Opinion ID: 1036292
Heading Depth: 3
Heading Rank: 1

Heading: Commutation

Text: Subject to exceptions not applicable here, Neb. Const. art. VIII, § 4, provides: [T]he Legislature shall have no power to release or discharge any county, city, township, town, or district whatever, or the inhabitants thereof, or any corporation, or the property therein, from their or its proportionate share of taxes to be levied for state purposes, or due any municipal corporation, nor shall commutation for such taxes be authorized in any form whatever. The State officials argue that this provision applies only to property taxes and that the nameplate capacity tax is not a property tax. The district court rejected this argument. Although it characterized the nameplate capacity tax as an “excise tax,” it noted that in Kiplinger v. Nebraska Dept. of Nat. Resources,13 we considered the merits of an argument that an excise tax violated the constitutional prohibition against commutation of taxes and concluded that it did not. Although acknowledging that the question of whether article VIII, § 4, applied to an excise tax was neither raised nor specifically considered by this court in Kiplinger, the district court concluded that it was “not dissuaded from following Kiplinger and analyzing the nameplate capacity tax credit against Neb. Const. art. VIII, § 4.” We now consider the question de novo.
Capacity Tax [3-6] An excise tax is a tax imposed on the manufacture, sale, or use of goods or on an occupation or activity, and is measured by the extent to which a privilege is exercised by the taxpayer, without regard to the nature or value of the taxpayer’s assets.14 An excise tax is imposed upon the performance of an act.15 We have also stated that an excise tax includes 13 Kiplinger v. Nebraska Dept. of Nat. Resources, 282 Neb. 237, 803 N.W.2d 28 (2011). 14 Anthony, Inc. v. City of Omaha, 283 Neb. 868, 813 N.W.2d 467 (2012). 15 Id. Nebraska Advance Sheets BANKS v. HEINEMAN 397 Cite as 286 Neb. 390 taxes sometimes designated by statute or referred to as “privilege taxes,” “license taxes,” “occupation taxes,” and “business taxes.”16 In contrast, a property tax is levied on real or personal property, with the amount of the tax usually dependent upon the value of the property.17 The State officials argue that the nameplate capacity tax is an excise tax because it is measured by the productive activity or capacity of a wind generation facility. But the Knox Countians counter that it is not an excise tax because it is not imposed upon an activity, but instead is imposed upon the capacity to generate electricity, whether the equipment is used or not. The Knox Countians contend that because it does not matter whether the equipment is used, the tax is similar to a tax on personal property. But at the same time, they contend that the nameplate capacity tax “does not replace personal property taxes.”18 We addressed a similar issue in Kiplinger. There, the tax at issue was designated as an “occupation tax” and was imposed on the “‘activity of irrigation.’”19 The landowners on whom the tax was imposed argued it was actually a property tax in disguise and as such was improperly imposed for a state purpose. In rejecting this argument, we noted that the tax was not a property tax in part because it was “not dependent upon the value of the land being taxed.”20 Similarly, it is clear that the nameplate capacity tax here is not dependent upon the value of the wind turbines and other equipment used to generate electricity. Instead, it is generally imposed on the privilege of owning wind generation facilities in Nebraska and is not measured by the value of those assets. For these reasons, we agree with the district court that it is an excise tax. 16 State v. Galyen, 221 Neb. 497, 378 N.W.2d 182 (1985). 17 Kiplinger, supra note 13. 18 Brief for appellees at 30. 19 Kiplinger, supra note 13, 282 Neb. at 243, 803 N.W.2d at 36, quoting Neb. Rev. Stat. § 2-3226.05 (Cum. Supp. 2008). 20 Id. at 251, 803 N.W.2d at 41. Nebraska Advance Sheets 398 286 NEBRASKA REPORTS
art. VIII, § 4, to Excise Tax With the exception of Kiplinger, all of our cases applying the constitutional prohibition against the commutation of taxes have involved property taxation.21 In Kiplinger, we implicitly assumed that article VIII, § 4, applied to excise taxes, but we did not decide that issue, because it was not raised. We address it now as an issue of first impression. [7] Constitutional provisions are not open to construction as a matter of course; construction is appropriate only when it has been demonstrated that the meaning of the provision is not clear and that construction is necessary.22 It is true, as the Knox Countians argue, that the language of article VIII, § 4, does not expressly differentiate between various types of tax. But its prohibition of the release or discharge of a taxpayer’s “proportionate share of taxes” and the commutation of “such taxes” raises a legitimate question as to its scope.23 [8,9] It is a fundamental principle of constitutional interpretation that each and every clause within a constitution has been inserted for a useful purpose.24 In ascertaining the intent of a constitutional provision from its language, a court may not supply any supposed omission, or add words to or take words from the provision as framed.25 The language of article VIII, § 4, does not prohibit the release, discharge, or commutation of “taxes,” but, rather, a taxpayer’s “proportionate share” of taxes. 21 See, Sarpy Cty. Farm Bureau v. Learning Community, 283 Neb. 212, 808 N.W.2d 598 (2012); Swanson v. State, 249 Neb. 466, 544 N.W.2d 333 (1996); Jaksha v. State, 241 Neb. 106, 486 N.W.2d 858 (1992); Natural Gas Pipeline Co. v. State Bd. of Equal., 237 Neb. 357, 466 N.W.2d 461 (1991); Peterson v. Hancock, 155 Neb. 801, 54 N.W.2d 85 (1952); Steinacher v. Swanson, 131 Neb. 439, 268 N.W. 317 (1936); Woodrough v. Douglas County, 7l Neb. 354, 98 N.W. 1092 (1904); State v. Graham, l7 Neb. 43, 22 N.W. 114 (1885). 22 State ex rel. Johnson v. Gale, 273 Neb. 889, 734 N.W.2d 290 (2007). 23 Neb. Const. art. VIII, § 4. 24 City of North Platte v. Tilgner, 282 Neb. 328, 803 N.W.2d 469 (2011); State ex rel. Lemon v. Gale, 272 Neb. 295, 721 N.W.2d 347 (2006). 25 Tilgner, supra note 24. Nebraska Advance Sheets BANKS v. HEINEMAN 399 Cite as 286 Neb. 390 That phrase, which we are not free to ignore or disregard, correlates with the requirement of Neb. Const. art. VIII, § 1, that taxes be levied by valuation uniformly and proportionally. We have held that this constitutional provision does not apply to an excise tax.26 When article VIII, § 4, was enacted in 1875, property taxes provided the sole means of funding state and local government in Nebraska. In Woodrough v. Douglas County,27 we noted that article VIII, § 4, was taken verbatim from a provision of the Constitution of Illinois which was adopted to address “[a]n evil [which] had grown up in that state which had commenced to break down the principles of uniformity and equality of taxation.” Article VIII, § 4, has been amended twice, in 1958 and 1966, and both amendments related to real property.28 [10,11] The Nebraska Constitution, as amended, must be read as a whole.29 Based on the semantic and historical linkage between the prohibition against commutation of a taxpayer’s “proportionate share” of taxes in article VIII, § 4, and the uniform and proportionate requirements of article VIII, § 1, we conclude that the scope of the two provisions is the same. We therefore hold that the constitutional prohibition against commutation of taxes set forth in article VIII, § 4, does not apply to an excise tax. To the extent that Kiplinger can be read to suggest otherwise, it is disapproved.