Lehnhausen v. Lake Shore Auto Parts Co Barrett v. Shapiro 8212 685, 71 8212 691
Decision Date | 22 February 1973 |
Docket Number | Nos. 71,s. 71 |
Citation | 93 S.Ct. 1001,35 L.Ed.2d 351,410 U.S. 356 |
Parties | Robert J. LEHNHAUSEN, Petitioner, v. LAKE SHORE AUTO PARTS CO., et al. Edward J. BARRETT, County Clerk of Cook County, Illinois, et al., Petitioners, v. Clemens K. SHAPIRO et al. —685, 71—691 |
Court | U.S. Supreme Court |
See 411 U.S. 910, 93 S.Ct. 1523.
An Illinois constitutional provision subjecting corporations and similar entities, but not individuals, to ad valorem taxes on personalty comports with equal protection requirements, the States being accorded wide latitude in making classifications and drawing lines that in their judgment produce reasonable taxation systems. Quaker City Cab Co. v. Pennsylvania, 277 U.S. 389, 48 S.Ct. 553, 72 L.Ed. 927, disapproved. Pp. 359—365.
49 Ill.2d 137, 273 N.E.2d 592, reversed.
William J. Scott, Atty. Gen., for Robert J. Lehnhausen.
Aubrey F. Kaplan, Chicago, Ill., for Edward J. Barrett and others.
Arnold M. Flamm, Chicago, Ill., for Lake Shore Auto Parts Co. and others.
Louis L. Biro, Chicago, Ill., for Clemens K. Shapiro, and others.
In 1970 the people of Illinois amended its constitution1 adding Art. IX—A to become effective January 1, 1971, S.H.A., and reading:
'Notwithstanding any other provision of this Constitution, the taxation of personal property by valuation is prohibited as to individuals.'
There apparently appeared on the ballot when Art. IX—A was approved the following:
Respondent Lake Shore Auto Parts Co., a corporation, brought an action against Illinois officials on its behalf and on behalf of all other corporations and 'non-individuals' subject to the personal property tax, claiming that the tax violated the Equal Protection Clause of the Fourteenth Amendment since it exempts from personal property taxes all personal property owned by individuals but retains such taxes as to personal property owned by corporations and other 'non-individuals.' The Circuit Court held the Revenue Act of Illinois, as amended by Art. IX—A, unconstitutional as respects corporations by reason of the Equal Protection Clause of the Fourteenth Amendment.
Shapiro and other individuals also brought suit alleging they are natural persons who own personal property, one for himself and his family, one as a sole proprietor of a business, and one as a partnership. A different trial judge entered an order in these cases dismissing the complaints except as to Shapiro and members of his class. The trial judge held that all other provisions of Illinois law imposing personal property taxes on property owned by corporations and other 'non-individuals' were unaffected by Art. IX—A, in line with the statement on the ballot, quoted above.
All respondents in both cases appealed to the Illinois Supreme Court, which held that Art. IX—A did not affect all forms of real and personal property taxes but only personal property taxes on individuals, which it construed to mean 'ad valorem taxation of personal property owned by a natural person or by two or more natural persons as joint tenants or tenants in common.' 49 Ill.2d 137, 148, 273 N.E.2d 592, 597. As so construed, the Illinois Supreme Court held that the tax violated the Equal Protection Clause of the Fourteenth Amendment. Id., at 151, 273 N.E.2d, at 599, one Justice dissenting.2 The cases are here on writs of certiorari which we granted. 405 U.S. 1039, 92 S.Ct. 1307, 31 L.Ed.2d 579.
The Equal Protection Clause does not mean that a State may not draw lines that treat one class of individuals or entities differently from the others. The test is whether the difference in treatment is an invidious discrimination. Harper v. Virginia Board of Elections, 383 U.S. 663, 666, 86 S.Ct. 1079, 1081, 16 L.Ed.2d 169. Where taxation is concerned and no specific federal right, apart from equal protection, is imperiled,3 the States have large leeway in making classifications and drawing lines which in their judgment produce reasonable systems of taxation. As stated in Allied Stores of Ohio v. Bowers, 358 U.S. 522, 526—527, 79 S.Ct. 437, 440—441, 3 L.Ed.2d 480:
In that case we used the phrase 'palpable arbitrary' or 'invidious' as defining the limits placed by the Equal Protection Clause on state power. Id., at 530, 79 S.Ct., at 442. State taxes which have the collateral effect of restricting or even destroying an occupation or a business have been sustained, so long as the regulatory power asserted is properly within the limits of the federal-state regime created by the Constitution. Magnano Co. v. Hamilton, 292 U.S. 40, 44—47, 54 S.Ct. 599, 601—602, 78 L.Ed. 1109. When it comes to taxes on corporations and taxes on individuals, great leeway is permissible so far as equal protection is concerned. They may be classified differently with respect to their right to receive or earn income. In Lawrence v. State Tax Comm'n, 286 U.S. 276, 283, 52 S.Ct. 556, 558, 76 L.Ed. 1102, a state statute relieved domestic corporations of an income tax derived from activities carried on outside the State, but imposed the tax on individuals obtaining such income. We upheld the tax against the claim that it violated the Equal Protection Clause, saying:
Id., at 283—284, 52 S.Ct., at 558.
It is true that in Quaker City Cab Co. v. Pennsylvania, 277 U.S. 389, 48 S.Ct. 553, 72 L.Ed. 927, the Court held that a gross receipts tax levied on corporations doing a taxi business violated the Equal Protection Clause of the Fourteenth Amendment, when no such tax was levied on individuals and partnerships operating taxicabs in competition with the corporate taxpayers. Justices Holmes, Brandeis, and Stone dissented. Id., at 403—412, 48 S.Ct., at 555 558. Mr. Justice Holmes stated:
Id., at 403, 48 S.Ct., at 555.
Each of these dissenters thought Flint v. Stone Tracy Co., 220 U.S. 107, 31 S.Ct. 342, 55 L.Ed. 389, should govern Quaker City Cab. The Flint case involved a federal tax upon the privilege of doing business in a corporate capacity, but it was not laid on businesses carried on by a partnership or private individual. It was, therefore, contended that the tax was 'so unequal and arbitrary' as to be beyond the power of Congress. Id., at 158, 31 S.Ct., at 351. We had not yet held that the Fifth Amendment in its use of due process carries a mandate of equal protection.4 But the Court in dictum stated:
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