Court Opinion

ID: 9663560
Source: CourtListenerOpinion
Date Created: 2023-08-23 23:42:44.821341+00
Date Added: 2024-06-11T18:14:51.780774
License: Public Domain

The following opinion was filed May 2, 1961:
Currie, J.
(on motion for rehearing). In view of the forceful and persuasive arguments advanced by the attorney general in the brief filed by the department in support of its motion for rehearing, we have reconsidered our original holding, that a question of whether a particular tax exemption denies the equal protection of the laws, is not of great public concern.
Such original determination had been motivated by the view that, while the granting of a particular tax exemption by the legislature might be of particular interest to other taxpayers to whom the exemption was not made applicable, it was not of great interest to the public at large. Upon further reflection we are convinced such issue should be held to present a question of great public interest. This is because the extending of special privileges by way of discriminating tax exemptions, which deny the equal-protection-of-the-laws requirement of the Fourteenth amendment, *14bhave a tendency to undermine the faith of citizens in the integrity of their state government. Therefore, we withdraw that part of the original opinion which determined that the equal-protection-of-the-laws issue was not of great public concern, and now hold that the department should be permitted to raise such constitutional issue.
There is a further reason of policy for holding that the department should be permitted to raise this particular issue of constitutionality. This is that unless the department is permitted to do so there is little likelihood that any taxpayer will. The situation is different with respect to the enactment of a statute imposing a new tax which denies the equal protection of the laws. There the constitutional issue is very likely to be raised by the taxpayer against whom an attempt is made to assess and collect the tax.
In Associated Hospital Service v. Milwaukee, post, p. 447, 109 N. W. (2d) 271, we have reviewed the legal principles which are applicable in determining whether a tax-exemption statute denies the equal protection of the laws. We will not here repeat the authorities cited in such opinion. The classification made by the legislature in granting a particular tax exemption must be sustained as not arbitrary or unreasonable if there is any conceivable basis in reason therefor.
When the legislature made the instant classification, in drawing the line with respect to which transfers should be retroactively exempted from gift tax, it drew the same on the basis of whether or not the previously imposed tax had already been paid. There exists a serious question of whether our legislature may constitutionally grant a retroactive tax exemption, which requires the refunding from the state treasury of taxes already paid, without running athwart of the implied restriction of our state constitution that public funds may not be appropriated for a private purpose.
In our original opinion herein we held that there was a time limitation beyond which the legislature cannot pro*14cceed retroactively, so as to compel a refund of taxes already paid. Our opinion in State ex rel. Larson v. Giessel (1954), 266 Wis. 547, 64 N. W. (2d) 421, is open to the interpretation that a refund of taxes already legally collected by way of a granting of a retroactive exemption from tax would constitute an expenditure of public funds for a private purpose. We see no reason to now either repudiate or affirm such interpretation. It is sufficient to sustain the classification made by the legislature to point out that a conceivable basis for the same is the reasonable doubt as to whether the exemption would have been constitutional if it had required the refund of taxes already paid.
We deem the case of Cahen v. Brewster (1906), 203 U. S. 543, 27 Sup. Ct. 174, 51 L. Ed. 310, controls the disposition of the instant issue of constitutionality. In that case the state of Louisiana had imposed a retroactive inheritance tax but in effect exempted therefrom estates of decedents that were finally closed at the time of enactment. This classification was attacked as being a denial of the equal-protection-of-the-laws clause of the Fourteenth amendment. In disposing of such contention the supreme court stated (p. 552):
“But, as we understand, the supreme court [of Louisiana] made the validity of the tax depend upon the very fact which counsel attack as an improper basis of classification. The court decided that the property bequeathed was property the state could tax, ‘until it had passed out of the succession of the testator.’ It was certainly not improper classification to make the tax depend upon a fact without which it would have been invalid. In other words, those who are subject to be taxed cannot complain that they are denied the equal protection of the laws because those who cannot legally be taxed are not taxed.”
The department’s brief cites the holding of this court in Will of LeFeber (1937), 223 Wis. 393, 271 N. W. 95, as being in conflict with Cahen v. Brewster, supra. If *14dsuch conflict exists we would be duty bound to defer to the United States supreme court’s holding in the latter case because that court is the final arbiter of issues of constitutionality arising under the Fourteenth amendment. However, there is no conflict between the holdings of the two cases. This is apparent from the following statement appearing in the opinion in the LeFeber Case (p. 399):
“The only semblance of support for the classification here involved is that the method of collection of the tax is more convenient in estates not closed than in closed estates.”
This would indicate that it was not sought to sustain the classification in the LeFeber Case on the ground that there was a reasonable doubt as to whether a retroactive inheritance tax could be constitutionally levied upon the assets of an estate which had been closed.
It is to be noted that the department here contends that a retroactive exemption of gift tax which would be made applicable to transfers, on which the gift taxes had already been paid, would be unconstitutional under the state constitution.
If gift taxes were imposed on the transfers in question by the applicable gift tax statutes in effect at the time the legislature enacted ch. 356, Laws of 1949, so as to provide for the retroactive exemption of the same, the gift taxes were then already past due. Thus such retroactive exemption may have benefited some taxpayers who had failed to pay gift taxes when due while others, who had paid gift taxes which had accrued during the same period, were denied such exemption. One may question the wisdom of such a policy, but the determination of such policy lay within the province of the legislature and not this court.
In the instant case the plaintiffs exercised their election under sec. 71.12 (2), Stats., to deposit with the state treasurer the amount of the gift taxes sought to be collected by the department. Under such statute, upon conclusion of *15this case, the state treasurer is required to refund the amount of any overpayment with interest at five per cent. Thus, such deposit in effect is one in escrow and the amount of the same in no sense constitutes public funds. Therefore, the making of the refund in no sense can be considered an expenditure of public funds for a private purpose.
By the Court. — The motion for rehearing is denied without costs.