Court Opinion

ID: 9730755
Source: CourtListenerOpinion
Date Created: 2023-08-26 15:22:42.841755+00
Date Added: 2024-06-11T18:26:09.065494
License: Public Domain

Blair Moody, Jr., J.
(dissenting). I dissent. Without overstating the obvious, this case has had a long and tortuous history. In 1962-1963, petitioner, C.A.F. Investment Company, constructed a K-Mart store for its tenant, the S.S. Kresge Company, on a 10.55-acre parcel of land in Saginaw Township. Prior to the actual construction of the store, C.A.F. entered into a lease agreement with its tenant for a term of 20 years with three renewal options of five years each. The lease provided for a fixed rental of $137,287 per year with an additional sum of 1% of gross sales exceeding $6,864,350 per year.
In 1971 petitioner appealed a property tax assessment on its leased property to the Michigan State Tax Commission (hereinafter STC). The STC entered an order sustaining the assessment and the Court of Appeals affirmed. This Court granted leave to appeal and reversed the decision of the Court of Appeals and the STC and remanded to the Tax Tribunal1 for findings consistent with this Court’s opinion. CAF Investment Co v State Tax Comm, 392 Mich 442; 221 NW2d 588 (1974).
In April, 1976, the Tax Tribunal after conducting lengthy hearings reached its decision. Petitioner appealed the decision of the Tax Tribunal and the Court of Appeals reversed and remanded for redetermination. CAF Investment Co v Saginaw Twp, 79 Mich App 559; 262 NW2d 863 (1977). *488Respondent appealed to this Court and leave to appeal was granted. 403 Mich 801 (1978).
This summary forms the backdrop within which a decision must be reached in this case. While it could be said by some that this case is merely another in a long line of tax cases involving a dispute between a taxpayer and local assessment authorities, this case is of crucial significance to all the taxpayers of Michigan and, therefore, it is imperative to examine in depth the whole history of the matter. With this in mind, this discussion will consist of three parts. First, the decision of the present panel of the Court of Appeals will be analyzed. Second, the original decision of this Court will be focused upon. Third, an issue which was not raised in the prior appeal which is dispositive of this matter will be addressed.
I
The present Court of Appeals panel, in reversing the Tax Tribunal, determined that the tribunal had not complied with the dictates of this Court’s earlier decision. The Court found that the tribunal had based its appraisal for property tax purposes upon the rate of return on comparable unencumbered property. The failure of the tribunal to base its projected income calculations upon the actual income of the property constituted a clear error of law.
The Court of Appeals terse analysis is captured in the following two paragraphs, which are quoted in their entirety, CAF Investment Co v Saginaw Twp, supra, 79 Mich App 564:
"In its opinion, the Supreme Court held that for the purpose of finding the 'true cash value’ of petitioner’s property using the capitalization of income approach, *489the tribunal could not base its valuation upon a rate of return which comparable unencumbered property could earn in the current market where petitioner’s property was in fact encumbered by an unfavorable long-term lease.
"The Court noted that there may be cases in which it would be inappropriate to consider lease term rental as a component of projected income. In this case, however, the Court required that the actual income from the lease could not be ignored and that it must constitute the basis for the valuation. *”2_
The analysis of the Court of Appeals is defective on two levels. There is no suggestion in the origi*490nal CAF decision that actual income must constitute the basis for valuation. This Court held that actual income cannot be ignored and must be considered in any determination of true cash value. The Court said:
"We point out that 'consideration’ of the enumerated factors under MCL 211.27; MSA 7.27 does not require that the taxing authority determine projected income under the income capitalization approach upon any one or all of the enumerated factors ('economic’ or actual income being one of those factors) so long as the valuation comports with the statute’s definition of true cash value as 'usual selling price at the place where the property to which the term is applied shall be at the time of assessment, being the price which could be obtained for the property at private sale, and not at forced or auction sale.’ 'Consideration’ of the various factors may well indicate that the application of some or all enumerated factors is inappropriate. For example, in the event lease rental (in statutory parlance a component of 'economic income’) were not arrived at on the basis of arm’s length bargaining or in other respects had no relationship to 'usual selling price’, as statutorily defined, it would be appropriate for the taxing authority to ignore lease rental as a component of valuation. It is only because in this case the record indicates that long-term lease rental fairly reflects economic circumstances at the outset of the lease term and bears a demonstrable relation to true cash value that we require its consideration.” CAF Investment v State Tax Comm, supra, 392 Mich 456, fn 6.
