless and wireline markets exist, the 

legislature could reasonably conclude that the wireless market is 

competitive, with four companies of national scope doing business in 

 

8The issue here is one of tax incidence, i.e., whether the tax would be borne by 

consumers or instead would come out of monopoly profits. Defending a tax on this 

basis is different from defending it based on “revenue production” or “the pure fact that 

the market will allow [a higher tax].” See RACI I, 648 N.W.2d 561–62. In short, it is one 

thing for the government to assert that a group of taxpayers should be more heavily 

taxed so the government can raise more money. As we pointed out in RACI I, this is a 

circular argument that can always be used to justify any discrepancy in tax rates. 

However, it is another thing to maintain that differential tax rates are rationally related 

to enhancing affordability because the lower rates will ultimately benefit consumers 

while the higher rates will come out of monopoly rents.

9Qwest argues that when the legislature phased out personal property taxes on 

most businesses in 1973, it could not have been intending to stimulate the wireless 

industry, which did not even exist. But one cannot have it both ways. If we are going 

to require that legislation serve a current legitimate purpose, we cannot require that 

such end have been in the actual minds of legislators when the legislation was enacted. 

Otherwise, we would be saying that the legislature has to periodically review the entire 

Iowa Code and regularly reenact any laws that serve a different purpose than the 

original intended purpose.
24

Iowa (AT&T, Verizon, Sprint and T-Mobile), and that the wireline market 

is not. In a competitive industry, pricing approaches marginal cost, and 

there are no monopoly rents for government to extract. See NetCoalition 

v. S.E.C., 615 F.3d 525, 537 (D.C. Cir. 2010) (“[I]n a competitive market, 

the price of a product is supposed to approach its marginal cost, i.e., the 

seller’s cost of producing one additional unit.”). Thus, the legislature 

might logically conclude that the burdens of a tax on the wireless 

providers’ personal property in Iowa would simply be passed along to 

consumers in higher prices, while, a tax on a monopolist would not.

The record contains evidence from which a rational legislator might 

conclude that the wireless companies operate in a competitive market 

and Qwest still does not. Wireless rates have been declining dramatically 

on a per minute basis. Meanwhile, Qwest increased single line flat-rated 

residential monthly service rates from $12.80 to $14.12 on August 1, 

2005, to $15.56 on August 1, 2006, and to $16.60 on August 1, 2007.10 

Thus, the justification for differential treatment is not “specious”; it is 

“credible.” RACI II, 675 N.W.2d at 8 n.3.

It is useful to compare and contrast this case with RACI II. A key 

weakness of the State’s position in RACI II was that it was trying (at least 

in part) to justify the tax differential simply as a way to promote the 

companies that were treated favorably by the differential. We do not hold 

here that the State can simply justify the different tax treatment of ILECs 

in section 433.4 as a way to promote one group of companies over 

 

10Qwest’s ability to institute annual price increases of eight to ten percent 

suggests that competition is not so “robust” as Qwest claims it be, or at least the 

legislature could so conclude. Qwest analogizes its situation to Blockbuster, which 

used to have a thriving in-store rental business but has been driven into bankruptcy by 

other forms of video competition. Yet, Qwest has not been driven into bankruptcy and 

does not claim that its wireline business in Iowa is unprofitable. Nor has Qwest 

demonstrated, as the racetracks did in RACI, that the tax in question jeopardizes its 

ability to make a profit. RACI I, 648 N.W.2d at 561.
25

another—and it hasn’t. Rather, the State has made a plausible showing 

that the ILECs retain some vestiges of their former monopoly status that 

make it appropriate for the State to tax their property while relieving 

potential developers of competing infrastructure from a similar burden.

Also, we dismissed the reliance interest in RACI II because nothing 

in those laws turned on when the investment had been made. By 

contrast, section 476.1D(10) limits the CLDTC exemption to property 

purchased after the exemption was enacted. Furthermore, this case 

concerns property taxes, an area where reliance interests have been 

viewed as significant. Owners—certainly sophisticated businesses like

telecommunications companies—often consider the property tax 

consequences of their purchases before they make them. It is reasonable 

for the State to preserve those reliance interests by continuing to tax 

property as it has been taxed from the date of purchase by its owner. 

See Nordlinger v. Hahn, 505 U.S. 1, 13–14, 112 S. Ct. 2326, 2333, 120 L.

Ed. 2d 1, 14 (1992) (upholding California’s limits on adjustments to the 

assessed value of property until it is resold and acknowledging that 

“classifications serving to protect legitimate expectation and reliance 

interests do not deny equal protection of the laws”).

Qwest’s challenge to Iowa’s personal property tax scheme is not the 

only such challenge that has been brought nationally. In Verizon New 

Jersey Inc. v. Hopewell Borough, an ILEC objected to a New Jersey law 

that imposed a personal property tax on any “local exchange telephone 

company,” which the law defined as “a telecommunications carrier 

providing dial tone and access to fifty-one percent of a local telephone 

exchange.” 26 N.J. Tax 400, 404 (N.J. Tax Ct. 2012). The court 

construed the statute as requiring an annual determination of whether 

the ILEC still had 51% of wireline service, in which case the personal 
26

property tax would continue. Verizon, 26 N.J. Tax at 418. The New 

Jersey court then held that the statute so construed did not violate the 

equal protection clause of the New Jersey Constitution:

The court concludes that there was a rational basis to 

continue to impose the personal property tax only on those 

local telephone companies that had, for many years, enjoyed 

a monopoly over the provision of local telephone service in 

their franchise areas. The Legislature could reasonably 

assume that the three ILECs enjoyed a substantial 

competitive advantage as a result of their former monopolies; 

that they continued to be the dominant users of public rights 

of way and facilities; and that, as a transitional measure, it 

was reasonable to continue to impose the tax on only those 

companies until such time as they no longer enjoyed a 

competitive advantage, as evidenced by the fact that they 

were no longer providing 51% of the dial tone and access to 

an exchange.

