Opinion ID: 2052640
Heading Depth: 1
Heading Rank: 10

Heading: common sense interpretation

Text: There is no suggestion in the record that Ford managed the location of its inventory for tax rather than manufacturing purposes, and we make no such assumption. However, in interpreting the statute we may legitimately assume that the Legislature intended an interpretation of § 13 that did not invite tax manipulation, all other things being equal. Consequently, it is in order to see what manipulation could follow, if a taxpayer were permitted under § 13 to adopt the average monthly inventory assessment method in one district and the tax day assessment in another. Let us suppose that a taxpayer has a $100,000 inventory throughout the year that he can locate in two different assessment districts with equal business and tax rate advantage and can be assessed on December 31 in one district and use the average monthly inventory method in the other. Obviously under the tax day assessment, the taxpayer benefits most by having the least inventory in situ on the tax day. Let us assume therefore he has only $10,000 of inventory in the first assessment district during December. Taxwise it does not make any difference under the tax day method how much or how little inventory is present at other times of the year, so we can assume that $90,000 of the $100,000 inventory is kept in the first assessment district January through November. This means that in the second assessment district there would be $10,000 in situ January through November, and in December there would be $90,000. The assessed value in the first district under the tax date method would be the amount of inventory present on December 31, or $10,000. The assessed value in the second assessment district on the average monthly inventory basis would be one-twelfth of the total of $10,000 for 11 months plus $90,000 for one month, or one-twelfth of $200,000, which is $16,666.66. This means that the taxpayer's total inventory value would be $26,666.66 rather than the $100,000, if he had it all in the first or second assessment district all of the time, or were required to make consistent elections throughout the state. It does not seem probable that this is the result the Legislature had in mind. We do not interpret § 13 to permit such an outcome.