Court Opinion

ID: 6361057
Source: CourtListenerOpinion
Date Created: 2022-06-24 23:35:52.77797+00
Date Added: 2024-06-11T15:49:41.455342
License: Public Domain

Opinion by
Judge Kramer,
Concurring in Part and Dissenting in Part:
I concur with my brothers of the majority in their holding that the private parking operators (appellants) have not proven any improper classification or illegal subject matter for taxation in violation of the Pennsylvania or United States Constitutions.
I must register my dissent to the result of the majority opinion because I believe that the record supports an allegation of the Complaint, to wit, that this parking tax increase violates the Equal Protection Clause of the United States Constitution, as found in the Fourteenth Amendment, which, inter alia, reads: “No state shall. . . deny to any person within its jurisdiction the equal protection of the laws.”
It is first necessary to point out that, under the decisional law, it was not necessary for these appellants to proceed under the statute to test the constitutionality of a tax measure as suggested by the majority. In the case of Lynch v. Owen J. Roberts School District, 430 *447Pa. 461, 465, 244 A. 2d 1, 3 (1968), the Pennsylvania Supreme Court stated: “While we agree with the general proposition that equity will not entertain an action where plaintiff has an adequate, statutory remedy at law, we also acknowledge the presence of an exception to that doctrine, existing where a taxing statute is made the subject of a constitutional challenge.” (Emphasis included.) Later the Court stated: “Finally, we note that the equity court, having once obtained jurisdiction because of the presence of a constitutional challenge to a taxing statute, may also dispose, as did the lower court here, of nonconstitutional challenges as well.” 430 Pa. at 466, 244 A. 2d at 3. See also, Campbell, et al. v. Coatesville Area School District, 440 Pa. 496, 270 A. 2d 385 (1970). Following the holding in the Lynch case, supra, I would also pass upon the reasonableness of the tax increase. On its face, the Taxing Ordinance in question levies a 20 percent tax upon all parking transactions of operators of nonresidential parking places, including governmental parking authorities. However, we should not analyze the Ordinance and the Record while wearing blinders to all of the facts.
This record conclusively proves that of the twelve private parking operator appellants, nine will sustain losses, and none of the others will earn more than about three percent per year.
One of the appellants’ exhibits (Plaintiffs’ Exhibit No. 1) sets forth in great detail their financial operating facts of life. It is based upon what were, at the time of trial, the latest actual operating statistics for the first six months of 1970 and projecting the same revenues and expenses for the balance of the year. A statistical summary of those figures, giving effect to the increased parking tax (at the 20 percent rate), proves better than a verbal description, what has happened to the parking business in the City of Pittsburgh.

*448
Operator

Number of Locations

Aleo Parking Corp.
William Penn Parking Lots
Parking Service Corp.
Arena Parking, Inc.
Fourth Avenue Parking, Inc.
William Penn Parking Garage, Inc.
Campus Parking Inc.
Grant Parking, Inc.
Oliver Plaza Garage
Liberty Avenue Lots
Stanwix Autopark
Liberty Parking
Meyers Parking System K-Seven Parking Co.,
includes St. Francis Hospital Lot
10
9
3
2
1
1
1
1
1
3
7
1
Total Gross Parking Revenue 1970 $1,446,446
661,571
1,965,264
404,048
550,964
130,613
146,136
320,178
282,923
175,403
638,895
146,380
1,015,188
285,549

