Opinion ID: 1395261
Heading Depth: 2
Heading Rank: 2

Heading: State Purposes and the Relationship Between These Purposes and the Classification

Text: Having assessed the nature and extent of the right infringed upon, the next step under Erickson is to analyze the purposes of the statute and assess the extent to which the classification chosen has a fair and substantial relationship to these purposes. The state advances six purposes for the tax exemption provisions: (1) the plan should not relieve individuals entirely of their obligation to help defray the costs of government; (2) the plan should not result in the total dismantling of the state's income tax audit and collection staff; (3) the plan should not redistribute the income tax burden so that it falls only on the very highest income earners, but should retain the existing progressive structure; (4) the plan should not saddle individuals with an empty and burdensome annual filing requirement; (5) the plan should not result in a revenue collection bureaucracy out of proportion in size and cost to the amount of revenue collected; and (6) the plan should not result in a windfall to persons who receive the protections, services and benefits provided by the state that are closely related to the earning of income, but who have never before contributed to the costs of providing those programs. [8] It seems clear that purposes (2) through (5), although obviously legitimate state interests, are not related to the specific provision here at issue, the prior filing requirement. The Zobels do not contest the power of the state to reduce taxes, to maintain some tax system infrastructure, to maintain a progressive tax system, to reduce or eliminate the filing requirement, or to cut back on a disproportionately large tax bureaucracy. None of these, however, are fairly and substantially related to the line drawn by the legislature between those who have filed three, two, one, or no tax returns in the state. These purposes may explain why the legislature chose to reduce, without eliminating, the income tax requirement, but they shed no light on why the legislature chose to gear this reduction to a prior filing requirement, which is the question that must be answered. A stronger case can be made for finding a relationship between the prior filing requirement and purposes (1) and (6). As I interpret the argument, the state contends that every resident of Alaska should, at some point in his or her income earning career, be subject to an income tax. Longterm residents have already been so subjected, as they have been liable for past taxes; and, to achieve some basic equity between that group and those first, second, and third-time filers who have not yet borne their share of the burden, this classification is required. The Zobels assert that this purpose-the notion of introducing equity between old and new residents based on past tax contributions-is impermissible under the rulings of the United States Supreme Court. In Shapiro v. Thompson, 394 U.S. 618, 89 S.Ct. 1322, 22 L.Ed.2d 600 (1969), the Court rejected a past tax contributions argument offered to justify a durational residency requirement for welfare benefits: [The state's] reasoning would logically permit the State to bar new residents from schools, parks, and libraries or deprive them of police and fire protection. Indeed it would permit the State to apportion all benefits and services according to the past tax contributions of its citizens. The Equal Protection Clause prohibits such an apportionment of state services. 394 U.S. at 632-33, 89 S.Ct. at 1330, 22 L.Ed.2d at 614 (footnote omitted). These same concerns were repeated in dicta in a footnote in Vlandis v. Kline, 412 U.S. 441, 450 n. 6, 93 S.Ct. 2230, 2235 n. 6, 37 L.Ed.2d 63, 70 n. 6 (1973). The state argues that the Court did not say that past tax contributions could never legitimately form the basis for a statutory distinction; and that the equal protection issue raised by making distinctions based on past tax contributions does not turn on the legitimacy of the purpose, but rather on whether the distinction can be rationally related to the purposes of the statute. In Shapiro, such a distinction could not be rationally related to the purposes of the welfare statute, but it can be so related here. I reject the Zobels' argument that distinctions based upon past tax contributions are absolutely impermissible. The Supreme Court's affirmance of Starns v. Malkerson, 326 F. Supp. 234 (D.Minn. 1970), aff'd, 401 U.S. 985, 91 S.Ct. 1231, 28 L.Ed.2d 527 (1971), stands for the proposition that the Supreme Court has approved such a distinction between residents and nonresidents, based on former tax contributions, in the context of differential tuition charges as to resident and nonresident students. I think that, in some situations, a classification based on past tax contributions would be unquestionably permissible; e.g., a tax rebate made retroactive for a reasonable period could not be struck down on the equal protection ground that it distinguished past taxpayers from past nontaxpayers based solely on past tax contributions (although I express no opinion as to the other grounds on which such a statute might be attacked). On the other hand, it cannot be ignored that this purpose raises potential constitutional questions in many contexts, and is clearly impermissible in some ( e.g., welfare programs). I would resolve these conflicting considerations by ruling that distinctions based on past tax contributions are permissible, at least in the limited context of statutes designed to grant tax relief; but considering the possible constitutional infirmities with this purpose noted by the Supreme Court, this purpose must be placed among the weaker of the vast spectrum of state purposes, and normally it will not be given a great deal of weight when the Erickson balancing test is struck. Of course, this weight is only significant in relation to the other elements of the Erickson test. If the statute is tightly drawn so that there are no substantial gaps in the means/ends relationship, and so that its impact, in terms of suspect classifications and/or constitutional rights infringed, is minimal, then this purpose may prevail. Having found the purpose legitimate in this limited context, I turn to an examination of the relationship between the means and the end here. The Zobels point out, and the superior court found significance in the fact, that the only requirement is that of having filed a return, not of having incurred tax liability. Thus, the relationship is not based on past tax contributions directly, but rather on past tax return filing. In effect, it is somewhat over-inclusive. The state is correct in pointing out that over-inclusiveness does not necessarily render a statute unconstitutional. See Commercial Fisheries Entry Commission v. Apokedak, 606 P.2d 1255, 1267-68 (Alaska 1980). That is true; the over-inclusiveness is not dispositive. But it also is not irrelevant in assessing the extent to which the relationship between the classification and its purpose is a fair and substantial one.