It is one thing to say that a particular item must be "considered” in terms of determining value; it is totally another thing to say that a particular item must "constitute the basis” of valuation.
In addition, there is no support for the Court of Appeals conclusion that actual income "must be the starting point” for calculating value. As the above quotation from this Court’s CAF decision so *491vividly demonstrates, economic income or actual income is to be considered. However, present economic income of structures is merely one of a number of statutory terms which must be considered in determining true cash value. While one or another of the terms may be controlling in a given situation in determining true cash value, all must be considered equally.
Because the decision of the present panel of the Court of Appeals extends the original CAF decision beyond the bounds stated by this Court, the decision must be viewed as erroneous.
II
Having determined that the Court of Appeals decision was in error, we must examine this Court’s original CAF decision to ascertain the exact holding of this Court. Further, it is imperative to review the original CAF decision in light of certain theoretical and practical problems which cast doubt on this Court’s analysis and result in that case.
At the very heart of the controversy in the original CAF decision was the definition of the term "true cash value”. The Legislature had defined the term as follows:
" 'Cash value’, means the usual selling price at the place where the property to which the term is applied shall be at the time of assessment, being the price which could be obtained for the property at private sale, and not at forced or auction sale. Any sale or other disposition by the state or any agency or political subdivision of lands acquired for delinquent taxes or any appraisal made in connection therewith shall not be considered as controlling evidence of true cash value for assessment purposes. In determining the value the assessor shall also consider the advantages and disad*492vantages of location, quality of soil, zoning, existing use, present economic income of structures, including farm structures and present economic income of land when the land is being farmed or otherwise put to income producing use, quantity and value of standing timber, water power and privileges, mines, minerals, quarries, or other valuable deposits known to be available therein and their value.
"Except as hereinafter provided, property shall be assessed at 50% of its true cash value in accordance with article 9, section 3 of the constitution.”3 (Emphasis added.) 1973 PA 109.
The STC tax appraiser in assessing the value of the property owned by C.A.F. interpreted the phrase "present economic income of structures” as being synonymous with a standard appraisal term called "economic rent”. Economic rent is a hypothetical figure derived from the approximate median ratio which rental per square foot bears to actual sales per square foot for similar properties.
With the economic rental figure computed, the STC appraiser then calculated the value of the whole C.A.F. property by the use of two standard appraisal techniques, namely the "reproduction cost” approach and the "market” approach. Reproduction cost is defined as the amount of money, based on current prices in the market, that would be required to duplicate a building or improvement with a new property or replica, made of the same or basically similar materials. The value of the property is arrived at by the following formula: estimated reproduction or replacement cost of the building new, less estimated accrued depreciation, plus the estimated land value. The "market” approach uses a comparison of the property *493with the actual sales of other comparable properties. Both approaches rely on estimated land value. Neither approach provides for inclusion of the actual income produced by the property.
This Court rejected the STC’s appraisal techniques, saying:
"The tax commission’s position is that determination of 'economic rental’ (the equivalent of 'economic income’) in a property tax valuation context may proceed on the assumption that the property was available to rent in the marketplace. The tax commission would have us equate the definition of the statutory term 'economic income’ as found in MCL 211.27; MSA 7.27 with their concept of 'economic rent’ and thereby justify ignoring, for valuation purposes, the fact that the piece of property in question is not available in the rental marketplace by virtue of existence of a long-term lease. We conclude that such a construction of 'economic income’ is not permissible.” CAF Investment Co v State Tax Comm, 392 Mich 451-452.
