Court Opinion

ID: 9704784
Source: CourtListenerOpinion
Date Created: 2023-08-26 00:46:42.32206+00
Date Added: 2024-06-11T18:22:05.512425
License: Public Domain

NIX, Justice,
dissenting.
The result reached by Mr. Justice Roberts is a product of not seeing the forest through the trees. Today’s opinion of the Court correctly states that the state legislature intended to “exclusively occupy the state banking field.” At 1369, emphasis added. This observation, however, does not compel the conclusion that the legislature also intended to deprive municipalities of their statutory power to levy taxes applicable to all businesses within the municipality.1 The Pittsburgh Business Privilege Tax2 does not intrude upon the state’s exclusive domain of bank regulation, it merely *557requires banks located within the City of Pittsburgh to pay the same tax that every other business in Pittsburgh pays.
I concede that this case presents the Court with the troublesome issue of tacit preemption of local enactments by state laws. The opinion of the Court, however, fails to articulate either a standard or a method of analysis by which this recurring problem can be resolved. Indeed, it sweeps away what fragmentary structures for the resolution of these matters that have existed previously.
Prior to today two lines of decisions concerning preemption existed in our case law: cases involving regulatory preemption — including zoning cases — and cases involving taxation.3 Cases from these two distinct areas of law were merged for the first time in Mr. Justice O’Brien’s opinion in United Tavern Owners of Philadelphia v. School District of Philadelphia, 441 Pa. 274, 272 A.2d 868 (1971), an opinion devoid of precedential authority.4 Today’s opinion of the Court further confuses this issue by its heavy reliance upon the United Tavern decision. If preemption law in our jurisdiction is to have any predictability, this Court must clarify the controlling principles for its applicability.
United Tavern and Allegheny Airlines v. Philadelphia, 453 Pa. 181, 309 A.2d 157 (1973) are the only Pennsylvania authority cited by Mr. Justice Roberts for his contention that “[i]t is well established in this Commonwealth that a municipal regulation may not intrude into areas preempted by the state. This concept is equally applicable to local taxation.” At 1370 (footnote omitted). United Tavern, aside from not being precedential, found preemption of a *558local tax on retail liquor sales only when the Commonwealth’s monopolistic regulation of liquor was coupled with two different state levies on retail liquor sales. The fact of pervasive state regulation alone was insufficient to justify a finding of preemption, see 441 Pa. at 282, 272 A.2d 868. The case was decided on the ground that “because the sales of liquor are already subject to two state taxes, the state has preempted the specific field of liquor sales for taxation purposes.” Id., 441 Pa. at 284, 272 A.2d at 873. The state has not enacted tax legislation in the instant case that indicates any intent to preempt the field of business privilege taxes even when such taxes are applied to banks. The Allegheny Airlines case also is inapposite to today’s case. There the Court found that the United States Congress had preempted the field of airport head taxes and that the federal Constitution by virtue of the supremacy clause barred state or local taxes on the same subject. Obviously, these weighty issues of federal constitutional law are not present in the instant case. Consequently, a majority of this Court has never held that the legislature’s enactment of a state-wide regulatory program is evidence of the legislature’s intent to strip a local governmental entity of an expressly conferred power to tax.
The miscellany of non-Pennsylvania authority cited by Mr. Justice Roberts at p. 1370 detract from, rather than sustain, his analysis. The Arizona Supreme Court in Tempe v. Prudential Insurance Co., 109 Ariz. 429, 510 P.2d 745, relied on an express statutory provision which read, “the state pre-empts the field of imposing excise, privilege, franchise, income, license and similar taxes upon insurers and their general agents . . ..’’in striking down the municipal levy. In East Ohio Gas Co. v. Akron, 7 Ohio St.2d 73, 218 N.E.2d 608, the Ohio Supreme Court was concerned with a conflict between a state gross receipts tax upon public utilities and a municipal tax and not with the asserted preemptive effect of a state regulatory scheme on municipal taxing power involved in the instant case. Even so, the *559Court questioned its own “obscure, ambiguous, inconsistent and on occasion almost contradictory” application of the implied preemption doctrine in the state and local tax area and stated that the doctrine’s continued vitality in Ohio was based on “the Court’s antipathy to ‘double taxation’ ” — a policy consideration wholly irrelevant to the instant case. 218 N.E.2d at 610. Again, Parker v. Silverton, 109 Or. 298, 220 P. 139, has nothing to do with this case since it involved an attempt by a locality with statutory authority to impose a tax which it did not have authority to levy in the guise of a regulatory license fee. McCulloch v. Maryland, 4 U.S. (4 Wheat. 316) 415 (Curt. Ed.), 4 L.Ed. 579, and Weston v. Charleston, 8 U.S. (2 Pet. 449) 171 (Curt. Ed.), 7 L.Ed. 481, have to do with state and local taxation of Federal instrumentalities where, unlike the case at bar, the Congress has not consented to state and local taxation. See 12 U.S.C.A. § 548 (Supp.1979).
The McQuillin treatise cited by Mr. Justice Roberts flatly contradicts their approach: “And where no express prescription as to other taxes appears, the doctrine of preemption, under which if state legislation imposes a tax upon a specific subject matter municipalities are deemed without power to impose a similar or further tax upon the same subject, may apply as an additional limit upon the municipal taxing power.” McQuillin, Municipal Corporations, § 44.190a. Both treatises and the cases cited therein require that there be a conflict between a local tax and a state tax on the same subject before the doctrine of implied preemption can be invoked. Antieau, 2A Local Government Law, § 21.10 (1979 ed.).
