Court Opinion

ID: 9532020
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:17:13.032572+00
Date Added: 2024-06-11T13:28:39.025743
License: Public Domain

Fromme, J.,
dissenting: I cannot agree with the reasoning or the result reached in the foregoing opinion.
Equality and uniformity in taxation refer to an equality in the burden of taxation, so that no higher rate or greater levy in proportion to value is imposed on one species of property than on others similarly situated or of like character. Equality in taxation is accomplished when the burden of the tax falls equally and impartially on all the persons and property subject to it, so that no higher rate or greater levy in proportion to value is imposed upon a class of property. (84 C. J. S., Taxation, § 22 [b].) When motor vehicles are singled out by legislative act for repeated valuation and assessment each time they are purchased and sold, the resulting tax burden is neither equal nor uniform compared with other personal property, which is valued and assessed only once during a tax year. Discrimination and inequality result in such case, both within that special class treated and within the class of personal property generally.
The provisions of Chapter 431 of the 1969 Session Laws of Kansas violate the express provisions of the constitution of this state relating to equality and uniformity in taxation.
Article 11, section 1, of the Constitution of the State of Kansas states:
“The legislature shall provide for a uniform and equal rate of assessment and taxation, except that mineral products, money, mortgages, notes and other evidence of debt may be classified and taxed uniformly as to class as the legislature shall provide. All property used exclusively for state, county, munici*10pal, literary, educational, scientific, religious, benevolent and charitable purposes, and all household goods and personal effects not used for the production of income, shall be exempted from taxation.”
Motor vehicles fall in that general category of property subject to taxation. The legislature is directed by the constitution to provide a uniform and equal rate of assessment and taxation for all such property. Every ad valorem tax must meet this constitutional requirement.
K. S. A. 1968 Supp. 79-301 provides for listing and assessment of personal property. It reads as follows:
“All tangible personal property subject to taxation shall be listed and assessed as of the first day of January each year in the name of the owner thereof. Such listing and assessment shall be made as hereinafter provided.”
Chapter 431, 1969 Session Laws of Kansas, relates exclusively to the listing, valuation, assessment and taxation of motor vehicles. Subsection (b) provides generally for the listing of each vehicle when the owner files his annual application for registration. This listing leads to the assessment of all motor vehicles owned by a taxpayer as of January 1.
However, under Chapter 431 this may or may not be the only listing, valuation and assessment of a motor vehicle, for subsection (c) of the act provides that any motor vehicle acquired, purchased, traded or sold after January 1 and prior to November 1 of any year shall again be listed, valued, assessed and taxed to the new owner. The act provides in case of a subsequent sale the tentative value of the vehicle shall be the amount determined by the January 1 listing. This tentative value is then divided by twelve and that figure is multiplied by the number of months remaining in the calendar year. Thus the proportionate valuation on which a subsequent tax is levied is determined. This proportionate valuation then constitutes the value of the motor vehicle for said calendar year so far as the new owner is concerned. The motor vehicle is then assessed and taxed to the second owner. Each time the vehicle is sold and registered by a different owner it is again listed, valued, assessed and taxed. It is readily apparent that any motor vehicle transferred and not acquired as a replacement vehicle is subjected to an additional tax burden over and above the amount of tax levied and assessed on other types of personal property listed and assessed only once.
When a motor vehicle is traded for a replacement vehicle the act requires that the two vehicles be reassessed and each vehicle *11is taxed to the owner on a pro rata basis for the number of months each is owned. The tax originally assessed on January 1 is thereby reduced and paid for those months it was owned.
However, no pro rata adjustment is provided in this act for cars sold outright during the calendar year. The owner on January 1 pays a full year assessment. The new purchaser is assessed for this same car. The mill levy remains the same but the valuation is reduced in proportion to the months remaining in the calendar year.
Let us consider a hypothetical case. A owns a car on January 1 which he sells outright to B on March 1. B sells the car to C on July 1. The tax assessed on the car January 1 amounts to $120. Since A did not replace the car his tax on the car is $120. When B buys the car on March 1 he is assessed for ten months or 10/12ths of $120. B’s tax on the car is 100. When C buys the car on July 1 he is assessed for six months or 6/12ths of $120. C’s tax on the car is $60. The tax burden on this car adds up to $280 in one year. If A had kept the car throughout the year the tax burden on this same car would have been $120.
