Opinion ID: 2616600
Heading Depth: 2
Heading Rank: 4

Heading: Validity of classifications based on size or value of an owner's other holdings

Text: Courts in other states with tax uniformity clauses in their constitutions have reached conclusions similar to Mahoney and Shattuck. For example, in Mathias, the state argued that valid legislative goals supported a classification giving a lower tax rate to owners of four or more lots within one residential subdivision. The state valued such property below market to encourage investment and effort by those engaged in subdividing land [and] to stimulate subdividers into more activity than market forces alone would produce. 817 P.2d at 280. The Oregon Supreme Court sympathized with this goal, but still found  no difference in kind or in use of the property on which to base a selective exemption. Id. 817 P.2d at 281 (emphasis added). Even if the exemption had a rational justification (as, we assume, does the limit in the present case), it would not override the constitutional requirement for uniformity in [the property tax] context. Id. 817 P.2d at 279. Otherwise the legislature could render ineffective all uniformity of taxation constitutional protections. Id. Moreover, the court recognized that the amount of other property that a taxpayer owns is not a rational basis for distinguishing between otherwise identical [property] for tax purposes. Id. (emphasis added). The court invalidated the legislature's classification scheme. See also In re Opinion of the Justices, 84 N.H. 557, 149 A. 321, 326, 330 (1930). In key aspects, the present case also resembles American Stores Co. v. Boardman, in which a Pennsylvania license tax increased solely according to the number of stores or theaters under the same general management. Thus, operators of one store would pay a maximum license fee of only one dollar, while operators of five stores would pay one dollar for the first store and five dollars for each of the other four. The scale went up, so that at the top of the statutory scale, those operating over 500 stores would pay a $500 license fee for each store over 500. 336 Pa. 36, 6 A.2d 826, 827 (1939). The license tax classification was set up solely on a difference in quantity of precisely the same property in the same industry. The Pennsylvania Supreme Court held the law void under Pa. Const. art. 9, § 1 ([a]ll taxes shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax). Id. 6 A.2d at 828. In the present case, as in Boardman, the statute penalizes America West for the number or value of its possessions (airplanes). Thus, we have an ad valorem tax graduated, not by differences in the property or its use, but by differences in the nature of other property belonging to the owners, a distinction that, if approved, would seemingly read the uniformity clause out of the Arizona Constitution. [5]