Total Income

Income as of % of

(Loss) Revenue

(5,981) —
(3,703) . —
(118,887) —
729 0.2%
16,126
(5,384)
(19,048)
(62,429)
650
536
(13,604)
(41,906)
17,377
(34,175)
2.9%
0.2%
0.3%
1.7%
Total
46
8,169,558 (269,699)
It is possible that other operating expenses of the private parking operators also may have increased during the test period in question; but the record in this case does not support any argument that the total of all such possible other increases would have had the impact of the increased tax here in question.
The record shows that the appellants represent about 71 percent of the total commercial parking spaces in the City, and that the public parking authorities represent about 25 percent of such parking spaces. The public parking authority charges lower rates and suffered no losses j1 further it pays no real estate taxes on *449realty used for parking, no business receipts taxes and no gross receipts taxes. Appellants enjoy no tax exemption.
The court below found that none of these appellants proved that they could not raise their parking rates so as to recover the increased tax levied by the City. The record indicates to me, however, that at least one of the appellants twice raised its parking rates with disastrous results, thus supporting appellants’ argument that they would lose more money by raising parking rates. The majority correctly recognized that the 20 percent tax rate is an unreasonable one based upon the facts submitted by the appellant parking operators. Under the holding of Lynch, supra, this Court could have voided this tax increase or remanded the case.
When most of the private taxpayer classification is caused to suffer financial losses (based upon an annual income statement) in the operation of their businesses resulting from an unreasonable tax increase, while at the same time the competitive governmental parking authority is permitted to use lower parking rates and realize profits because of its preferential treatment, via tax exemptions (on a total tax basis), I would hold that such private taxpayers have suffered a violation of their constitutional rights.
Under our free enterprise capitalistic system, the government was never intended to enter into competitive private businesses, except as may be justified under its police powers. When this Commonwealth instituted the authority approach to public services, it was never intended as an intentional and direct method of governmental competition with its citizens. Rather, it was intended as a means to circumvent the constitutional limitations on governmental indebtedness, where certain public services were in need of capital investment not otherwise available or provided by private citizens or *450businesses. Except for matters purely within a governmental function, government should not provide capital and labor to compete with its citizens. To some, who believe in some form of government other than that which we enjoy, the government should take over all businesses affecting the public interest. To them, in Pennsylvania, it would be appropriate for government to take over the steel mills and use government employees to run them, much like that which was done with the retail sale of liquor. Such a philosophical approach does violence to my understanding of our present system of government. Therefore, I believe great caution should be taken to make certain that a competing government does not force the private businesses of our citizens out of existence by an arbitrary use of otherwise unrestricted taxing powers.
Private parking operations were a recognized private business long before governmental parking authorities came into existence.2 Though the Legislature declared that these authorities were necessary for the public safety and welfare; and even if it could be proven that private enterprise had not the wherewithal to supply sufficient parking facilities for the public, the fact remains that once government entered this private business field it was given an unfair advantage over the private sector through tax exemptions. (See 53 P.S. 355.)
The record in this case indicates that the governmental parking authority competitor does not pay real estate taxes or gross receipts taxes to the City, while the appellants do pay such taxes. Authorities were not instituted for the purpose of making profits and therefore should show none. Parking authorities’ parking rates are lower because of the legislative directions and *451advantages they receive. Apparently the private sector of the parking business survived, even with these differentials, for many years. But now, as the record shows, the City has raised the parking tax, here in question, to a point where most of the private sector is losing money in its overall operation. It doesn’t take a graduate economist to understand that losing business ventures eventually go out of existence. This point is especially important when one realizes that after the authorities’ bonds and other debts are paid in full the parking authority will go out of existence, and all of its assets and business will be owned and operated by the City. (See 53 P.8. 354)
This is not a case where one or two marginal private operators are being forced out. See Philadelphia v. Samuels, 338 Pa. 321, 12 A. 2d 79 (1940). This is a case where most of the private operators are being forced out of business. It doesn’t take a person with psychic powers to see that government, under such facts, will eventually take over all of the parking facilities in the City. Another five or ten percent increase in this tax may complete the job.
I find this case to be one of first impression in our courts. The debilitating effect upon a citizen’s property rights due to a combination of an unreasonable high tax rate and direct governmental business competition, should be recognized. The new wrinkle in the aged face of the principle that the Legislature possesses unrestricted taxing powers, is the advent of government competing with the private business of its citizens ; and this gives the picture a new appearance heretofore unviewed by the courts.
