Opinion ID: 2539248
Heading Depth: 2
Heading Rank: 2

Heading: Missouri Case Law

Text: Although no reported Missouri case has considered whether a tax credit is a direct expenditure of funds generated through taxation for the purpose of taxpayer standing, in W.R. Grace & Co. v. Hughlett, 729 S.W.2d 203 (Mo. banc 1987), the court considered whether a taxpayer had standing to bring a constitutional challenge against the manufacturers tax, which gave exemptions for certain types of tangible personal property. The taxpayer argued that the exemptions resulted in a lack of tax uniformity violative of the Missouri Constitution. Id. at 204-05. Before considering the constitutional validity of the exemptions, W.R. Grace determined whether appellant had standing to challenge the validity of the statute. Id. at 206. The court stated that it fail[ed] to see how it can be said that [the taxpayer] has been `adversely affected by the statutes in question' when those statutes . . . merely excuse the tax obligations of others. Id. at 206-07 (quoting Ryder v. Cnty. of St. Charles, 552 S.W.2d 705, 707 (Mo. banc 1977)); cf. State ex rel. Kansas City Power & Light Co. v. McBeth, 322 S.W.3d 525, 529 (Mo. banc 2010) (noting that taxpayers lack standing to challenge other taxpayers' property tax assessments, as they are not injured personally by others' assessment calculations). The taxpayer was not adversely affected because, if the exemptions were ruled unconstitutional, the taxpayer would not have been entitled to receive a refund of the taxes it paid under a wholly separate taxing statute. W.R. Grace, 729 S.W.2d at 207. Although the taxpayer in W.R. Grace did not claim that it had taxpayer standing to challenge the statute, the court considered the possibility and analyzed the issue. Id. W.R. Grace recognized that it might well be argued that [the taxpayer] has standing because the net result of granting an exemption to others would not seem to differ in substance from the spending of tax monies. Id. The court acknowledged that in each situation, the result is the same: the state treasury will be diminished. Id. It rejected that contention because there is no public interest when the appellant challenges the statutory exemptions given to other taxpayers. Id.; see also Civic League of St. Louis v. City of St. Louis, 223 S.W. 891, 893 (Mo.1920) (finding that a taxpayer has standing to challenge public funds dissipated for an illegal purpose if there are public interests involved). W.R. Grace 's analysis regarding the effect of tax exemptions on the state treasury is instructive here. The standing test asserted by taxpayers here is whether there is a direct expenditure of funds generated through taxation. The tax exemptions in W.R. Grace and the tax credits here are similar in that they both result in a reduction of tax liability. The government collects no money when the taxpayer has a reduction of liability, and no direct expenditure of funds generated through taxation can be found. The tax credits provided by the Act merely excuse the tax liability of redevelopers or persons to whom it is assigned or sold. The court in W.R. Grace correctly concluded that the taxpayer did not have standing as there was no direct expenditure of funds generated through taxation. Likewise, tax credits are not from monies paid into the state treasury by taxpayers as tax revenue and are not direct expenditures of funds generated through taxation. Judge Wolff's concurrence cites Ste. Genevieve School District as support for its conclusion that tax credits given under the Act are a direct expenditure of public money generated through taxation. There, the court held that a taxpayer had standing to challenge whether the city had authority to amend a redevelopment plan without reconvening the Tax Increment Financing (TIF) commission. 66 S.W.3d at 11. That case is distinguishable from the facts here. In Ste. Genevieve School District, unlike here, it appears there was a challenge to the proposed expenditure of funds generated through taxation under the amended redevelopment plan. Further, it is distinguishable in that the holding in Ste. Genevieve School District arose in the unique context of analyzing the TIF statutes. The taxpayers and Judge Wolff's concurrence incorrectly rely on Curchin v. Missouri Industrial Development Board, 722 S.W.2d 930 (Mo. banc 1987), to support their position that tax credits are a grant of public money resulting in taxpayer standing. In Curchin, the court decided that the allowance of a tax credit constitutes a grant of public money or property in violation of article III, section 38(a), which bans the grant of public money or property to private entities. [9] Id. at 933. The court held that there was a violation of the constitution by stating that a tax credit is as much of a grant of public money or property and is as much a drain on the state's coffers as would be an outright payment by the state. Id. But any reliance on Curchin is misplaced. The issue of standing was not raised or addressed in Curchin. The court in Curchin adjudicated the merits of the case by analyzing the constitutional question of whether tax credits are the grant of public money. But that question is different from the preliminary issue before this Courtwhether taxpayers have standing. Curchin is not relevant. There is a dispositive distinction between the test for standingwhether there is a direct expenditure of funds generated through taxationas opposed to the constitutional questionwhether a tax credit is a grant of public money or property to a private person, association, or corporation. By relying on Curchin as support for its position that taxpayers have standing, Judge Wolff's concurrence conflates the requirements for standing and constitutional validity under article III, section 38(a). By merging the two requirements into one, it would require this Court to abandon over a century of precedent. Since Newmeyer, which was decided in 1873, taxpayer standing has required a challenge to an expenditure of public funds. [10] This Court is mindful of stare decisis and declines to overrule Newmeyer and its progeny. See Sw. Bell Yellow Pages, Inc. v. Dir. of Revenue, 94 S.W.3d 388, 390 (Mo. banc 2002) (Under the doctrine of stare decisis, a decision of this court should not be lightly overruled, particularly where, as here, the opinion has remained unchanged for many years.).