The Court went on further to define the statutory term "economic income” as actual income:
"Unlike 'economic rent’, 'economic income’ is not a well-defined term of art. Given this fact, the statutory meaning of this term must be derived from the statutory and constitutional context within which the term is used. From this context it is apparent that the Legislature intended that 'economic income’ would have relation to the definition of the 'usual selling price’ (or fair market value) of property under assessment. The tax commission’s construction permits the assessor to contend that actual income relevant to a determination of 'usual selling price’ may be ignored. If the Legislature intended the construction urged by the tax commission it was incumbent upon that body to make such intention apparent by its choice of statutory language. Given a failure of clear legislative expression in this regard, such a construction is not tenable. We conclude *494that 'economic income’ as used in MCL 211.27; MSA 7.27 means actual income.” (Footnote omitted.) CAF Investment Co v State Tax Comm, 392 Mich 454.
Because the "reproduction cost” and "market” approaches require the use of hypothetical, estimated value, neither approach was held to be applicable. In their place, the CAF Court substituted the "income capitalization” approach. This method of real estate evaluation permits the estimation of value based on factual data with respect to income yield of the property. It is a mathematical process for converting the stream of income derived from real estate into capital value. Value may be based on the present and prospective income from the property. It also may be based on the potential earning capacity of the land. Since the income capitalization approach provided a means for determining value based upon actual income, this Court endorsed the approach.
This Court concluded its discussion by saying:
"It is only because in this case the record indicates that long-term lease rental fairly reflects economic circumstances at the outset of the lease term and bears a demonstrable relation to true cash value that we require its consideration.” CAF Investment Co v State Tax Comm, 392 Mich 456, fn 6.
This Court’s definition of economic income as actual income and the Court’s rejection of the reproduction cost and market approaches is inherently suspect in several ways.
A
This Court’s CAF decision does not comport with the decision of any other jurisdiction in the United *495States which has considered the question. Construing state property tax statutes with language similar to the Michigan statute, in the context of a property tax assessment on land encumbered by a long-term unprofitable lease, the various courts have applied three differing but amazingly similar analyses.'
First, there is a minority of jurisdictions which absolutely rejects the use of actual income but rather relies on the full potential earning capacity of the land regardless of the lease. Donovan v Haverhill, 247 Mass 69; 141 NE 564 (1923); Richmond, F & P R Co v Commonwealth, 203 Va 294; 124 SE2d 206 (1962); Yadco, Inc v Yankton County, 89 SD 651; 237 NW2d 665 (1975). Cf. State ex rel Park Plaza Shopping Center, Inc v Board of Review for Madison, 61 Wis 2d 469; 213 NW2d 27 (1973).
The second group, which comprises the majority of courts, permits the consideration of actual income along with full potential earning capacity in determining the value of property. These courts, however, place little emphasis on actual income and allow actual income to be disregarded in most cases in favor of earning capacity. Rowland v City of Tyler, 5 SW2d 756 (Tex Comm of Appeals, 1928); People ex rel Gale v Tax Comm of New York City, 17 AD2d 225; 233 NYS2d 501 (1962); In the Matter of the Ad Valorem Valuation of Property of Pine Raleigh Corp, 258 NC 398; 128 SE2d 855 (1963); McCrory Stores Corp v Asbury Park, 89 NJ Super 234; 214 A2d 526 (1965); C C Anderson Stores Co v State Tax Comm, 91 Idaho 413; 422 P2d 337 (1967); Springfield Marine Bank v Property Tax Appeal Board, 44 Ill 2d 428; 256 NE2d 334 (1970); Crossroads Center (Rochester), Inc v Comm’r of Taxation, 286 Minn 440; 176 NW2d 530 *496(1970); Pima County v Trico Electric Cooperative, 15 Ariz App 517; 489 P2d 1219 (1971); Kargman v Jacobs, 113 RI 696; 325 A2d 543 (1974); Demoulas v Town of Salem, 116 NH 775; 367 A2d 588 (1976).