In addition to its inconsistency with the analysis broadly enunciated in the leading treatises, Mr. Justice Roberts’ position is not sustained in pertinent cases in other jurisdictions. In considering an argument that comprehensive state and federal regulatory authority impliedly preempted a local excise tax on the purchase of tangible personal property as *560applied to the purchase of liquor, the California Supreme Court observed that such a tax is no more regulatory of “the liquor retailer in his business pursuit than are local and non-discriminatory fire ordinances, electrical plumbing and building restrictions, zoning limitations, and the like.” Ainsworth v. Bryant, 34 Cal.2d 465, 211 P.2d 564, 570. American National Bldg. & Loan Assn. v. City of Baltimore, 245 Md. 23, 224 A.2d 883 (sustaining city privilege tax levied on savings and loans where state franchise tax on savings and loans was in nature of fees imposed to raise revenues for regulatory purposes); State Farm Mutual Ins. Co. v. Temple, 176 Colo. 537, 491 P.2d 1371 (1971) (state regulation of insurance industry did not preclude imposition of doing business tax by city). Compare Callaway v. City of Overland Park, 211 Kan. 646, 508 P.2d 902 (1973) (sustaining city occupation tax on business of renting property despite express statutory prohibition of city excise tax on sale, transfer or use of property); P. Lorillard v. City of Seattle, 83 Wash.2d 586, 521 P.2d 208 (1974) (city occupation tax on wholesalers valid as applied to wholesalers of cigarettes).
The mischievousness of Mr. Justice Roberts’ opinion is further illustrated by its cavalier failure to address itself to the teaching of the cases of this jurisdiction sustaining the validity of local taxes which were arguably subject to statutory preemption. In Smith, Kline & French v. Philadelphia, 437 Pa. 197, 262 A.2d 135 (1970), for example, the Court upheld the imposition of the Philadelphia Mercantile License Tax against a business subject to state exactions, because the payments to the state were intended as part of a regulatory schema and did not support the inference that the state intended to preempt local taxing jurisdiction. This closely analogous case is not mentioned by Mr. Justice Roberts. Neither is F. J. Busse Co. v. Pittsburgh, 443 Pa. 349, 279 A.2d 14 (1971), which upheld the Pittsburgh Business Privilege Tax — the same tax now challenged — against the claims that the state had preempted the area by already taxing the subject matter of the Pittsburgh tax. In fact, *561Mr. Justice Roberts has failed to cite any Pennsylvania cases dealing with business privilege taxes, the subject matter of the present case.
In place of a structured legal analysis, Mr. Justice Roberts justifies his result by raising the spectre of the “Great Depression,” the “delicate nature” of banks, and his belief that the Business Privilege Tax “undercuts the Banking Department’s responsibility, as well as its capacity, to regulate the soundness of banks.” At 1371. He offers no authority in support of this belief. Significantly, representatives from neither the State Banking Department or any other state office have objected to the Pittsburgh tax. If the State Banking Department does not object to this, can it be said that the Department’s ability to function will be destroyed by this tax?
The answer is that Mr. Justice Roberts mixed apples and oranges and created a lemon. His opinion states that the state has legislated upon virtually all aspects of banking, including the powers governing commercial and savings banks, bank deposits, a bank’s capital structure, shares and shareholders, incorporation, and fiduciary duties. At 1369. I fail to understand how a six mill tax will affect the ability of the state to regulate these aspects of banking.
Since the language of the Local Tax Enabling Act expressly gives the City of Pittsburgh the “power to levy, assess and collect taxes upon any and all subjects of taxation . which the Commonwealth has power to tax but which it does not tax or license,”5 an option which has been exercised by the City of Pittsburgh by ordinance, the effect of today’s decision is to infer from bank regulatory enactments an exemption from the city’s business privilege tax. This result plainly contravenes the rule that a statutory provision purporting to exempt persons and property from taxation must be strictly construed. 1 Pa.C.S.A. § 1928(b)(5); Bd. of Revision of Taxes of Philadelphia v. *562United Fund of Philadelphia Area, 11 Pa.Cmwlth. 201, 314 A.2d 530 (1973).
It is clear that the subject matter of the Pittsburgh Business Privilege Tax is not one already subject to state taxation. F. J. Busse Co. v. Pittsburgh, supra. There the Court said of the instant tax:
By definition, the tax imposed by the City is not an income tax, but rather a tax on a privilege which is measured by the gross receipts collected from conducting a business and not by the amount of profit made by the taxpayer.
443 Pa. 349 at n. 1, 279 A.2d 14 at n. 1 (emphasis in the original).
The United States Congress, after a comprehensive series of studies which considered and rejected all the policy arguments raised by Mr. Justice Roberts in part III of his opinion,6 has chosen to consent to state and local taxation of national banks.7 Localities by the force of the language of the Local Tax Enabling Act share in that power to the extent that the Commonwealth does. Diversity in local choice as to the subjects of taxation is the essence of the Local Tax Enabling Act. Should the legislature wish to take cognizance of the policy arguments used by the majority to justify its result, it can simply amend the laws of this Commonwealth, as it did in the wake of this Court’s decision in United Tavern Owners, supra8 to reflect these concerns. But this Court has not been deputized to do what a majority *563of this Court speculates that the legislature should do to protect the state banking industry from local taxes.
EAGEN, C. J., joins this opinion.