This inherent inequality and lack of uniformity in taxation is present as between different motor vehicles having the same valuation. It is present when you compare the $280 tax with the tax assessed and paid on replacement vehicles and with tax assessed against other personal property with a comparable valuation. The valuations and the rate of levy are the same for each taxpayer but certain motor vehicles are subjected to repeated assessment which results in double taxation.
The Constitution of this state requires that the legislature provide uniform and equal rates of assessment and taxation of property and any law passed by the legislature which will result in double taxation is invalid. (Hull v. Johnston, 64 Kan. 170, 67 Pac. 548, Lingenfelter v. Ferguson, 71 Kan. 154, 80 Pac. 48.)
Uniformity in taxation implies equality in sharing the burden of taxation, and this equality cannot be attained without uniformity in the assessment as well as in the rate of taxation. (Beardmore v. Ling, 203 Kan. 802, Syl. ¶ 2,457 P. 2d 117.)
The majority opinion of this court fails to address itself to the-effects of the Act. No explanation is given to justify the discriminatory tax burden placed upon those motor vehicles which are subjected to repeated listing, valuation, assessment and taxation each-time a vehicle is purchased and sold. The provision in our con*12stitution requiring a uniform and equal rate of assessment and taxation does not relate to the burden of tax on persons as the opinion of the court seems to infer. The constitutional requirement of uniformity and equality applies to the burden of tax placed upon property. (See Addington v. Board of County Commissioners, 191 Kan. 528, 382 P. 2d 315; Voran v. Wright, 129 Kan. 1, Syl. ¶ 5, 281 Pac. 938.)
It is the imposition of taxes upon selected classes of property to the exclusion of others, and the exemption of selected classes to the exclusion of others, which constitute invidious discriminations which destroy uniformity. (Wheeler v. Weightman, 96 Kan. 50, 58, 149 Pac. 977.)
The case of Graham v. Comm’rs of Chautauqua Co., 31 Kan. 473, 2 Pac. 549 is analogous and fully supports the petitioners claim in this case. In Graham a statute provided for the assessment of cattle driven into any county from any unorganized county or from another state prior to December 1. In holding a portion of the act unconstitutional the court said:
“We think this argument is sound, and that if in addition to the listing of all property present in the state on the first of March, an attempt is made to list property brought in after the first of March, it must apply to all property so brought in. No distinction can be made as to property after the first of March, any more than it can as to property on that day. This case differs from that of Francis v. Rld. Co., 19 Kas. 303, for in that the failure to reach all property was due to a lack of county organization and thus there was a failure of the tax machinery, while here it is the direct result of legislation distinguishing between different kinds of property.” (p. 478)
The court’s decision in that case is based squarely upon the inequality and lack of uniformity which attend when cattle driven into the state are taxed and other kinds of property brought into the state are not.
In our present case motor vehicles sold and acquired after the original assessment date, January 1, are taxed and other kinds of property sold and acquired after January 1 are not.
It is stated that the Graham case can be distinguished from our present case because in Graham the statute made no provision for pro rata assessment. After careful study of the Graham decision I do not believe the holding is based upon the absence of such a provision. In either event there is no distinction for Chapter 431, Laws of 1969, makes no provision for pro rata assessment of non-replacement motor vehicles.
*13No statute is cited, and I find none, which provides for assessment of other personal property acquired during the tax year. No statute is cited, and I find none, which provides generally for the assessment of personal property brought into this state after January 1. K. S. A. 79-314 which formerly provided for such assessments was repealed June 30, 1965.
Several statutes are cited in the majority opinion “merely as instances in which the legislature has sought to tax property acquired or brought into the state after January 1”. However, those statutes apply only to limited types of personal property. They do not apply to the general body of personal property. The constitutionality of those laws has not been challenged or determined. They lend no support to the constitutionality of the present law.