The third group of jurisdictions, found in older decisions, places substantial emphasis on the actual earnings from the encumbered property. But even these courts, unlike this Court in its CAF decision, allow the consideration of "earning capacity” and do not wholly denigrate the cost of reproduction or market approaches to valuation. In re Taxes B P Bishop Estate, 27 Hawaii 190 (1923); Somers v Meriden, 119 Conn 5; 174 A 184 (1934).
Representative of the analysis of those jurisdictions which totally abrogate the use of actual income in determining property valuations is the following statement from the Massachusetts Supreme Court:
"Taxation is a practical matter, and mathematical uniformity in the distribution of the public burden arising from governmental expenses is an impossible attainment. The difference in income derived by the owners from different parcels of realty of substantially the same market value might be due to imprudent management, irresponsible tenants or disadvantageous leases. The tax to the owner receiving the smaller income is undoubtedly a heavier burden than it is to a neighbor who obtains a greater income. Such inequality arises from business and economic conditions. It cannot be attributed to the taxing statute.” Old Colony R Co v Assessors of Boston, 309 Mass 439, 446; 35 NE2d 246 (1941).
There is a common thread between this statement and the statement of a New York court, which is representative of the analysis and ratio*497nale of the majority of jurisdictions. That court said:
"An outstanding lease may be a benefit or a detriment to the subject property, and thus its duration, covenants and the rental fixed are simply elements along with many other considerations used to arrive at the value of the property. The amount of rental fixed by a lease, even though negotiated at arm’s length, could be very misleading, as to the true value of property, for it is well known that many rental contracts may be at excessive or inadequate rentals because of poor business judgment on the part of one party or another. Then, too, long-term rental contracts may be made in boom times or in times of depression, so do not necessarily reflect true value on a change in times. And, as Mr. Justice Bergan, sitting in this court, has very appropriately said, 'Assessments cannot be made to trail behind every turn in the fortunes of real property. There are times when property must bear a share of taxation proportionate to value even though it may then have no income, or an income inadequately focused to true value. There are times when the full measure of ephemeral surges of increased income should not be reflected in assessments in fairness to the owner.’
"Of course, an outstanding bona fide lease and the rental income established thereby are matters to be considered in determining the 'full value’ of the whole property, land and improvements. Value arrived at by capitalization of the fair rental value is, in ordinary cases, the surest guide to a sound appraisal. * * * But when there is evidence that factors such as long-term leases made under distress or boom conditions affect the actual rent, the weight to be given to the actual rent must be discounted accordingly. * * *
"So, the existence of an outstanding lease at an unrealistically low rental * * * of the property, is not to be used as a basis for calculating actual value.” (Citation omitted.) (Emphasis added.) People ex rel Gale, supra, 229-230.
All the jurisdictions express the concern that *498the net effect of reliance on actual income in determining tax assessments is the destruction of the principle of uniformity in taxation. All the courts indicate that assessment based on full potential earning capacity is the most fundamentally fair and even-handed method of distributing the tax burden. Thus, reproduction cost and market approaches are as equally valid as the income capitalization approach in calculating true cash value of property.
On a policy level, all of these jurisdictions look with great disdain upon the effect of reliance on actual income. The effect is to give tax relief and, therefore, subsidize the unwise businessman at the expense of the wise businessman and the rest of the taxpayers of the state. The North Carolina Supreme Court has said it well:
"The statute [tax assessment statute], in fixing the guide which assessors must use in valuing property for taxes, includes as a factor 'the past income therefrom, its probable future income.’ But the income referred to is not necessarily actual income. The language is sufficient to include the income which could be obtained by the proper and efficient use of the property. To hold otherwise would be to penalize the competent and diligent and to reward the incompetent or indolent.” (Emphasis added.) In re Property of Pine Raleigh Corp, supra, 403.
B
It is important to stop and reflect at this point on the legislative definition of true cash value. While the definition contains various terms, it is without doubt that the most important element in the commercial setting is the "present economic income of structures”. Economic income will al*499most always dictate the level of commercial property tax assessment. Thus, by defining economic income as actual income, this Court betrays a rather narrow and unrealistic attitude toward property tax assessment in Michigan.
