Opinion ID: 1952673
Heading Depth: 1
Heading Rank: 1

Heading: the vanishing tax credit:

Text: It cannot be gainsaid that the Legislature now has the authority under the new provisions of the Pennsylvania Constitution to establish special classes or make special tax provision for the poor, aged, infirm or disabled (Article VIII, Section 2(b) (ii)). Accordingly, the Legislature sought to accomplish this commendable result in Section 319 of the Tax Code. [4] For the reasons outlined by Judge KRAMER in his opinion in the court below, I feel that Section 319 cannot escape condemnation since its very vagueness would allow it to operate in a nonuniform manner far removed in some instances from its original purpose. As Judge KRAMER aptly notes the section is absolutely devoid of any definition of age, disability, infirmity or poverty. Can it be said that these terms are infused with any more meaning by reciting that The class of taxpayers who qualify for such tax credit and the amount thereof shall be determined solely by reference to the taxable income and exemption schedule. . . . Something more than taxable income is needed to make the permitted classification of poor, aged, disabled and infirm an integrated classification and hence, uniform. However this is merely a technical defect easily corrected by the use of qualifying definitions. THE LOCAL TAX CREDIT: In an attempt to alleviate some of the double taxation resulting from the imposition of the personal income tax, the Legislature included in the Tax Code the following credit provision: Section 317. Taxes imposed by political subdivisions of this Commonwealth: (a) Every resident or nonresident individual, estate or trust subject to tax under this article shall be allowed a credit against the tax otherwise due under this article equal to thirty percent of the amount of any local taxes imposed on and paid by such individual, estate or trust to any political subdivision of this Commonwealth during the calendar year 1971, except that such credit shall not apply to local taxes imposed on real estate, realty transfers or amusements. (b) For local taxes described in subsection (a) imposed and paid in the taxable years beginning after December 31, 1971, the amount of credit base provided in this section shall not exceed thirty percent of the total amount of the local taxes which were imposed and paid by such individual, estate or trust during the calendar year 1971 to political subdivisions of this Commonwealth, except that in the case where no such local taxes were imposed upon and paid by such individual, estate and trust during the calendar year 1971, then the percentage rate shall be applied to the total amount of such local taxes which were imposed upon and paid by such individual, estate or trust during the calendar year in which such taxes were first imposed and paid and the amount so determined shall each year thereafter constitute the base on which the tax credit rate shall be applied. This section, I believe, patently lacks uniformity in its operation and hence is unconstitutional. The foremost thing to be noted is that the tax credit is frozen at thirty percent of taxes paid to a political subdivision of the Commonwealth during 1971, or if no such taxes were paid by the individual during 1971, then thirty percent of local taxes during the first year in which they were imposed and paid. The credit once established, is forever predetermined despite the fact that a taxpayer may move to a new taxing authority and/or substantially increase the amount of his income. However, where a formula or method of computing a tax will, in its operation or effect, produce arbitrary or unjust or unreasonably discriminatory results, the constitutional provision relating to uniformity is violated. Turco Paint & Varnish Co. v. Kalodner, 320 Pa. 421, 184 A. 37 (1936). See also Danyluk v. Johnstown, 406 Pa. 427, 430, 178 A. 2d 609 (1962) wherein Mr. Justice COHEN said, Residence cannot be made the basis of discrimination in taxation. . . . To permit such distinction would be contrary to the well established principle that the test of the validity of a classification is whether it produces diversity in results or lack of uniformity in its operation on . . . the persons affected as payers. Biddle Appeal, 390 Pa. 460, 468, 135 A. 2d 915 (1957). Despite the fact that the Commonwealth has impaled itself on its own good intentions here, this section of the Tax Code can be invalidated (as can section 319) without affecting the constitutionality of the rest of the Code. See Butcher v. Philadelphia, 333 Pa. 497, 6 A. 2d 298 (1938) where the Court excised credits provided by the Philadelphia income tax while upholding the tax itself.