Mr. Justice Holmes, dissenting in the case of Panhandle Oil Co. v. Mississippi, ex rel. Know, 277 U.S. 218, 223, 72 L. Ed. 857, 859 (1928), and in speaking generally of the taxing powers of the Legislature, said: *452“In those days [referring to the time of Mr. Chief Justice Marshall and McCulloch v. Maryland, 4 Wheat. 316, 17 S. Ct. 579 (1819)] it was recognized as it is today that most of the distinctions of the law are distinctions of degree. If the States had any power it was assumed that they had all power, and that the necessary alternative was to deny it altogether. But this Court which so often has defeated the attempt to tax in certain ways can defeat an attempt to discriminate or otherwise to go too far without wholly abolishing the power to tax. The power to tax is not the power to destroy while this Court sits. The power to fix rates is the power to destroy if unlimited, but this Court while it endeavors to prevent confiscation does not prevent the fixing of rates.” Mr. Justice Holmes expresses my sentiments.
I would hold that where government creates an unreasonable tax rate (as found by the majority) which forces private citizens to operate at a deficit, while simultaneously permitting competing governmental operations to continue operating at lower parking rates and with profits from such operation, owing to other tax exemptions, such a tax rate, as a part of the total city tax load imposed on its competition, is a denial of the Equal Protection Clause of the United States Constitution and in addition is illegally confiscatory.
In the Seventeenth Century, J. B. Colbert, Controller-General of Finance to Louis IV, offered a maxim widely accepted for its intrinsic merit: “The art of taxation consists in so plucking the goose as to obtain the largest amount of feathers with the least amount of hissing.” Evans; Dictionary of Quotations; 680; 1st Ed. (1968). In this case, even the life’s blood of the proverbial goose is being drained.
The theory of government’s power to tax beyond a reasonable limit, as stated by the majority, is axio*453matic. However, none of the eases cited goes so far as to make such a maxim absolute.
Once again I quote a Mr. Justice Holmes dissent. In the case of Hyde v. U. S., 225 U.S. 347, 391, 56 L. Ed. 1114, 1135 (1912), he said: “It is one of the misfortunes of the law that ideals become encysted in phrases and thereafter for a long time cease to provoke further analysis.”
The competition of a governmental parking authority adds a new dimension to the tax issues raised and from my point of view requires further analysis. If the government desires both an unreasonable high tax and an unfair competitive business position, it should be forced to prove the need for such a tax.
I would reverse and remand to permit the City to prove its need for this unreasonable tax increase.
Judge Mencer joints in this Opinion.
Judge Crumlish, Jr., joins in this Opinion.
Opinion by
Judge Rogers
Following Reargument, October 10, 1972:
This court affirmed the order of the lower court in this matter1 but thereafter allowed reargument. The case has been reargued and additional briefs have been filed and carefully considered.
A principal factual issue below was as to the effect of the tax on appellants’ parking lot operations. The expression of the opinion writer’s belief that the 20 percent gross receipts tax was unreasonable is now equated by the appellants to a finding by this court that the tax was confiscatory. No such characterization of the taxing measure was made or intended to be made. Indeed the Court found that the ordinance was an exertion of the taxing power and did not constitute the *454exertion of a different and forbidden power, as, for example, the confiscation of property. Further, neither the Constitution of the United States nor of this Commonwealth imposes a standard of reasonableness in the rate of taxation. The cases cited in our opinion recognize this principle and the unspoken but real danger to our system of government should the courts assume power to review revenue measures by such a standard. It is true that a public parking Authority operates in competition with appellants’ lots. However, the tax before us is imposed on transactions of the Authority as well as those of the appellants and we do not perceive a purpose here to favor the Authority by destroying the appellants’ businesses. Of course, the Legislature may afford court review of reasonableness and, as we noted, did so in Act 511 by procedures not invoked by the appellants.
The City advises us at reargument that our statement that there are 24,300 parking spaces in the City of Pittsburgh is erroneous and that that figure represents the number of parking spaces only in the “downtown” area. The lower court found that the number in question represented all spaces in the City. The appellants made the same assertion in their brief and this was uncontested by the City. A close examination of the record demonstrates that the court below, the appellants and we were incorrect and that the figure mentioned indeed represents the number of parking spaces in the “downtown” area only. While a higher number of spaces in the City, by reducing the percentage of appellants’ lots to the total tends to bolster the City’s assertion that the levy was in fact not unreasonable, it obviously had no effect on our decision upholding the ordinance.
We adhere to our decision affirming the order of the court below.
*455Dissenting Opinion by
Judge Kramer
Following Reargument.
After reargument and reviewing the majority opinions, I must again register my dissent by reasserting the points made in my prior dissenting opinion, filed herein, which is made a part hereof by reference thereto. See 291 A. 2d 556, 563 (1972).
Based upon the record before us, I would still hold the unreasonable high twenty per cent (20%) parking tax to be confiscatory. I would still remand the case to the court below for further hearings on reasonableness.
The majority, in its second opinion, quite correctly points out the discrepancy in the number of parking spaces in the City of Pittsburgh; and, as was noted at the reargument, the number of Authority parking spaces in the neighborhood areas outside of the downtown business district, together with the number of parking spaces contained in parking lots directly owned and controlled by the City, and operated with City employees, should also be noted as discrepancies or missing statistics in the record.
I would reverse and remand.
Judges Ceumlish, Jii. and Mencer join in this Dissenting Opinion.

 We can take judicial notice of tke published financial reports of the Public Parking Authority of Pittsburgh, which show that it consistently has earned handsome annual profits, including the test year, 1970.

 See the Parking Authority Daw, Act of June 5, 1947, P. L. 458, as amended, 53 P.S. 341, et seq.

 291 A. 2d 556, 563 (1972).