Property tax by its nature is cumulative; it is a tax on each and every right and interest that attaches to real property. A proper assessed valuation, therefore, must include the value of all the rights which inhere in the property.
The right to current possession under a lease is a right which inheres in the property. If, as in the instant case, the rent paid for the right to possession is less than the current market rate, then the value of the right of current possession will increase in proportion. As the appraiser for the State Tax Commission so ably demonstrated on remand, a lessor’s and a lessee’s interest is thus created in the land. In order to establish the true value of the land, the value of the right to receive income, the lessor’s interest, must be combined with the value of the right of possession, the lessee’s interest.
Because this Court’s first CAF decision focuses on the lessor’s right to receive income under the lease, a distorted view of the true cash value of the property results. And, while it is true that any sale of the lessor’s interest in the property would reflect the unfavorable lease, the converse, a sale of the lessee’s interest in the property, would result in a rate of return which would be much higher than the relatively low rental expense would suggest.
By using a similar analysis to that employed here, on remand the Tax Tribunal attempted to ascertain the true cash value of the C.A.F. property, i.e., a combination of the lessor’s interest and *500the lessee’s interest in the property. Such an approach is eminently fair and sensible. It truly endeavors to ascertain the "usual selling price” of the property as mandated by the Legislature.4
C
Actual income is a very limited tool in determining property tax assessment and its use creates procedural difficulties for the taxing authorities. In addition, the class of individuals who are capable of making use of the actual income method is also extremely limited. The following exchange between Judge Cramer and Norman Daniels, the tax appraiser for the State Tax Commission, at the Tax Tribunal hearings brings the problem into focus:
"Cramer: Well is — well I guess what I’m really get*501ting at is the cost approach the primary basis of — of assessment in the State of Michigan?
"Daniels: Yes, I would say it is. The cost approach is the primary basis used.
"Cramer: When — when does the income approach become a significant criteria [sic] in valuing a given property? If the cost approach is a general — if it’s a general basis, when does a cost approach come into play? The income approach, I’m sorry.
"Daniels: Well, I think we give more weight to the income approach when the information is available so that we can make the income approach.
"Cramer: What do you mean when the information’s available?
"Daniels: Well, to the typical assessor, all this data is not available to them. In fact, most companies refuse to give their income and expense data to their assessor.
"Cramer: Why is that?
"Daniels: Because they’re not required to do it. There’s no law that requires them to furnish that to the assessor. So most of them have to rely on the cost approach, which probably sets the upper limit of value and may not take into effect [sic] economic obsolescence, such things as that, as — as well as the income approach would. But I think most assessors are forced to go to the cost approach just because the income approach necessary — yeah—the data necessary to make an income approach isn’t available to them and they have no way of forcing each taxpayer to give that data to them. They’re—
"Cramer: Well, would it be a fair conclusion then that generally when you do get the expense data and you do get lease information it is when that information is of advantage to the taxpayer, to provide that information?
"Daniels: Well, almost always when it’s to the taxpayer’s advantage then the — .”
It is clear from this testimony that under normal circumstances the majority of taxpayers in Michigan have their property assessed by the reproduction cost approach. Only income-producing *502property can be assessed in terms of actual income by use of the income capitalization approach. But even in this regard the taxing authorities are virtually hamstrung. Only when it is to the advantage of the taxpayer will the necessary information be supplied to the assessor for the assessor to use the income capitalization approach for tax assessment purposes. Under this method the ability to control and manipulate property tax assessment rests in the hands of the taxpayer alone.
In this situation, logic would dictate that if the Legislature wanted actual income to be the method or the basis for property tax assessment it would have provided some independent means for the assessor to ascertain actual income. Also, it would seem highly unlikely that the Legislature would define "present economic income of structures” as actual income when only a limited segment of a class of persons would fall into a grouping that would be affected by such a definition. This is particularly true where the constitutional mandate to the Legislature to define the term "true cash value” is found in the same constitutional section which requires uniformity in property tax assessment.