K. S. A. 79-316 applies only to property brought into the state when any person, association or corporation shall settle or organize in any county in this state or when any nonresident owner shall bring property into the state.
K. S. A. 79-316b and 79-316c apply to livestock maintained both in Kansas and in another state which has reciprocal tax laws. These two statutes were enacted for the purpose of equalizing taxes on livestock in proportion to the number of months livestock is maintained in Kansas.
I fail to see how the constitutionality of Chapter 431, Laws of 1969, can be bolstered by reference to these special laws of limited application which have not been tested in court.
In support of the Act the case of Associated Rly. Equipment Owners v. Wilson, 167 Kan. 608, 208 P. 2d 604, is cited. In that case the court considered the constitutionality of what is now K. S. A. 79-907. This statute imposes a tax upon a percentage of the gross earnings from railroad freight cars leased to railroads and operated in Kansas and other states. Said tax is in lieu of all other taxes upon such property. As pointed out in the syllabus the decision is based upon a conviction that such property is taxable in no other manner, because the freight cars while in transit acquire no tax situs in the state. The case has very little relevance to the constitutional question here involved.
In support of the constitutionality of Chapter 431, Laws of 1969, reference has been made to the interim report of a Joint Committee on State Tax Structure made to the 1969 legislature, concerning a *14“loophole” and a “serious tax evasion problem” with respect to taxing motor vehicles on January 1, the usual assessment date for property.
The so-called “loophole” or evasion of tax is alleged to occur when a prospective purchaser of a motor vehicle sells his old car to a dealer prior to January 1 and does not acquire title to another car until after the assessment date. I fail to see how such a sale to a dealer can be termed a “loophole”. That term applies when no tax is assessed or collected. Such is not the case in the example given. In the example used the dealer owns both cars on January 1 and both cars are subject to assessment and taxation. (See K. S. A. 79-1001 and 79-1002.) The dealer pays the tax on both cars even though their value for tax purposes may be arrived at differently by the average monthly inventory method. This is not evading tax. It is shifting the tax burden onto the dealer. I notice the motor car dealers association appears herein as friend of the court in support of the new law.
If the assessment date, January 1, opens a “loophole” as to motor vehicles the same is equally true with respect to farm machinery, motor boats and other property. Under present tax laws a farmer may sell his tractor to the dealer before January 1 and purchase a new tractor after January 1. The dealer owns both tractors on January 1. The farmer owns none. The farmer owes no tax on either tractor for the current year.
If the problem is serious as to motor vehicles why is it any less serious as to other personal property? No reason exists as to motor vehicles which does not exist as to other property. This special classification and taxation of motor vehicles cannot be justified.
Various arguments are urged in support of this act. None of them are sound. It is suggested, if the expense necessary to collect the tax on certain property in a class is excessive, uniformity and equality is not required. This argument is false because the certain property referred to in this case is all property other than motor vehicles. The case of Francis, Treas., v. A. T. & S. F. Rld. Co., 19 Kan. 303 is cited to support the argument. That early case arose in 1876 when some of the territory in the state was outside of any organized county. A law was passed taxing railroad property throughout the state. In the unorganized territory no other state taxes were imposed on personal property. There was no county organization and no officers to assess and collect tax on other *15property. The decision holding the tax on railroad property valid rests upon the exigencies of that particular period. The reasoning in the case is open to more serious question now than in 1876. On page 316 of the reported decision the court said:
. . The conclusions which we have reached are by no means entirely satisfactory to us. We hold the section to be constitutional and valid, not because it is clear to us that it is so, but because it is not clear to us that it is not.” (19 Kan. 303, 316.)
The argument as to the difficulty in assessing and collecting tax in a similar manner on other personal property is fallacious because it completely overlooks our present laws governing the collection of sales and compensating tax. The machinery required to collect those taxes can readily be adapted and utilized to assess all other property when it is acquired.
Chapter 431, Laws of 1969, violates our constitutional requirement of equality and uniformity in the rate of assessment of personal property. Therefore, it should be held invalid.
Schroeder and O’Connor, JJ., join in the foregoing dissenting opinion.