Opinion ID: 2131483
Heading Depth: 1
Heading Rank: 4

Heading: negative-aid payments; a tax?

Text: Both respondents and amici assert that the negative-aid payment provided for in sec. 121.08, Stats., is something other than a tax. Respondents argue that negative-aid is a cost of doing business, while amici argue that it falls within the exercises of the police power of the state. We find neither of these arguments convincing. The only possible source of revenue for the required payments is the basic source of school district funds, i.e., local property taxes. See sec. 120.16 (6), Stats., which requires payment out of general property taxes. Under the statutorily created negative-aid formula, the method of meeting the required payments are made an integral part of the local taxing process. [8] Respondents confuse the purpose of the tax with the definition of the nature of state and local taxes. It is undisputed that education is a statewide concern and that money raised through the negative-aid provision will go toward: the fulfillment of the state's duty to provide education. But to determine whether a tax is to be classified as a state or a local tax, one must look to the entity which directly levies the tax, and which in turn directly provides governmental benefits therefor. If that entity is the state, it is a state tax. If that entity is a political subdivision of the state, it is a local tax. The question is who directly (and not indirectly) levies the tax? The funds paid to the state in the form of negative-aids can only be derived from revenues produced by taxes levied by the local district on property located within the negative-aid school district. The revenues from which these negative-aid funds are derived are raised by local taxes, not state taxes. The tax is a local property tax, locally levied, locally assessed and locally collected. For the last 128 years it has been locally spent for educational purposes of the district. It is a tax, and a local tax, not a state tax. Negative-aid payments are not part of the levy, assessment or collection of these district taxes, but they are part of the distribution and disbursements of the proceeds of these taxes. They are an integral part of the taxing process, and subject to those constitutional rules which relate to the distribution and disbursement of tax proceeds. [9] The parties concede that the state has the power to levy a statewide property tax for the purpose of supporting education, and in fact some form of such tax was in effect in Wisconsin from 1885 until 1933. However, the present statutory scheme vests the power of property taxation in local districts, and the taxes which they impose pursuant to this delegated power are local taxes, not state taxes.