Court Opinion

ID: 9700355
Source: CourtListenerOpinion
Date Created: 2023-08-25 21:23:34.160749+00
Date Added: 2024-06-11T13:10:34.801346
License: Public Domain

Concurring Opinion by
Mr. Chief Justice Bell:
The Legislature passed and the Governor signed, on March 4, 1971, the “Tax Reform Code of 1971,” Article III of which is commonly referred to as the Pennsylvania Personal Income Tax. I have believed for a cou*57pie of years that an income tax was inevitable in Pennsylvania.* However, that, of course, means a Constitutional income tax—and in this case it particularly means an income tax which does not violate the Uniformity provisions in our State Constitution.
I join in Justice Roberts’s able Opinion.** In an attempt to implement or explain or distinguish the many points of view and the rationale which have been expressed in the various Opinions, I feel compelled, because of the tremendous importance of this income tax to millions of Pennsylvanians, to supplement Justice Roberts’s Opinion and to attempt to further explain, answer or refute some of the reasonings which have been advanced by others.
Nearly everybody hates taxes. However, taxes of nearly every kind and description and nomenclature are Constitutionally and legally permissible, provided they do not violate any provision of the Constitution or any pertinent statute. Of all the provisions of the Constitution, the interpretation and application of those provisions which pertain to taxes, and especially the Uniformity Clause, present the most difficulties. Some of this Court’s decisions on the subject of taxes are confusing, and others irreconcilable. Moreover, similar difficulties arise in the interpretation and application of tax statutes and tax ordinances. An illustration of this difficulty may be found in the recent case of National Biscuit Co. v. Philadelphia, 374 Pa. 604, 98 A. 2d 182, in which this Court held that a tax on the privilege of transacting business was an excise tax, and was not duplicative of the corporate net income tax, or of the State’s capital stock tax, or of its foreign corporation *58franchise tax, because those taxes were property taxes, whereas the challenged Philadelphia ordinance .tax was an excise or privilege tax. That decision was made by this Court in 1953 and lasted four years. Four years later (in 1957), in Commonwealth v. National Biscuit Company, 390 Pa. 642, 136 A. 2d 821, this Court repudiated that interpretation and held that the foreign corporation franchise tax was not a property tax, but was an excise tax, i.e., a privilege tax. This interpretation and conclusion was arrived at by determining (1) whether the challenged tax is a tax on the same subject matter and (2) whether the measure of the tax “is the base or yardstick by which the tax is applied.” Irrespective of what said tax actually and legally was (and which of the aforesaid cases was correctly decided), these cases demonstrate that a provision of the Constitution, or of a statute, or of an ordinance pertaining to taxes is oftentimes very difficult of interpretation, as well as application.
Senator Tilghman contends that the Pennsylvania Personal Income Tax passed under Article III of the Pennsylvania Tax Reform Code of 1971 and approved by the Governor on March 4, 1971, is unconstitutional because it was passed by the Legislature without the benefit of an annual operating budget submitted by the Covernor. Section 12 of Article Till of the Constitution of 1968 provides that the Governor shall submit to the General Assembly “annually at the times set by law . . . (a) a balanced operating budget for the ensuing fiscal year setting forth in detail (i) proposed expenditures classified by department or agency and by program and (ii) estimated revenues from all sources.”
Moreover, Section 602 of the Administrative Code, Act of April 9, 1929, P. L. 177, as amended, 71 P.S. §222, provides that the Governor shall submit to the Legislature a balanced operating budget “as soon as *59possible* after the organization of the General Assembly.” While it would be both wise and helpful if the Governor complied with these provisions, the time period is an indefinite generalization, and it should be construed not only reasonably but also realistically.
The Commonwealth Court unanimously (although strongly divided as to the other issues raised) held that Tilghman’s contention is meritless. They concluded, and we agree, that there is nothing in the record to show that the aforesaid Act, when reasonably and realistically construed, was not complied with by the Governor. More importantly, there is nothing in the Constitution or in the Act, which specifically or by necessary implication prohibits a Legislature from enacting tax legislation before its receipt from the Governor of a balanced operating budget.
The present Personal Income Tax Act imposing a tax on the amount shown on Line 50 of the Federal Income Tax Return provides, because of at least a dozen items, exemptions, deductions, classifications, discriminations, and/or provisions, a different tax basis** for thousands of people—including, inter alia, the exemption from all taxes of many millionaires.
The contention of the appellants that the Act is unconstitutional because it delegates the tax and the power to tax to the Federal Government by adopting Line 50 of the Federal Income Tax Return as the basis for the Pennsylvania Personal Income Tax is without merit. The Pennsylvania Legislature has merely taken and adopted, as the base for the Income Tax levied by the Commonwealth, the taxable (net) income arrived at and reported on Line 50 of the Federal Income Tax Return. See Campbell v. Coatesville Area School District, 440 Pa. 496, 503, 270 A. 2d 385; Commonwealth v. *60Budd, 379 Pa. 159, 108 A. 2d 563; Commonwealth v. Warner Brothers, 345 Pa. 270, 27 A. 2d 62; Turco Paint & Varnish Co. v. Kalodner, 320 Pa. 421, 184 Atl. 37.
