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

Heading: Does the Hub Exemption Violate the Equal Protection Clause?

Text: ถ 54 State tax classifications require only a rational basis to satisfy the Equal Protection Clause. Gen. Motors Corp. v. Tracy, 519 U.S. 278, 311, 117 S.Ct. 811, 136 L.Ed.2d 761 (1997). [I]n taxation, even more than in other fields, legislatures possess the greatest freedom in classification. Id. To survive an equal protection challenge, a classification made by the legislature that does not concern a suspect class or implicate a fundamental right must bear a rational relationship to a legitimate government interest. Ferdon v. Wis. Patients Compensation Fund, 2005 WI 125, ถถ 60-65, 284 Wis.2d 573, 701 N.W.2d 440; State v. Hezzie R., 219 Wis.2d 848, 894, 580 N.W.2d 660 (1998). ถ 55 Since the hub exemption implicates neither a suspect class nor a fundamental right, we will uphold the classifications as reasonable if, under any state of facts that can be reasonably conceived, the classification advances a legitimate governmental purpose. Ferdon, 284 Wis.2d 573, ถถ 71-72 & n. 77, 701 N.W.2d 440; Aicher v. Wis. Patients Compensation Fund, 2000 WI 98, ถ 57, 237 Wis.2d 99, 613 N.W.2d 849; State ex rel. Hammermill Paper Co. v. La Plante, 58 Wis.2d 32, 74, 205 N.W.2d 784 (1973). ถ 56 The Single Airport hub exemption classifies air carriers into two groups: those that operate at least 45 daily flights out of a single Wisconsin airport to at least 15 nonstop destinations versus those that operate less than 45 daily flights out of a single Wisconsin airport and/or that fly to less than 15 nonstop destinations. See Wis. Stat. ง 70.11(42)(a)2.a. The Headquarters hub exemption also classifies air carriers into two groups: those whose corporate headquarters are in Wisconsin and operate at least 20 common carrier departing flights each weekday versus those whose corporate headquarters are not in Wisconsin and/or do not operate at least 20 common carrier departing flights each weekday. ง 70.11(42)(a)2.b. The legislature chose to classify air carriers based on the amount and type of business activity they conduct in Wisconsin. We must accept the classifications adopted by the legislature unless we can say that [they are] very wide of any reasonable mark. Stanhope v. Brown County, 90 Wis.2d 823, 843 n. 11, 280 N.W.2d 711 (1979) (quoting Louisville Gas & Elec. Co. v. Coleman, 277 U.S. 32, 41, 48 S.Ct. 423, 72 L.Ed. 770 (1928)). ถ 57 The legislature could have rationally concluded that a number of legitimate governmental purposes are advanced by exempting air carriers that conduct a minimum level of business in Wisconsin or that are headquartered in Wisconsin. The Legislative Fiscal Bureau documented many of the expected benefits of the hub exemption in a summary of the 2001-2003 budget. Legislative Fiscal Bureau Paper # 899. ถ 58 The Legislative Fiscal Bureau noted the hub exemption would likely help retain an existing hub facility in Wisconsin or might encourage additional air carriers to expand in Wisconsin. Id. at 2-3. Expected benefits of a hub facility included: (1) more nonstop flights to and from the state, which would encourage existing business to remain in-state and help attract new businesses to the state; (2) an increase of all flights to and from the state; and (3) an increase in jobs in the state. Id. ถ 59 Three historical facts demonstrate the rational basis for the belief that the hub exemption was necessary to protect Wisconsin's transportation infrastructure and economy. First, in the early 1990s, Northwest downsized its Wisconsin presence, opting to expand its operations in Minnesota, in response to a public financing and incentive package of approximately $761 million. [21] Minnesota Legislative Reference Library, Resources on Minnesota Issues Northwest Airlines and the State of Minnesota, http://www.leg.state .mn.us/lrl/issues/ nwa. asp (last visited June 30, 2006). When Northwest reduced its Wisconsin presence, Milwaukee lost about 100 jobs. The legislature could have reasonably believed that the hub exemption would guard against the loss of more jobs and prevent a further drop in the number of flights to and from Wisconsin. ถ 60 Second, at the time the legislature drafted and passed the hub exemption, Midwest was planning a nearly $1 billion expansion. Dennis Chaptman, Midwest Express turns attention to tax cut, Milwaukee J. Sentinel (Feb. 15, 2000), at 1D. Midwest, however, was undecided about where to expand. Id. The legislature could have reasonably believed that the hub exemption would influence Midwest to expand in Wisconsin. ถ 61 Third, Air Wisconsin was also planning to expand its operations. Avrum D. Lank, Panel OKs airlines tax break, Milwaukee J. Sentinel (Feb. 7, 2001), at 1D. Like Midwest, Air Wisconsin was uncertain about where it would expand: Wisconsin, Illinois, or Indiana. Id. Again, the legislature could have reasonably believed that the hub exemption would influence Air Wisconsin to expand in Wisconsin. In short, we conclude that the legislature could have reasonably determined that creating the hub exemption would help retain air carriers with a Wisconsin hub facility, which would bolster economic development in Wisconsin, a legitimate governmental purpose.