American Amusement Co., Inc. v. Department of Revenue, Docket Nos. 78-2535
Decision Date | 06 August 1979 |
Docket Number | 78-2536,Docket Nos. 78-2535 |
Citation | 283 N.W.2d 803,91 Mich.App. 573 |
Parties | AMERICAN AMUSEMENT COMPANY, INC., a Michigan Corporation, Plaintiff- Appellant, v. DEPARTMENT OF REVENUE, State of Michigan, Defendant-Appellee. Harry V. MOHNEY, Plaintiff-Appellant, v. DEPARTMENT OF TREASURY REVENUE DIVISION, Defendant-Appellee. |
Court | Court of Appeal of Michigan — District of US |
Sandborn & O'Neill, by Michael Y. Sandborn, Lansing, for plaintiff-appellant.
Frank J. Kelley, Atty. Gen., Robert A. Derengoski, Sol. Gen., by E. Raymond O'Malley, Asst. Atty. Gen., for defendant-appellee.
Before MacKENZIE, P. J., and HOLBROOK and CYNAR, JJ.
In 1973, plaintiff American Amusement Company, Inc., was assessed a use tax of $14,378.84 for the exhibition of noncopyrighted "adult films". In the same year, plaintiff Harry V. Mohney was assessed a tax of $2414.65 as a result of his showing similar films. In each case, the plaintiff paid the tax under protest and instituted suit in the Court of Claims to recover the amount paid. They now appeal as of right from a decision of the Court of Claims denying their requests for refunds.
M.C.L. § 205.93; M.S.A. § 7.555(3) provides for the levying of a "specific tax for the privilege of using, storing or consuming tangible personal property in this state". Other sections of the Use Tax Act, M.C.L. § 205.91 Et seq.; M.S.A. § 7.555(1) Et seq., provide numerous exemptions from this tax. It has also been held that property subject to sales tax under the Sales Tax Act, M.C.L. § 205.51 Et seq.; M.S.A. § 7.521 Et seq., is also exempt from the use tax. Banner Laundering Co. v. State Board of Tax Administration, 297 Mich. 419, 428, 298 N.W. 73 (1941).
Plaintiffs did not contend that they fit into any of the statutory or judge-made exemptions to the use tax. Rather, they noted that M.C.L. § 205.94(o); M.S.A. § 7.555(4)(O ), 1 provides an exemption for copyrighted motion-picture films and argued that the disparate treatment between copyrighted and noncopyrighted films violated equal protection. They further argued that both copyrighted and noncopyrighted films should fall within the statutory exemption.
The trial judge agreed that the distinction between the two types of films violated the equal protection clause of the Fourteenth Amendment of the United States Constitution. However, he concluded that this violation necessitated striking down the exemption for copyrighted films rather than applying it to all films. Accordingly, he concluded that the equal protection violation present in the use tax scheme did not relieve plaintiffs of their liability to pay the use tax in this instance.
We agree with the trial court's conclusion that plaintiffs are liable for the payment of use tax under M.C.L. § 205.93; M.S.A. § 7.555(3). However, we disagree with his conclusion that equal protection is violated as a result of the disparate treatment of copyrighted and noncopyrighted films under the Use Tax Act.
As a general rule, the Legislature's enactments are clothed with a presumption of constitutionality. People v. McQuillan, 392 Mich. 511, 536-537, 221 N.W.2d 569 (1974). This presumption appears to be especially strong where tax legislation is concerned. In Lehnhausen v. Lake Shore Auto Parts Co., 410 U.S. 356, 364, 93 S.Ct. 1001, 1006, 35 L.Ed.2d 351 (1973), the United States Supreme Court stated:
Similarly, in Thoman v. City of Lansing, 315 Mich. 566, 576, 24 N.W.2d 213, 214 (1946), our Supreme Court noted:
" 'The presumption of constitutionality following taxing statutes is stronger than applies to laws generally and only where a taxing system clearly and palpably violates the fundamental law will it be held invalid.' "
However, this is not to say that the states are exempt from the requirements of the equal protection clause of the Fourteenth Amendment when enacting taxation legislation. As stated in Allied Stores of Ohio, Inc. v. Bowers, 358 U.S. 522, 527-528, 79 S.Ct. 437, 441, 3 L.Ed.2d 480 (1959):
See also W. S. Butterfield Theatres Inc. v. Dep't of Revenue, 353 Mich. 345, 353, 91 N.W.2d 269 (1958).
In determining whether a particular taxation scheme is rationally based it must be remembered that the equal protection clause:
" " Lehnhausen v. Lake Shore Auto Parts Co., supra, 410 U.S. 359-360, 93 S.Ct. 1004.
Our Supreme Court echoed this viewpoint in Banner Laundering Co. v. State Board of Tax Administration, supra, 297 Mich. 433, 298 N.W. 78-79, stating:
" ...
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