Fulton Foundation v. Wisconsin Dept. of Taxation
| Decision Date | 02 May 1961 |
| Citation | 13 Wis.2d 1,109 N.W.2d 285 |
| Parties | FULTON FOUNDATION et al., Respondents, v. WISCONSIN DEPARTMENT OF TAXATION, Appellant. |
| Court | Wisconsin Supreme Court |
John W. Reynolds, Atty. Gen., Harold H. Persons and E. Weston Wood, Asst. Attys. Gen., Madison, for appellant.
Foley, Sammond & Lardner, Frederic Sammond, James R. Modrall, III, Bender, Trump, Davidson & Godfrey, Walter H. Bender, Kneeland A. Godfrey, Milwaukee, of counsel, for respondents.
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, have 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, Inc. v. City of Milwaukee, Wis., 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 proceed 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 S.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...
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