Court Opinion

ID: 9699474
Source: CourtListenerOpinion
Date Created: 2023-08-25 20:26:44.138385+00
Date Added: 2024-06-11T18:20:51.063137
License: Public Domain

*392Dooley, J.,
concurring. Frequently in a 3-to-2 decision of this Court, a justice finds force in both competing arguments and is ultimately persuaded to join one side or the other on relatively narrow considerations. This is such a case. Like the dissent, I am not particularly persuaded by the form of this tax or the fact that it is placed in Title 2 and paid to the Secretary of State or that the revenue goes to a special campaign fund. I would probably uphold a sales tax on the personal services of lobbyists, whatever its form. What persuades me is that the tax involved in this challenge cannot fairly be called either a sales or use tax, a point made by the majority and largely ignored by the dissent. The substance, not the form, of the tax makes it invalid.
Vermont’s sales and use tax law defines both sale and use. A sale is a “transfer of title or possession or both, exchange or barter, rental, lease or license to use or consume, conditional or otherwise, in any manner or by any means whatsoever for a consideration, or any agreement therefor.” 32 V.S.A § 9701(6). The definition does not include sales of services, even if some tangible personal property is transferred in the process. 32 V.S.A § 9741(35). Use is “the exercise of any right or power over tangible personal property by the purchaser thereof.” 32 V.S.A § 9701(13). If the substance of the lobby tax merely removed the exception for services with respect only to lobbyist services, the State’s characterization of the tax as just an extension of the sales tax would be valid. Similarly, if the substance of the tax merely expanded the definition of use to include consumption of services to compensate for instances when the sales tax did not reach them, again the State’s position would be defensible.
But, in my judgment, the dissent is in error in its central description of the nature of the tax:
First and foremost, the tax on lobbying expenditures indisputably functions like a sales tax, by taxing a sales transaction. Every commercial transaction involves an expenditure and a sale, depending on one’s perspective. The tax on expenditures is no different from a tax on sales; there is only one transaction, and it is generally the purchaser who pays the tax.
172 Vt. at 397, 779 A.2d at 37. As the dissent states in the quoted passage, the tax before us is one on “expenditures,” not sales or uses. It is a tax on expenditures of both lobbyists and employers of lobbyists. Of course, sales necessarily produce expenditures, even if by exchange *393or barter, as described in the statutory definition set out above. Expenditures are not necessarily based on sales, however.
The most obvious example is when an employer of a lobbyist directly makes a gift to a legislator. That is clearly a taxable expenditure, but it is neither a sale nor a use. A quick perusal of the website of the Secretary of State shows that many of the taxable expenditures of an employer of a lobbyist are neither sales nor services. For example, if a trade association, which employs a staff lobbyist and mails a newsletter to its members, adds legislators or administrative officials to its mailing list, the costs of the newsletter attributable to discussion of policy issues before the legislative or executive branch is a taxable lobbyist employer expenditure even if the newsletter is produced solely in-house. Lobbying FAQs: What Constitutes Lobbying?, Vermont Secretary of State’s Home Page, at http://www.sec.state.vt. us/pubs/lobby/bbfaql.ktm (last visited Apr. 27, 2001). Indeed, the Secretary of State has opined that inviting legislators to view the Vermont Yankee Nuclear Power Plant for general background information would make any expenses in connection with the trip taxable if Vermont Yankee also employed a lobbyist. Id. at http://umm. sec. state. vt.us/pubs/lobby/bbfaq7.htm (last visited Apr. 27,2001).
As the majority points out, a tax imposed based on the purpose of an expenditure necessarily crosses all the lines contained in traditional tax categories. For example, advertising services generally remain untaxed, but advertising services intended to influence legislation or administrative rulemaking are taxed if sold to an employer of a lobbyist.
For this reason, much of the tax base defined in 2 V.S.A § 264a(a) will be salaries paid to company or association staff who lobby as part of their jobs. I acknowledge that employees in such circumstances could be said to be selling their services for compensation. This is, however, a large expansion of any concept of sales of services in the current law. The result is a payroll tax on employers on that part of the payroll attributable to lobbying, including presumably a share of the salary of corporate officers and managers whose jobs necessarily include seeking favorable governmental action. I do not think that a broad payroll tax can be fairly viewed as a sales or use tax.
Finally, I note that the repetitive taxation of the same event by this tax is unparalleled in our sales tax. If a lobbyist buys a pen to use in lobbying, the lobbyist pays a sales tax on the purchase. The lobbyist then pays a lobbyist’s expenditure tax on the same pen purchase. The lobbyist then bills the client for the lobbyist’s expenditures, including *394the cost of the pen, and the lobbyist’s employer pays an additional, third tax on the cost of the same pen. I recognize that double taxation may be unavoidable once a state taxes the sale of services, but triple taxation of the same purchase goes well beyond anything in our sales tax, even broadly defined.
In short, the tax before us is a tax on lobbying and not merely a tax on the services of lobbyists, as it is often described. It will capture some sales of services, but it will capture a lot more than that. It has no analog in our state tax scheme. As explained by the majority, this unique tax on lobbying clearly transcends the lines drawn by the United States Supreme Court in Minneapolis Star & Tribune Co. v. Minnesota Comm’r of Revenue, 460 U.S. 575 (1983), and Leathers v. Medlock, 499 U.S. 439 (1991).