Ill
The previous discussion sets forth an issue which was not addressed by this Court in its original CAF decision and is raised by the parties here for the first time. This issue concerns the constitutional mandate of uniformity of taxation. It is dispositive of the matter.
In the same constitutional provision which requires that the Legislature "provide for the determination of true cash value” is found the constitu*503tional mandate of uniformity of taxation. Const 1963, art 9, § 3 reads in pertinent part:
"The legislature shall provide for the uniform general ad valorem taxation of real and tangible personal property not exempt by law.” (Emphasis added.)
The constitutional framers considered uniformity of taxation the paramount goal of all property assessments. The official Convention Committee Comment to art 9, § 3 is illustrative:
"The important constitutional objective is uniformity of assessment, regardless of the level at which property is commonly assessed. Permitting the Legislature to fix the standard offers the possibility of moving to a more realistic level such as the 50 per cent of cash value currently used by the State Tax Commission. On this basis actual uniformity could be achieved and a taxpayer aggrieved by an assessment over the level prescribed by law could obtain relief. This section provides that the standard set by the Legislature shall not exceed 50 per cent. Recognizing that some jurisdictions currently assess some property in excess of 50 per cent, effective date of this limitation has been postponed until 1966.” (Emphasis added.) 2 Official Record, Constitutional Convention 1961, p 3398.
Cognizant of the intent of the drafters of the Constitution, this Court has always recognized the importance of the principle of uniformity. This Court has said:
"With the destruction of the standard of cash value, the standard of uniformity becomes even more imperative, not only from tax unit to tax unit but as to the individual taxpayer within a unit. If there was ever any question as to which should control, the principle of equal treatment regardless of cash value is now recognized as being primary.” (Emphasis added.) In re Ap*504peal of General Motors Corp, 376 Mich 373, 379; 137 NW2d 161 (1965).
The principle of uniformity of taxation requires neither mathematical equality nor mathematical certitude. What is required is that similar properties within the same district be assessed on a similar basis. If that is done, the actual amount of taxes to be paid will be the same.
It must be recognized, however, that even very similar parcels of land may possess differing attributes which may lead to a disparity in tax assessment. Such a disparity in tax assessment may not in and of itself constitute a violation of the principle of uniformity but it may indicate that something is amiss.
Petitioner in the present case contends that one of the attributes of its property is that it is encumbered by a long-term unprofitable lease. Petitioner contends further that this long-term unprofitable lease should form the basis for projecting any assessment of its property. But what will this do to the principle of uniformity?
Positing for the moment that another parcel of property exists in Saginaw Township upon which there are similar structures to those found on the C.A.F. property but such structures are not encumbered by a long-term unprofitable lease, there can be little doubt that this hypothetical property will bear a considerably greater tax burden than the C.A.F. property. This will be so because actual income will not be the basis of tax assessment of this property. Rather, the property, as is most of the property in this state, will be assessed based upon economic rent by means of the reproduction cost method.
A disparity clearly exists here. But the disparity *505is not the result of any innate differences between the two properties. The disparity results because the one taxpayer, because of poor business judgment, has saddled his property with a long-term unprofitable lease while the other taxpayer, because of sound business judgment, has reaped a profit from his land. If this disparity should be sanctioned as a significant viable difference by the taxing authorities, the net effect is to reward the unwise businessman while penalizing the conscientious businessman.
To allow business acumen to form the controlling basis of property tax assessment in Michigan would obliterate the principal concept of consistency. Such a conclusion would seem fundamentally unfair and would result in the doctrine of uniformity becoming a mere sham. In addition, such a proposition would permit the taxpayer to actually manipulate the taxing process for his own purposes. In this regard, the exchange between Judge Cramer and the attorney for C.A.F. at the Tax Tribunal hearing is enlightening:
’’Cramer: I see. So if a man through imprudence or foresightedness or whatever, enters into a lease, he can influence and thereby, in part, determine what his assessments are going to be.
