Opinion ID: 2060173
Heading Depth: 1
Heading Rank: 6

Heading: Does sec. 234.28, Stats., grant an unreasonable exemption from taxation in violation of art. VIII, sec. 1, Wisconsin Constitution?

Text: Sec. 234.28, Stats., provides: Notes and bonds; exemption from taxation. The state covenants with the purchasers and all subsequent holders and transferees of notes and bonds issued by the authority, in consideration of the acceptance of any payment for the notes and bonds, that its fees, charges, gifts, grants, revenues, receipts and other moneys received or to be received, pledged to pay or secure the payment of such notes or bonds shall at all times be free and exempt from all state, city, county or other taxation provided by the laws of the state. Respondents argue that sec. 234.28, Stats., gives the Authority advantages which private financial institutions, performing similar functions, do not have. They submit that a tax exemption having this effect is unreasonable and in violation of art. VIII, sec. 1. Art. VIII, sec. 1, Wisconsin Constitution, in part, provides: ... Taxes may also be imposed on incomes, privileges and occupations, which taxes may be graduated and progressive, and reasonable exemptions may be provided. Any classification of taxation is permissible which has a reasonable relation to a legitimate end of governmental action. Estate of Miller (1942), 239 Wis. 551, 558, 2 N. W. 2d 256. In Welch v. Henry (1937), 223 Wis. 319, 323, 271 N. W. 68, 277 N. W. 183, this court stated: ... while the legislature may classify persons for purposes of taxation, the classification must be based on reasonable differences or distinctions which distinguish the members of a class from those of another in respects germane to some general and public purpose or object of the particular legislation. Louisville Gas & Electric Co. v. Coleman, 277 U. S. 32, 48 Sup. Ct. 423.... The legislative findings, which are supported by facts as set forth in the stipulation of facts, reflect that there exists in Wisconsin a serious shortage of safe and sanitary residential housing for persons and families of low and moderate income, and that private enterprise and investment have not been able to produce, without assistance, this needed residential housing. The Authority was established by the legislature as a public body corporate and politic, whose purpose, absent any profit motive, is to alleviate this condition. Ch. 234, Stats., provides that the Authority shall respond to this serious public need, without encroachment on private enterprise, by restricting the power of the Authority to act only upon the determination that financing is not otherwise available from private lenders upon reasonably equivalent terms and conditions. The Authority is acting in all respects for the benefit of the people of this state in the performance of essential public functions and serves a public purpose in improving and otherwise promoting their health, welfare and prosperity. The tax exemption provided by sec. 234.28, Stats., is intended to encourage favorable sale of the Authority's bonds and notes and thereby contribute substantially to the accomplishment of the public purpose for which they were issued. The tax exemption provided by sec. 234.28 is reasonable and sec. 234.28 is not in violation of art. VIII, sec. 1.