Court Opinion

ID: 9552406
Source: CourtListenerOpinion
Date Created: 2023-08-07 19:10:03.85354+00
Date Added: 2024-06-11T15:26:17.783815
License: Public Domain

*16McFarland, j.,
concurring in part and dissenting in part. I concur with those portions of the majority opinion which uphold the validity of the challenged statutes and dissent from those portions of the majority opinion which invalidate the statutes as unlawful delegations of legislative authority in contravention of article 2, § 1, of the Kansas Constitution.
The majority opinion’s discussion of the issues commences with the following:
“Let us state at the outset the long-standing and well-established rules of this court when considering the constitutionality of a statute. Constitutionality is presumed, all doubts must be resolved in favor of the statute’s validity, and before a statute may be stricken down it must be clearly shown it violates the constitution. It is the court’s duty to uphold the statute under challenge, if possible, rather than defeat it, and if there is any reasonable way to construe the statute as constitutionally valid, that should be done.”
This is an accurate statement of the basic rules which are to be assiduously followed by this court in determining the constitutionality of a statute. In the context of the majority opinion, however, these fundamental limitations on judicial authority are mere perfunctory regurgitations of prefatory material.
Specifically, the majority holds:
“The provision of K.S.A. 1980 Supp. 79-3109(f>) authorizing local units of government to reduce or eliminate the statewide intangibles tax levy is an ünauthorized delegation of legislative authority to local government in violation of article 2, § 1, of the Kansas Constitution.” Syl. ¶ 7.
K.S.A. 1980 Supp. 79-3120a(d) is struck down as being “a mere ratification of constitutionally impermissible action.” In essence, the majority piggybacks the invalidity of this latter statute upon the shoulders of the invalidity of K.S.A. 1980 Supp. 79-3109(h). For purposes of this dissent, I shall refer hereafter only to 79-3109(¿) as having been invalidated. For further simplification, I shall refer to the “counties” or “local unit” as having the right to reduce or eliminate the intangibles tax, although 79-3109(b) grants such rights to cities and townships under certain circumstances.
I believe the underlying error in the majority opinion is a misconception of the basic nature of the tax involved herein. Repeatedly, the majority refers to intangibles tax as a “statewide tax’ or “statewide levy.” The inference arising from the usage of these terms is that the intangibles tax is a state tax which the local *17units of government have been unlawfully delegated power to modify. This is simply not the situation.
K.S.A. 1980 Supp. 79-3109 provides in relevant part:
“Moneys, notes and other evidences of debt . . . shall hereafter be taxed annually as hereinafter provided.
“(a) Except as otherwise provided by subsection (b) of this section, any person owning money, notes and other evidence of debt . . . shall ... be subject to a tax equivalent to three percent (3%) upon the total gross earnings received by him or her from such money, notes and other evidences of debt ....
“(b) the board of county commissioners . . . may ... fix the rate of the tax levied for the benefit of such county upon money, notes and other evidence of debt having a tax situs in such county at a rate other than the rate prescribed in subsection (a) of this section .... Such board may ... in lieu of prescribing a rate of taxation, elect that no tax shall be levied for the benefit of such county upon money, notes, and other evidence of debt . . . .” (Emphasis supplied)
I believe a fair paraphrasing of this statute is:
Taxation of intangible property shall be as hereinafter provided:
Unless the tax is reduced or wholly eliminated by the county as provided by (b) of this statute, intangible property is subject to a tax of three percent of its gross earnings.
As noted in the statute, the tax is for the benefit of the county.
When the state levies taxes against classes of property, it does so specifically. Illustrative thereof is K.S.A. 76-6b01 which provides:
“There is hereby levied an annual permanent state tax of one mill upon all tangible property in this state which is subject to ad valorem taxation, and such tax levy shall be made each year until changed by statute. Such tax levy shall be in addition to all other state tax levies authorized by law. Such tax levy shall be for the use and benefit of the state institutions of higher education. The proceeds of such tax levy shall be apportioned in accordance with this act.
“The county treasurer of each county shall make the proceeds of the tax levy provided for in this section available to the state treasurer immediately upon collection. When available the state treasurer shall withdraw from each county the proceeds of the taxes raised by such tax levy. Upon such withdrawal the state treasurer shall deposit the same in the state treasury and shall credit the same as provided in K.S.A. 76-6b02.”
See also K.S.A. 76-6b04. The constitutional authority for these levies is article 6, § 6, and article 7, § 6, respectively. These tax levies are state tax levies and the revenues therefrom are state monies.
*18This is in sharp contrast to the intangibles tax herein. The state does not levy a tax against intangibles. There is no constitutional provision permitting such a state tax levy. Not one cent of revenue raised from the intangibles tax becomes state money.
Kansas Gas & Elec. Co. v. Dalton, 142 Kan. 59, 46 P.2d 27 (1935), discussed the procedure whereby the state tax levy is collected by the county and submitted to the state treasurer. See also K.S.A. 79-2917 which provides for deficiency levies “in addition to the regular levy for state purposes.”
The intangibles tax is not a state tax. Revenues therefrom are used exclusively at the local level. The reduction or elimination of the intangibles tax in one particular county in no way increases the tax burden in any other county. The taxing unit for the intangibles tax is each individual county — not the state as a whole. Within each taxing unit there is uniformity.
There are numerous examples whereby the legislature authorizes, but does not require, a local unit of government to impose a tax. Some representative statutes are summarized as follows: K.S.A. 12-1220 et seq., does not require a municipality to establish a library, but, if one is established by local choice, a tax may be levied for its establishment and maintenance not to exceed a specified number of mills.
K.S.A. 12-1680 et seq., authorizes cities and counties on a local option basis to levy a set mill amount for programs for the elderly.
K.S.A. 1980 Supp. 12-lla01 is an interesting statute. It provides in relevant part:
“Whenever the board of county commissioners . . . shall by resolution determine that it is essential for the protection of persons and property within such county to provide additional law enforcement services, such board is hereby authorized to levy a tax of not to exceed one-half mill upon all taxable tangible property within such county to pay the costs thereof . . .
The majority characterizes the setting of the ad valorem tax levy as a clerical act involving only dividing the adjusted budgeted amount into the assessed valuation. This is certainly true as far as the mechanical aspects of determining the total number of mills needed to raise a particular amount of money in a particular taxing district but is determinative of no issue before us.
The majority refers to the home rule amendment, article 12, § 5, of the Kansas Constitution, in support of its conclusion that the legislature has violated article 2, § 1, by the delegation of author*19ity herein. If the home rule amendment is considered to be pertinent to any issue herein, the following provision should be noted:
“(b) Cities are hereby empowered, to determine their local affairs and government including the levying of taxes, excises, fees, charges and other exactions except when and as the levying of any tax, excise, fee, charge or other exaction is limited or prohibited by enactment of the legislature applicable uniformly to all cities of the same class . . . .” (Emphasis supplied)
The authority of the local unit to reduce or eliminate the intangibles tax is directly granted by the legislature and certainly is not a power “limited or prohibited by enactment of the legislature.”
It would appear that the majority herein objects primarily to the form of the power granted to the local unit rather than the power itself. Under the majority opinion, the legislature has imposed a “statewide” tax with unlawful delegation to the local unit of authority to modify or eliminate the tax. Presumably, the majority would have no quarrel with a legislative grant of authority to the local unit to impose a tax on intangibles not to exceed three percent of total gross earnings. In my opinion such a technical distinction is one of form rather than of substance.
As previously noted, this court has a duty to uphold the statute rather than defeat it. I would uphold the validity of both K.S.A. 1980 Supp. 79-3109(6) and 79-3120a(d).