’’[Counsel]: That’s correct.
’’Cramer: And he has to be treated oh that basis regardless of what happens to the rest of the property owners of the state.
’’[Counsel]: That’s correct.”
It can hardly be said that the framers of the Constitution or the Legislature intended such a result.
Valid limitations on the use of land may exist which will lead to disparate valuations of similarly *506situated properties. The courts of this jurisdiction have recognized such valid limitations and have found that no violation of the doctrine of uniformity occurs where the taxing authorities take such limitations into consideration when assessing property. See, e.g., Kensington Hills Development Co v Milford Twp, 10 Mich App 368; 159 NW2d 330 (1968); Lochmoor Club v Grosse Pointe Woods, 10 Mich App 394; 159 NW2d 756 (1968).
In each of the cited cases, however, the limitation was imposed by the actions of a third party. In no case have the courts of this jurisdiction sanctioned a limitation which was imposed on the property by the property owner himself. To the contrary, the Court of Appeals has specifically rejected the proposition that a self-imposed limitation on the use of property can form the nucleus for a property tax reduction. NeBoShone Ass’n, Inc v State Tax Comm, 58 Mich App 324; 227 NW2d 358 (1975). The NeBoShone Court said:
"A private individual could not self-impose a restriction whereby he might be able to avoid or limit paying his just share of the ad valorem taxes due to government, nor can a corporation.” NeBoShone, supra, 334.
Finally, the present case is essentially on all fours with a United States Supreme Court case in which the Court struck down a property tax assessment as violative of the Fourteenth Amendment to the United States Constitution and a state constitutional provision requiring uniformity of tax assessment. Johnson v Wells Fargo & Co, 239 US 234; 36 S Ct 62; 60 L Ed 243 (1915). In Johnson, the state attempted to assess taxes on the "gross net income” derived from property of a corporation within the state. All other assessments *507were made on property regardless of the net income derived therefrom.
The Court found that such an assessment was anathema to the principle of uniformity, saying:
"It is enough to say upon this point that, in our opinion, the record does show that the payment to the railroad companies, if not the only basis of the assessments made by the Board, was the principal factor in fixing the value of the property of the express companies for taxation in the State, and the question arises, was such administration of the statute contrary to the requirement of the South Dakota constitution, already quoted, requiring all taxation to be in proportion to the value of the property assessed, and corporation property to be assessed, as near as may be, by the same methods as are provided for assessing the value of individual property. It appears that the South Dakota statutes, other than those relating to railroads, telephone, telegraph, express and sleeping car companies, do not authorize a valuation which considers gross income, and that individuals and other corporations are taxed according to the value of their property, without reference to the income derived therefrom. In other words, property owned by other corporations and individuals is assessed for what it is fairly worth, and a valuation for taxation is not fixed by a method which gives controlling effect to the amount of the gross income derived therefrom. We concur with the Court of Appeals that such procedure is in violation of the provision of the South Dakota constitution, specifically requiring that all taxes levied and assessed upon corporation property shall be as near as may be by the same methods as are provided for the assessment of taxes upon individual property.
"The stringent provisions of the constitution of South Dakota, then in force, required the adoption of a rule of valuation, as near as might be, of like character in assessing individual and corporate property in the State, and here, the record shows, the valuation of the property of the express companies was based principally upon their gross incomes, determined by the method *508already described. Such administration of the statute would be illegal, although the law upon its face be unobjectionable.” (Emphasis added.) Johnson, supra, 241-242.
Although the facts of the present case represent the flip-side of the Johnson case, it is clear that if the Legislature intended the term "present economic income of structures” to mean "actual income”, the Legislature has created an arbitrary and irrational classification that cannot be sustained on equal protection and uniformity grounds. There can be no uniformity of taxation if a special group of individuals can claim that property tax must be based on the actual income derived from a self-imposed, unfavorable lease.
