Opinion ID: 1867810
Heading Depth: 2
Heading Rank: 3

Heading: Does the Hub Exemption Violate the Uniformity Clause?

Text: ถ 62 The Uniformity Clause of the Wisconsin Constitution provides: The rule of taxation shall be uniform. . . . Taxes shall be levied upon such property . . . as the legislature shall proscribe. Wis. Const. art. VIII, ง 1. The Uniformity Clause requires that there be one class of taxable property and that all property within that class must, as nearly as practicable, be taxed uniformly, unless otherwise provided in Article VIII, Section 1. See Noah's Ark Family Park v. Bd. of Review, 210 Wis.2d 301, 317-18, 565 N.W.2d 230 (Ct.App.1997) aff'd 216 Wis.2d 387, 390, 573 N.W.2d 852 (1998) (adopting the analysis of the court of appeals). We have consistently held that a tax conforms to the Uniformity Clause if it meets the following standards: 1. For direct taxation of property, under the uniformity rule there can be but one constitutional class. 2. All within that class must be taxed on a basis of equality so far as practicable and all property taxed must bear its burden equally on an ad valorem basis. 3. All property not included in that class must be absolutely exempt from property taxation. 4. Privilege taxes are not direct taxes on property and are not subject to the uniformity rule. 5. While there can be no classification of property for different rules or rates of property taxation, the legislature can classify as between property that is to be taxed and that which is to be wholly exempt, and the test of such classification is reasonableness. 6. There can be variations in the mechanics of property assessment or tax imposition so long as the resulting taxation shall be borne with as nearly as practicable equality on an ad valorem basis with other taxable property. State ex rel. Ft. Howard Paper Co. v. State Lake Dist. Bd. of Review, 82 Wis.2d 491, 506, 263 N.W.2d 178 (1978) (quoting Gottlieb v. City of Milwaukee, 33 Wis.2d 408, 424, 147 N.W.2d 633, 641 (1967)) (emphasis added). ถ 63 Northwest argues the hub exemption arbitrarily distinguishes between itself and Midwest because there is no meaningful basis for any distinction. Thus, Northwest concludes, the distinction made by the hub exemption cannot bear a reasonable relationship to a legitimate governmental purpose. ถ 64 DOR counters that the legislature is free to tax some property and wholly exempt other property as long as the basis for classifying the property differently is reasonably related to a legitimate governmental purpose. DOR argues the hub exemption advances the legitimate governmental purpose of promoting a robust air transportation system in Wisconsin, a vital component of a strong economy. DOR notes the hub exemption (1) encourages airlines to add or retain non-stop flights from Wisconsin, which has a positive impact on economic development; (2) encourages airlines to expand or remain in Wisconsin, generally; and (3) generates and retains jobs in Wisconsin. ถ 65 We conclude there is no argument that can prove beyond a reasonable doubt that the hub exemption violates the Uniformity Clause. Norquist, 211 Wis.2d at 250, 564 N.W.2d 748; Bd. of Trustees of Lawrence Univ. v. Outagamie County, 150 Wis. 244, 246, 136 N.W. 619 (1912). All legislative acts are presumed constitutional and every presumption must be indulged to uphold the law if at all possible. Norquist, 211 Wis.2d at 250, 564 N.W.2d 748. This is especially true where the challenged statute involves a tax measure, because the presumption of constitutionality is the strongest for taxation-related statutes. Id. ถ 66 The Uniformity Clause grants the legislature the right to select some property for taxation and to totally omit or exempt other property. Gottlieb, 33 Wis.2d at 420, 147 N.W.2d 633. The only limitation upon the legislature's authority to exempt property is that the distinction between taxed and wholly exempt property must bear a reasonable relation to a legitimate purpose of government[.] Madison Gen. Hosp. Ass'n v. City of Madison, 92 Wis.2d 125, 129-30, 284 N.W.2d 603 (1979). For the reasons stated under the equal protection analysis, we conclude the classifications made by the hub exemption are rationally related to the legitimate governmental purpose of ensuring the vitality of the Wisconsin economy.