. Local Tax Enabling Act of 1965, Act of December 31, 1965, P.L. 1257, as amended, 53 P.S. §§ 6901 et seq.

. Ordinance No. 675 (effective February 1, 1969), as amended by Ordinance No. 594 (effective December 30, 1970).

. See Dalzell, The State Preemption Doctrine: Lessons From the Pennsylvania Experience, 33 U.Pitt.L.Rev. 205 (1971).

. Although the Court was composed of seven members, only five participated in the consideration and decision of the case. Mr. Justice O’Brien wrote an opinion of the Court in which Chief Justice Bell and Mr. Justice Roberts concurred in the result, Justice Pomeroy filed a dissenting opinion in which our current Chief Justice joined, and Justices Jones and Cohen did not participate.

. § 53, P.S. § 6903.

. U.S. Senate, Committee on Banking, Housing, and Urban Affairs, State and Local Taxation of Banks — Report of a Study Under Public Laws 91-156 and 92-213 (92d Congressional Second Sessions) (June, 1972); U.S. Senate, Committee on Banking, Housing and Urban Affairs, state and local “Doing Business” Taxes on Out-of-State Financial Depositories, Report of a Study Under Public Law 93-100 (94th Cong. 1st Sess. May, 1975).

. 12 U.S.C.A. § 548 (Supp.1979).

. First Class School District Liquor Tax Sales Act, Act of June 10, 1971, P.L. 153, No. 7.