Id. at 428. The court added in dictum that the tax would fail the rational 

basis test if companies that had originally met the fifty-one percent 

would “perpetually be subject to tax” regardless of what happened to 

their competitive position. Id. Notably, though, New Jersey employs a 

balancing test in rational basis cases that differs analytically from the 

federal rational basis test. Id. at 425. In any event, the New Jersey court 

found that the ILECs’ retention of a majority of the wireline business was 

a sufficient constitutional justification for continuing to treat them 

differently, the same conclusion we are reaching here. See also Qwest 

Corp. v. Colo. Div. of Prop. Taxation, ___ P.3d ___, No. 10CA1320, 2011 

WL 3332876 (Colo. App. 2011) (rejecting Qwest’s constitutional 

arguments that “its property must receive the same tax benefits as 

similar property used by cable companies to provide telephone services”), 

cert. granted, No. 11SC669, 2012 WL 1940812 (Colo. 2012); GTE North, 

Inc. v. Zaino, 770 N.E.2d 65, 69 (Ohio 2002) (rejecting an ILEC’s 

constitutional challenge to an Ohio law that provided for a much higher 
27

rate of assessment on certain personal property of ILECs and noting that 

ILECs “enjoy the advantage . . . of being the default provider of intraLATA 

call service for customers who fail to take affirmative action to choose 

another provider”); Sw. Bell Tel. Co. v. Combs, 270 S.W.3d 249, 272–73

(Tex. App. 2008) (finding no federal or state equal protection violation in 

imposing franchise taxes on local exchange carriers but not longdistance carriers).11

C. Alternative to the Rational Basis Test. In the alternative, 

Qwest urges us not to follow our established rational basis 

jurisprudence, but instead to take up the lead of certain other states that 

expressly require uniformity in taxation. Qwest points out that a few 

other jurisdictions have concluded that “constitutional uniformity is 

sufficiently important that no rationalization can justify differences in 

taxation.” See Citizens Telecomms. Co. of the White Mountains v. Ariz. 

Dep’t of Revenue, 75 P.3d 123, 129–30 (Ariz. Ct. App. 2003) (holding that 

under the Arizona constitution functionally equivalent property must be 

taxed the same); Idaho Tel. Co. v. Baird, 423 P.2d 337, 346–47 (Idaho 

1967) (finding it unconstitutional under Idaho’s uniformity clause to 

assess certain property at a higher ratio of full cash value), overruled by 

Simmons v. Idaho St. Tax Comm’n, 723 P.2d 887, 892–93 (Idaho 1986); 

Inter Island Tel. Co., v. San Juan County, 883 P.2d 1380, 1382–83 (Wash. 

1994) (holding it unconstitutional to assess a local phone company at a 

much higher rate than other utilities and personal property taxpayers).

These cases are easily distinguishable, however, because the state 

constitutions at issue contained specific language requiring uniformity in 

 

11The State also argues that Qwest’s greater use of government services because 

of its much larger infrastructure in Iowa justifies imposing personal property tax on it, 

but not on the CLDTCs and wireless providers. We need not reach that argument.
28

taxation. Idaho Telephone relied on language in article VII, section 5 of 

the Idaho Constitution stating, “All taxes shall be uniform upon the same 

class of subjects within the territorial limits, of the authority levying the 

tax . . . .” 423 P.2d at 340. In any event, that Idaho decision has been 

overruled. See Simmons, 723 P.2d at 892–93. The Arizona and 

Washington courts also relied on similar state constitutional provisions

apparently mandating uniform taxation. See Citizens Telecomms. Co., 75 

P.3d at 129 (“According to the Uniformity Clause of the Arizona 

Constitution, Article 9, Section 1, ‘all taxes shall be uniform upon the 

same class of property.’ ”); Inter Island, 883 P.2d at 1382 (“All taxes shall 

be uniform upon the same class of property within the territorial limits of 

the authority levying the tax . . . .” (quoting Wash. Const. art. 7, § 1)).

Needless to say, the Iowa Constitution does not contain such a 

clause. And, such a test would be antithetical to our precedents as we 

have described them above. Cf. City of Coralville v. Iowa Utils. Bd., 750 

N.W.2d 523, 530 n.3 (Iowa 2008) (declining to interpret the Iowa

Constitution as requiring that “all Iowa laws be geographically uniform”).

IV. Conclusion.

For the foregoing reasons, we reverse the judgment of the district 

court and remand to that court for further proceedings not inconsistent 

with this opinion.

DISTRICT COURT JUDGMENT REVERSED AND CASE 

REMANDED.

All justices concur except Waterman, J., who concurs specially and 

Appel, J., who takes no part.
29

#11–1543, Qwest Corp. v. Iowa State Bd. of Tax Review

WATERMAN, Justice (concurring specially).

I concur in the majority’s well-reasoned decision in all respects but 

one. The majority misses the opportunity to expressly overrule Racing 

Ass’n of Central Iowa v. Fitzgerald (RACI II), 675 N.W.2d 1 (Iowa 2004). I 

reiterate my call to expressly overrule RACI II as plainly erroneous for the 

reasons set forth in my special concurrence in King v. State, 818 N.W.2d 

1, 43 n.28 (Iowa 2012) (Waterman, J., concurring).