Opinion ID: 1678629
Heading Depth: 1
Heading Rank: 3

Heading: does the provider tax in hb 250 violate the equal protection of the laws doctrine?

Text: Appellants assert that HB 250 violates the Equal Protection Clause of the United States and Kentucky Constitutions by creating a provider tax. Since the analysis for each is identical, we discuss the contention. Because the challenged provisions do not adversely affect a fundamental interest, see, e.g., Dunn v. Blumstein, 405 U.S. 330, 336-42, 92 S.Ct. 995, 999-1003, 31 L.Ed.2d 274 (1972); Shapiro v. Thompson, 394 U.S. 618, 629-31, 89 S. Ct. 1322, 1328-30, 22 L.Ed.2d 600 (1969), or contain a classification based upon a suspect criterion, see, e.g., Graham v. Richardson, 403 U.S. 365, 372, 91 S.Ct. 1848, 1852, 29 L.Ed.2d 534 (1971); McLaughlin v. Florida, 379 U.S. 184, 191-92, 85 S. Ct. 283, 287-89, 13 L.Ed.2d 222 (1964), they need only be tested under the lenient standard of rationality that this Court has traditionally applied in considering equal protection challenges to regulation of economic and commercial matters. See, e.g., Western & Southern Life Ins. Co. v. State Board of Equalization, 451 U.S. 648, 668, 101 S.Ct. 2070, 2083, 68 L.Ed.2d 514 (1981); Minnesota v. Clover Leaf Cremery Co., 449 U.S. 456, 461-63, 101 S.Ct. 715, 722-23, 66 L.Ed. 2d 659 (1981); Kotch v. Board of River Pilot Comm'rs, 330 U.S. 552, 564, 67 S.Ct. 910, 916, 91 L.Ed. 1093 (1947). Under that standard, a statute will be sustained if the legislature could have reasonably concluded that the challenged classification would promote a legitimate state purpose. See, e.g., Western & Southern Life Ins. Co., 451 U.S., at 668, 101 S.Ct., at 2083; Clover Leaf Creamery Co., 449 U.S., at 461-462, 464, 101 S. Ct., at 722, 723-24. Legislation will be upheld under equal protection principles of the federal and state constitutions if the law is rationally related to a legitimate objective. Waggoner v. Waggoner, Ky., 846 S.W.2d 704, 708 cert. denied 510 U.S. 932, 114 S.Ct. 346, 126 L.Ed.2d 310 (1993) ( citing McGowan v. State of Maryland, 366 U.S. 420, 425-26, 81 S. Ct. 1101, 1104-05, 6 L.Ed.2d 393 (1961)); Kentucky Ass'n of Chiropractors, Inc. v. Jefferson County Medical Society, Ky., 549 S.W.2d 817, 822 (1977). The constitutionality of a statute will be upheld if its classification is not arbitrary, or if it is founded upon any substantial distinction suggesting the necessity, or propriety, of such legislation. Waggoner, 846 S.W.2d at 708. With this standard in mind, we find that nothing in HB 250 is so irrational as to warrant a finding of unconstitutionality. Appellants argue that it is irrational and arbitrary to tax one sub-group of health care providers and not another. We do not find this argument compelling. The rational review standard is not hard for a legislature to meet. It merely requires one to postulate that the legislature could have envisioned that HB 250 would promote a legitimate state purposeany legitimate state purpose. Commonwealth, Revenue Cabinet v. Smith, Ky., 875 S.W.2d 873, cert. denied sub nom Yeoman v. Kentucky, 513 U.S. 1000, 115 S.Ct. 509, 130 L.Ed.2d 417 (1994). Appellants' argument is essentially that this tax is unfair and therefore unconstitutional. This is not the correct standard. While this Court is loathe to engage in such platitudes as life is not fair, the essence of our decision in this matter is that the legislature is not required to be fair or even reasonable in matters of taxation. It is simply barred from behaving irrationally or arbitrarily. HB 250 creates a two percent (2%) provider tax on certain health care providers. The persons who are classified so as to be within the tax are those categories as designated by the federal government. 42 U.S.C. § 1396b(w). See supra, discussion of § 59 of the Kentucky Constitution. Appellants claim that this classification scheme is so irrational that it violates equal protection of the laws. In this case the legislature made a distinction between those health care providers who were subject to the Provider Tax of HB 250 and those who were not. Appellants have not even begun to satisfy their burden in terms of showing that the tax in question was arbitrary or irrational. As was noted in Regan v. Taxation with Representation of Washington, 461 U.S. 540, 546, 103 S.Ct. 1997, 2002, 76 L.Ed.2d 129 (1983), Legislatures have especially broad latitude in creating classifications and distinctions in tax statutes. Lehnhausen v. Lake Shore Auto Parts Co., 410 U.S. 356, 359, 93 S.Ct. 1001, 1003, 35 L.Ed.2d 351 (1973); Allied Stores of Ohio v. Bowers, 358 U.S. 522, 526-527, 79 S.Ct. 437, 440, 3 L.Ed.2d 480 (1959); Madden v. Kentucky, 309 U.S. 83, 60 S.Ct. 406, 84 L.Ed. 590 (1940); Heritage Cablevision v. Board of Supervisors, 436 N.W.2d 37, 38 (Iowa 1989); Revenue Cabinet v. Estate of Marshall, Ky.App., 746 S.W.2d 408, 411 (1988). The fact that this Court upholds the challenged legislation under the principles of equal protection of the laws should not be read as an endorsement of the legislation itself. Rather, it should simply be seen as this Court ruling on the issue of the constitutionality of the legislation under the rational review standard. Vance v. Bradley, 440 U.S. 93, 97, 99 S.Ct. 939, 942-43, 59 L.Ed.2d 171 (1979); Department of Revenue v. Spalding Laundry and Dry Cleaning Co., Ky., 436 S.W.2d 522 (1969).