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attorney

statuterespondentappellant

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State ex rel. La Follette v. Torphy, 85 Wis.2d 94, 270 N.W.2d 187

Facts

The case arose when the Secretary of the Wisconsin Department of Revenue requested funds to administer the Improvements Tax Relief law, which provided tax credits to certain property owners for improvements that increased property tax assessments. The law was challenged on the grounds that it violated both the equal protection clauses of the state and federal constitutions and the uniformity of taxation clause of the Wisconsin Constitution. The law specifically targeted owners of one or two-family dwellings valued at $50,000 or less and rental units valued at $75,000 or less, both of which had to be at least ten years old.

The law provides tax credits, within prescribed limitations, to certain property owners for building and garage improvements which result in increased property tax assessments.

Issue

Did the enactments granting 'improvements tax relief' to certain property owners violate the equal protection clauses of the state and federal constitutions and the uniformity of taxation clause of the Wisconsin Constitution?

The respondent argues that the Improvements Tax Relief law violates the equal protection clauses of both the federal and state constitutions.

Rule

The court applied standards for reviewing legislative classifications, emphasizing that classifications must be based on substantial distinctions, germane to the law's purpose, and not arbitrary. The uniformity clause requires that taxation act alike on all persons similarly situated, and classifications must not create an unequal burden on taxpayers.

These standards are to be applied in light of the presumption of constitutionality: 'However, before appellant can avail himself of these rules to challenge any distinctions between legislative classifications, he must overcome a presumption that the classifications are reasonable and proper.'

Analysis

The court determined that the classifications established by the Improvements Tax Relief law were not arbitrary and had a rational basis, as they were aimed at encouraging improvements to older, lower-valued properties. However, the court concluded that the law resulted in unequal tax burdens, as it effectively provided a partial exemption from taxation for certain property owners, violating the uniformity clause.

The legislative finding here that older buildings valued at less than the stated figures were particularly in need of improvement justifies the statutory value and age limits. Given such a legislative finding it cannot be said that these classifications are without a rational basis.

Conclusion

The court declared the Improvements Tax Relief provisions unconstitutional as they violated the uniformity of taxation clause of the Wisconsin Constitution.

We conclude the plan set forth in sec. 79.25, Stats., is, in fact, a tax statute. The remaining question is whether the statute provides a partial exemption. We are of the opinion it does provide such an exemption and is therefore in violation of art. VIII, sec. 1, of the Wisconsin Constitution.

Who won?

The prevailing party was the Attorney General, as the court ruled that the tax relief provisions were unconstitutional.

The Improvements Tax Relief law does not violate the equal protection clauses of either the state or federal constitutions.

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