Every Act of the Legislature, even a tax statute, is presumed to be Constitutional and its challengers must prove clearly, plainly and palpably that it violates the Constitution—in this case, the Uniformity Clause. Wanamaker v. Philadelphia School District, 411 Pa. 567, 274 A. 2d 524; Campbell v. Coatesville Area School District, 440 Pa., supra; Allentown School District Mercantile Tax Case, 370 Pa. 161, 166, 87 A. 2d 480; Evans v. West Norriton Township, 370 Pa. 150, 87 A. 2d 474; Tranter v. Allegheny County Authority, 316 Pa. 65, 173 Atl. 289. I believe this test for violation has been met by those who allege the Act is unconstitutional.
I agree with Justice Eagen that the Vanishing Tax Credit and the Local Tax Credit are for several reasons unconstitutional. For example, the former would be violative of the Uniformity Clause as interpreted in Saulsbury v. Bethlehem Steel Company, 413 Pa. 316, 196 A. 2d 664, and in Kelly v. Kalodner, 320 Pa. 180, 181 Atl. 598. Moreover, Section 319, dealing with the poor, aged, infirm or disabled (Article VIII, Section 2(b) (ii)) is (because of lack of definition of this class) too vague to comply with the exemption provisions in this Section.
I likewise believe, for the reasons set forth in Justice Eagan's Opinion, that Section 317, which deals with taxes imposed by political subdivisions of this Commonwealth, is unconstitutional, because it patently lacks uniformity in its operation. In Allentown School District Mercantile Tax Case, 370 Pa., supra, the Court said (pages 167-168, 170): “Article IX, Section 1, of the Constitution of Pennsylvania, provides, ‘All taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authoritj^ levying the tax, and shall be levied and collected under general law; *61. . .’ This means that the classification by the legislative body must be reasonable and the tax must be applied wtih uniformity upon similar kinds of business or property and with substantial equality of the tax burden to all members of the same class: Commonwealth v. Girard Life Insurance Co., 305 Pa. 558, 158 A. 262; Knisely v. Cotterel, 196 Pa. 614, 46 A. 861; Dufour v. Maize, 358 Pa. 309, 56 A. 2d 675; Commonwealth v. McCarthy, 332 Pa. 465, 3 A. 2d 267; Dole v. Philadelphia, 337 Pa. 375, 11 A. 2d 163.
“Uniformity requires substantial equality of tax burden: Com. v. Overholt & Co., Inc., 331 Pa. 182, 200 A. 849; Com. v. Repplier Coal Co., 348 Pa. 372, 35 A. 2d 319; Moore v. Pittsburgh School District, 338 Pa. 466, 13 A. 2d 29. While taxation is not a matter of exact science and perfect uniformity and absolute equality in taxation can rarely ever be attained (Wilson v. Philadelphia, 330 Pa. 350, 352, 198 A. 893), the imposition of taxes which are to a substantial degree unequal in their operation or effect upon similar kinds of business or property, or upon persons in the same classification, is prohibited: Cf. Com. v. Overholt & Co., Inc., 331 Pa. 182, 190-191, 200 A. 849; Pollock v. Farmers’ Loan and Trust Co., 157 U.S. 429, 599. Moreover while reasonable and practical classifications are justifiable, where a formula or method of computing a taw will, in its operation or effect, produce arbitrary or unjust or unreasonably discriminatory results, the constitutional provision relating to uniformity is violated: Turco Paint & Varnish Co. v. Kalodner, 320 Pa. 421, 184 A. 37; Hans Rees’ Sons v. North Carolina, 283 U.S. 123.”
I am familiar with Section 1202 of the Act, “Constitutional Construction,” which provides: “. . . It is hereby declared as the legislative intent that this code would have been adopted had such unconstitutional word, phrase, clause, sentence, section or provision thereof not *62been included herein.” In the light of Section 1202, the unconstitutionality of these two vanishing credit provisions would not impair the Constitutionality of the rest of the Act, if the Act as a whole was Constitutional. However, since the Act is clearly, plainly and palpably unconstitutional, Section 1202 is inapplicable.
One other contention of the appellees remains to be answered, namely, that the corporation tax decisions of this Court are apposite and controlling. I disagree. Corporate tax cases are different and distinguishable from taxes imposed on individuals, and (I repeat) are therefore not controlling. For example, Article VIII of the Pennsylvania Constitution of 1968, “Taxation and Finance”, provides:

“Uniformity of Taxation

Section 1. All taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax, and shall be levied and collected under general laws.
Exemptions and Special Provisions*
Section 2. (a) The General Assembly may by law exempt from taxation:
(b) The General Assembly may, by law:
(ii) Establish as a class or classes of subjects of taxation the property or privileges of persons who, because of age, disability, infirmity or poverty are determined to be in need of tax exemption or of special tax provisions, and for any such class or classes, uniform standards and qualifications ...”
This exemption provision clearly indicates that there may Constitutionally be different tests, standards and exemptions for individuals which are totally inapplicable to corporations, and consequently decisions with *63respect to and governing taxes for corporations are not controlling on uniformity requirements for individuals.
For the reasons set forth in Mr. Justice Roberts’s Opinion, and also for the additional reasons herein set forth, I believe the Pennsylvania Personal Income Tax is clearly, plainly and palpably Unconstitutional.

 The wisdom or fairness of an Aet is a matter for the Legislature and not for the Courts.

I wish to take this opportunity to tell the Commonwealth Court how much we appreciate their speedy consideration and disposition of these cases—they have been very helpful.

 Italics throughout ours, unless otherwise noted.

 The effect of this will be hereinafter discussed.

 New, under the 1968 Constitution.