Court Opinion

ID: 3457018
Source: CourtListenerOpinion
Date Created: 2016-07-05 20:25:47.330066+00
Date Added: 2024-06-11T14:04:15.581949
License: Public Domain

The majority opinion deals primarily with the first of the appellant's four grounds for urging that the judgment of the trial court should be reversed. This contention is that Section 5 of the 1934 Act as amended is unconstitutional as being an unreasonable and arbitrary classification of those engaged in the trade or occupation of a merchant for the purpose of taxation. The opinion holds, "that the classification made in the act under consideration is not a natural one, but is unreasonable and arbitrary, and that Section 5 of the Act, therefore, is invalid."
I am unable to agree with this conclusion, since it does not appear to me, for the reasons hereinafter stated, that the method of classification employed is so palpably arbitrary that a reasonable mind can not accede to it. However, I concur in the view that Sections 2 and 3 of the petition stated a cause of action and that the demurrers thereto should have been overruled.
The effect of the majority opinion is that retail business establishments can not be classified in groups according to the number of such establishments operated in the state by one operator for the application of a graduated license tax. This conclusion was reached without regard to the rates of the license tax applied to the several groups of establishments in the numerical classification. It was unnecessary, therefore, to consider *Page 383 
the reasonableness of the scale of progression in the rates when applied to the number of stores as classified, and also the question as to whether any part of the rate structure was confiscatory.
While I realize that the method of classification employed in the so-called chain store license tax in question is not the best to be had, it does not seem to me to be an arbitrary classification for license tax purposes. A sound tax measure should have some definite relation to the income of the taxpayer, since taxes are paid from income or capital. But in all such matters the legislature has been given wide latitude in determining the subjects to be taxed and the manner in which the taxes are to be applied. We have been reluctant, however, to accept and apply the theory that the power to tax involves the power to destroy; but that concept involves the question of confiscation and not that of classification.
Progress has been made in recent years in the field of taxation toward the goal of levying and collecting taxes in accordance with the ability of the taxpayer to pay. Property taxes, which are as old as organized government, and which have long been condemned, have been giving way rapidly to the more modern types of business, income and excise taxes, of which the measure in question is one. This change, however, has not kept pace with the rapid changes in our social and economic structure which incidentally accounts in no small part for the confusion and chaos in the field of taxation. Kentucky has been in the forefront in attempting to adopt a more equitable tax structure, though she still has some way to go along that road.
The so-called chain store taxes, most of which involve methods of classification similar to that in the measure now under consideration, are to be found in about one-half of the states. In some instances these taxes, as pointed out in the majority opinion, have been upheld upon the ground that they come within the scope of police power regulatory measures. But, regardless of the ground upon which they have been placed or considered, they have been generally upheld by the state courts and by the Supreme Court. Many of these decisions set forth the reasons and considerations for holding that a definite relationship exists between the ability to pay taxes and the number of outlets in the field of retail business. *Page 384 
Therefore, for the reasons set out above, I do not think the method of classification employed in the license tax in question violates our requirements as to the uniformity and equality of tax measures. I am authorized to say that Judge Fulton concurs in this dissent.