State v. Taylor
| Decision Date | 23 October 1975 |
| Docket Number | No. 13949,13949 |
| Citation | 541 P.2d 1124 |
| Parties | The STATE of Utah, Plaintiff and Respondent, v. Samuel S. TAYLOR, Defendant and Appellant. |
| Court | Utah Supreme Court |
Bradley Rich, of Salt Alke Legal Defender Assn., Salt Lake City, for defendant-appellant.
Vernon B. Romney, Atty. Gen., Salt Lake City, for plaintiff-respondent.
Defendant appeals from a conviction for the crime of operating a business, in Salt Lake County, without a valid business license. His defense was predicated on the ground that the ordinance was unconstitutional in that it denied him equal protection of the law in violation of the Furteenth Amendment of the Constitution of the United States. We affirm the judgment of the trial court.
Defendant operates a hearing aid service in his home which is located in the unincorporated area of Salt Lake County. The County Commissioners enacted an ordinance levying a license fee upon the business of every person engaged in business within the county. By its express terms, the ordinance is a revenue measure. The license fee was $30 per place of business; plus an additional fee of $3, for each and every employee, exceeding one. However, a person having a gross sale of goods or services which amounted to less than $10,000 for the preceding calendar year was entitled to an exemption of $22.50. Furthermore, the maximum fee under the ordinance was set at $780. Defendant did a gross business of less than $10,000; so under the ordinance he was required to pay a fee of $7.50. He refused to pay this sum.
On appeal defendant contends that he was denied equal protection of the law in that the ordinance discriminated against small businessmen. He asserts that local government has an obligation to tax proportionally throughout the tax base. Defendant explained that he must pay $7.50, as the operator of a business with gross earnings of less than $10,000 per annum, while a corporation with gross earnings of many times this amount is subject to a maximum fee of only $780. Defendant argues that this system of taxation casts a disproportionate burden on the small businessman and thus violates the equal protection clause of the Fourteenth Amendment.
In L. S. Clark v. Titusville, 1 it was urged that an occupation tax which was not in proportion to the amount, but varied with the amounts which were arbitrarily fixed violated the equal protection clause of the Fourteenth Amendment. The court explained that there may be inequality among members of different classes. All that is required, under the Fourteenth Amendment, is equality among members of each class. The court stated that if there be inequality it must be because the members of a class are arbitrarily made such and burdened as such, upon no distinctions justifying it. The court stated that the rule of equality of the Fourteenth Amendment does not require exact equality of taxation, but only that the law imposing the tax shall operate on all under the same circumstances. The court ruled that where a tax on the privilege of doing business was graded according to the value, it may not be deemed unequal in operation solely because it does not levy the same percentage on every dollar.
The United States Supreme Court has adhered to this interpretation that the Equal Protection Clause imposes no iron rule of equality upon the States in the exercise of their taxing power. The state is not required to resort to close distinctions or to maintain a precise, scientific uniformity with reference to composition, use, or value. A state must proceed upon a rational basis, and may not resort to a classification which is palpably arbitrary. However, a state may discriminate in favor of a certain class, if the discrimination is founded upon a reasonable distinction or difference in state policy. 2
In Menlove v. Salt Lake County 3 this court observed that when government imposes a fee for the purpose of raising revenue, it is classified as an occupation tax. In such a case, the legislative branch is exercising its revenue-producing prerogative and is endowed with a broader degree of discretion in its classification.
In Salt Lake City v. Christensen Co. 4 this court cited the rule that taxes need not be equal as between individuals but shall be uniform is respect to the class upon which they are imposed. This court held that classifying merchants into groups according to the value of their stocks did not violate the precept of uniformity. In Davis v. Ogden City 5 this court approved an occupation tax based on the gross income of the businesses concerned and described it as one of the permissible...
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