Davis v. Department of Treasury, Docket No. 62236

• Court: Court of Appeal of Michigan (US)
• Writing for the Court: PER CURIAM
• Citation: 124 Mich.App. 222,333 N.W.2d 521
• Docket Number: Docket No. 62236
• Decision Date: 17 May 1983
• Parties: Paul S. DAVIS, Petitioner-Appellant, v. DEPARTMENT OF TREASURY, Respondent-Appellee. 124 Mich.App. 222, 333 N.W.2d 521

Page 521

333 N.W.2d 521 Paul S. DAVIS, Petitioner-Appellant,
v.
DEPARTMENT OF TREASURY, Respondent-Appellee. Docket No. 62236.
124 Mich.App. 222, 333 N.W.2d 521 Court of Appeals of Michigan. Submitted Oct. 14, 1982.
Decided Feb. 1, 1983.
Released for Publication May 17, 1983.

Page 522

[124 MICHAPP 224] Paul S. Davis, East Lansing, for petitioner-appellant.

Frank J. Kelley, Atty. Gen., Louis J. Caruso, Sol. Gen., and Richard R. Roesch and Curtis G. Beck, Asst. Attys. Gen., for respondent-appellee.

Before HOLBROOK, P.J., and J.H. GILLIS and DODGE, ^* JJ.

PER CURIAM.

Petitioner appeals as of right from a January 11, 1982, judgment of the Michigan Tax Tribunal affirming the denial of petitioner's claim for an intangibles tax refund.

Petitioner timely paid his intangibles taxes for the years 1976, 1977 and 1978. In November, 1979, the Michigan Department of Treasury issued a notice of intent to assess an additional intangibles tax of $118.40 for the years 1976 and 1978. Petitioner paid the tax under protest and requested a hearing. A hearing was held before a Department of Treasury hearing officer who, by decision and order dated November 21, 1980, denied petitioner's claim for an intangibles tax refund.

Petitioner then petitioned the Tax Tribunal for review of the department's denial of his refund [124 MICHAPP 225] claim, alleging that the intangibles tax act, M.C.L. Sec. 205.131 et seq.; M.S.A. Sec. 7.556(1) et seq., was unconstitutional in several respects or, in the alternative, that the November, 1979, assessment was improper.

On December 10, 1981, the Tax Tribunal's hearing officer issued a proposed judgment recommending affirmance of the department's denial of the refund claim. Petitioner filed exceptions and, on January 11, 1982, the tribunal adopted the findings of fact and conclusions of law of the proposed judgment. Petitioner appeals as of right.

Petitioner first argues that the intangibles tax act taken in conjunction with the Income Tax Act of 1967, M.C.L. Sec. 206.1 et seq.; M.S.A. Sec. 7.557(101) et seq., results in a graduated income tax in violation of Const.1963, art. 9, Sec. 7. The argument lacks merit. The intangibles tax is a specific tax on the privilege of ownership of intangible personal property. The fact that income is used as a partial basis for measuring the

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intangibles tax does not make it an income tax. Shivel v. Kent County Treasurer, 295 Mich. 10, 19, 294 N.W. 78 (1940). See also Shapero v. Dep't of Revenue, 322 Mich. 124, 33 N.W.2d 729 (1948). Since the intangibles tax does not constitute an income tax, there is no violation of Const.1963, art. 9, Sec. 7.

With regard to petitioner's second argument, we adopt the following analysis of the Tax Tribunal hearing officer:

"Petitioner next argues that since the new Constitution removed intangible property from the general property tax, removed the reference to 'specific' taxes, and the reference to a nongraduated income tax, it 'is clear that the intent of the new Constitution was to replace the intangible property tax with an income tax'. * * *

[124 MICHAPP 226] "Petitioner is correct that the reference in Section 4 of the 1908 Constitution has not been reinserted in the new Constitution ('The legislature may by law impose specific taxes, which shall be uniform upon the classes upon which they operate') and that the new Constitution provides for 'the uniform general ad valorem taxation of real and tangible personal property not exempt by law'. Thus, the new Constitution specifically speaks only of tangible property.

"But, as the Convention comments point out: 'This is a revision of Sections 3, 4, 7 and 8, Article X, of the present [1908] Constitution. The first sentence preserves the uniformity clause of Sec. 3, Article X, except as it presently applies to intangible personal property for which ad...