Court Opinion

ID: 9532493
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:21:49.829234+00
Date Added: 2024-06-11T13:28:46.287651
License: Public Domain

MR. JUSTICE KLUCZYNSKI, dissenting: I must dissent from the majority opinion which construes the taxation of a leasehold estate in real property under section 26 of the Revenue Act of 1939, as amended (Ill.Rev.Stat. 1969, ch. 120, par. 507), to be a use tax and thus unconstitutional. Ill. Const. (1870), art. IV, sec. 13. While the majority admits that the General Assembly possesses the authority to tax a leasehold interest as real estate, they arrive at their conclusion that the tax in question is a use tax by isolating and dissecting section 26, as amended, from the remainder of the Revenue Act and overemphasizing the words “use” and “used” contained therein. This construction ignores the well-established principles of statutory construction which we are required to consider. Initially we must look to the entire Revenue Act of 1939, as amended, to determine the legislative intent which is of paramount importance. (People ex rel. Nelson v. Olympic Hotel Building Corporation, 405 Ill. 440, 444.) We cannot construe a provision in a vacuum. Secondly, we are required to construe a legislative enactment to be constitutionally valid if such an interpretation is reasonably possible. Continental Illinois National Bank and Trust Co. v. Illinois State Toll Highway Com., 42 Ill.2d 385, 389-90. The majority has ignored section 13 of the Revenue Act of 1939, as amended (Ill.Rev.Stat. 1969, ch. 120, par. 482(13)), which specifically defines real estate, in part, by providing: “Not only the land itself *** but also *** all rights and privileges belonging or in anywise pertaining thereto ***.” (Emphasis added.) It is apparent to me, after the majority has conceded the legislative power of the General Assembly to classify a leasehold as real estate for the purpose of taxation, that the legislature has in fact done so by clearly defining real estate as “*** all rights and privileges belonging or in anywise pertaining thereto ***.” This definition includes the leasehold interest contained in section 26, as amended. In view of our rules of statutory construction and the entire Revenue Act of 1939, as amended, I am constrained to hold that the tax in question is an ad valorem property tax. This position is further fortified by this court’s decision in City of Chicago v. University of Chicago, 302 Ill. 455, wherein a leasehold under section 60 of the Revenue Act of 1872 (Hurd’s Stat. 1921, ch. 120, par. 60)—the predecessor to section 26—was declared to be real estate for the purpose of taxation. Having so determined, I would dispose of the remaining issues, which the majority did not consider, in the following manner. The paramount complaint of the plaintiffs and intervenors here to section 26, as amended, is directed to the change in the method of the valuation of the property interest to be taxed rather than the right to tax. They fail to recognize that unlimited power resides with the General Assembly to determine the base and method by which property may be valued for tax purposes barring a constitutional infringement. Anderson v. City of Park Ridge, 396 Ill. 235, 244. Among the several contentions of invalidity urged by the plaintiffs and intervenors, several are predicated on constitutional grounds. Initially they argue that section 26, as amended, is violative of section 13 of article IV of the constitution of 1870 in that the Act contains more than one subject and that the amendment is not reflected in the title thereof. It is apparent that the section as amended refers to and governs solely the taxation of real property. Since a leasehold is real property for purposes of taxation under amended section 26, the constitutional prohibition which is asserted is erroneously applied. It is further argued that the valuation of the leasehold interest of the plaintiffs and intervenors is violative of section 1 of article IX of the constitution of 1870 in that it is based upon the value of the property of the fee owners rather than upon the value of their leases. This is not so. In United States v. City of Detroit, 355 U.S. 466, 2 L.Ed.2d 424, 78 S.Ct. 474, in sustaining a decision of the Supreme Court of Michigan, the United States Supreme Court upheld the imposition of a tax on the lessee’s right to use tax-exempt government property at a value equal to the property used, stating, “Other things being the same, it seems obvious enough that use of exempt property is worth as much as use of comparable taxed property during the same interval. In our judgment it was not an impermissible subterfuge but a permissible exercise of its taxing power for Michigan to compute its tax by the value of the property used.” 355 U.S. at 470, 2 L.Ed.2d at 427. As in the Detroit case, the tax imposed by section 26, as amended, is not a tax upon or measured by the value of the property of another but rather is imposed upon the value of the leasehold interest for the taxing period in question. It creates no inequalities among those so taxed, for each is taxed uniformly for the period in question. Plaintiffs and intervenors contend in this cause that section 26, as amended, is retroactively applied to their leases, which were entered into prior to the effective date of the amendment, without the demonstrative requisite intent of the General Assembly. However, a taxpayer has no vested right in a taxing statute and therefore cannot rely upon the continuation of the rate or basis of tax into the future. (Wessler v. Mud Creek Drainage Dist., 300 Ill. 350; 16 C.J.S., Constitutional Law, sec. 240(a).) There has been no attempt by the General Assembly to assess and levy a tax antedating the effective date of the amendment in question. It is prospective in application only and the General Assembly cannot be precluded from revising the method of taxation of the taxpayer in the future which may alter the rate or basis of taxation. Finally, they urge that the amendment is vague and that the statute is incomplete in that it provides no method for ascertaining or collecting this use or privilege tax. The tax imposed on leaseholds, pursuant to section 26, as amended, is a tax upon real property and is clear and- unambiguous, and all provisions relating to the assessment and collection of these taxes are contained within the Revenue Act of 1939. The imposition of a tax upon leaseholds of an otherwise tax-exempt fee, based upon the value of the property itself for the taxing period, lies within the power of the General Assembly, and the plaintiffs and intervenors have failed to establish any constitutional violation of the exercise of this power. Therefore I would hold that section 26 of the 1939 Revenue Act, as amended, is valid. MR. JUSTICE GOLDENHERSH joins in this dissent.