IV
In conclusion, the Court of Appeals has erred by extending this Court’s original CAF decision beyond the limits stated by this Court. In addition, an analysis of this Court’s original CAF decision shows that it conflicts with the law of all jurisdictions that have considered the subject, could be interpreted to obligate the acceptance of a distorted view of the true cash value of the property, could penalize the competent while rewarding the incompetent, and permits certain taxpayers to manipulate tax assessments.
The use of actual income as the standard to measure property tax assessment is violative of the state constitutional requirement of uniformity of taxation. It becomes even more evident that this standard shatters the constitutional mandate of uniformity when only particular taxpayers may *509chose when or when not to reveal their actual income to require its use to control assessment evaluation.
Although it is respectfully submitted that this Court erred by defining "economic income” as "actual income”, the Tax Tribunal, on remand, did consider actual income in evolving its assessment. It was not required to base its evaluation on that factor to the exclusion of any other consideration. Because the Tax Tribunal properly determined the true cash value of the property owned by C.A.F. Investment Company, the tribunal’s assessment should be sustained.

 During the pendency of this initial appeal, the Legislature transferred jurisdiction over property tax appeals from the tax commission to the Tax Tribunal. MCL 205.701 et seq.; MSA 7.650(1) et seq.

"The tribunal need not utilize actual income as the sole basis for valuation, but may adjust that figure to reflect other factors that would affect the 'usual selling price’ of the property. However, actual income must be the starting point for such calculations.” (Citations omitted.) (Emphasis changed.)_

 Const 1963, art 9, § 3 provides in pertinent part:
"The legislature shall provide for the uniform general ad valorem taxation of real and tangible personal property not exempt by law. The legislature shall provide for the determination of true cash value of such property; the proportion of true cash value at which such property shall be uniformly assessed, which shall not, after January 1, 1966, exceed 50 percent; and for a system of equalization of assessments.”
In response to this constitutional mandate, the Legislature has defined the term "true cash value” as follows:
" 'Cash value’ means the usual selling price at the place where the property to which the term is applied shall be at the time of assessment, being the price which could be obtained for the property at private sale, and not at forced or auction sale. Any sale or other disposition by the state or any agency or political subdivision of lands acquired for delinquent taxes or any appraisal made in connection therewith shall not be considered as controlling evidence of true cash value for assessment purposes. In determining the value the assessor shall also consider the advantages and disadvantages of location, quality of soil, zoning, existing use, present economic income of structures, including farm structures and present economic income of land when the land is being farmed or otherwise put to income producing use, quantity and value of standing timber, water power and privileges, mines, minerals, quarries, or other valuable deposits known to be available therein and their value.
"Except as hereinafter provided, property shall be assessed at 50% of its true cash value in accordance with article 9, section 3 of the constitution.” MCL 211.27; MSA 7.27.

 It is noted that the Legislature has enacted certain amendments to this statutory provision. None of the amendments, however, affect the decision in this case.

 The opinion of my colleague Justice Levin states: "The opinions which would sustain the Tax Tribunal would substitute for the constitutionally prescribed market-based standard of true cash value a hypothetical value, ignoring the lease which alone creates value of this dimension on land”. That statement does not accurately reflect the conclusion of this opinion.
"True cash value” as mandated by the Constitution and defined by the Legislature as "the usual selling price” is not to be based alone upon actual income calculations even according to the original CAF opinion. On the contrary, actual income may be ignored as a component of valuation in a given case. As correctly analyzed by its author, my colleague Justice Fitzgerald, the first CAF opinion only required "consideration” of actual income under the circumstances of this case. It did not require its use to the exclusion of any other factor.
On remand, the Tax Tribunal appropriately rejected actual income as the sole criterion of value. The tribunal’s approach did not ignore the actual income received by the lessor but considered it in combination with the lessee’s interest.
In addition, to conclude there was no probative evidence whatsoever that the property could be sold for more than a value based upon actual income, as suggested in the opinion of Justice Levin, is to ignore the record and the preponderance of evidence that would support the factual findings of the tribunal. My colleague presents an argument with respect to the probativeness of the evidence which the tribunal, if faced with this assertion, clearly could have chosen not to accept.