380 Mass. 888 | Mass. | 1980
Lead Opinion
This action, coming before us on reservation and report by a single justice of this court, attacks the constitutionality of that portion of §§ 10 and 24 of St. 1979, c. 797,
The statutory sections challenged in this action were adopted as part of a comprehensive scheme of property valuation and classification, which represents the latest in a long series of dramatic developments in the area of property taxation in this Commonwealth. We need not recount here the widespread incidence of illegal assessments antedating the statute. Judicial efforts to enforce the long-standing statutory and constitutional requirements that all real property be assessed proportionately, Part II, c. 1, § 1, art. 4, of the Massachusetts Constitution; G. L. cc. 58-59, as then in effect, are well documented in the opinions of this court. See, e.g., Sudbury v. Commissioner of Corps. & Taxation, 366 Mass. 558 (1974); Shoppers’ World, Inc. v. Assessors of Framingham, 348 Mass. 366 (1965); Bettigole v. Assessors of
Although enacted with the current classification plan, §§10 and 24 have no direct connection with classification. Rather, the contested aspects of the legislation pertain to an interim method of computing property tax abatements for property disproportionately assessed during years in which the classification plan is being implemented: Section 10
1. As the defendants do not dispute the appropriateness of declaratory relief in the circumstances of this case, see Sydney v. Commissioner of Corps. & Taxation, 371 Mass.
When legislative enactments involving taxation have been challenged as violative of the equal protection clause of the Fourteenth Amendment, the Supreme Court has granted State Legislatures wide discretion. In upholding a Florida statute which granted a $500 property tax exemption to widows but not to widowers, the Court in Kahn v. Shevin, 416 U.S. 351, 355-356 (1974), stated: “We deal here with a state tax law reasonably designed to further the state policy of cushioning the financial impact of spousal loss upon the sex for which that loss imposes a disproportionately heavy burden. We have long held that ‘[w]here taxation is concerned and no specific federal right, apart from equal protection, is imperiled, the States have large leeway in making classifications and drawing lines which in their judgment produce reasonable systems of taxation.’ Lehnhausen v. Lake Shore Auto Parts Co., 410 U.S. 356, 359 [1973]. A state tax law is not arbitrary although it ‘discriminate^] in favor of a certain class ... if the discrimination is founded upon a reasonable distinction, or difference in state policy,’ not in conflict with the Federal Constitution. Allied Stores [of Ohio, Inc.] v. Bowers, 358 U.S. 522, 528 [1959], This principle has weathered nearly a century of Supreme Court adjudication, and it applies here as well. The statute before us is well within those limits.” This court has accorded similar latitude to legislative determinations in the field of taxation. See Beals v. Commissioner of Corps. & Taxation, 370
The plaintiffs direct our attention to the discrimination between and within various classes of property wrought by the historical discrepancies between assessments and fair cash value. See Sudbury v. Commissioner of Corps. & Taxation, 366 Mass. 558, 563 (1974). They contend that § 10 fails to alleviate this discrimination. In particular, the plaintiffs argue that the statute utterly destroys the abatement rights of disproportionately assessed taxpayers within the most favored class itself because the equalized ratio of assessed value to fair cash value, dictated, in effect, by § 10, will always be higher than the average ratio of the most favored class.
While it may be true that fewer taxpayers will receive abatements under the § 10 formula and that the abatements of those taxpayers who do qualify may be smaller under § 10 than under the most favored class remedy,, we cannot agree that such results work a “hostile and oppressive discrimination.” See Lehnhausen v. Lake Shore Auto Parts Co., supra at 364, quoting from Madden v. Kentucky, 309 U.S. 83, 88 (1940). The abatement limitation has a rational basis in that a taxpayer is remitted only so much of his tax as exceeds what he should have paid had a municipality followed lawful assessment practices. See Tregor v. Assessors of Boston, 377 Mass. 602, and id. at 613, 615 (dissenting opinion), cert. denied, 444 U.S. 841 (1979). If under the § 10 formula a taxpayer, residential, commercial, industrial, or open space, pays no more than his fair share, see Bade v. Drachman, 4 Ariz. App. 55, 63-65 (1966); Siegal v. Newark, 38 N.J. 57, 62-64 (1962), he does not present a case of invidious discrimination. The equal protection clause imposes “no iron rule of equality.” Allied Stores of Ohio, Inc. v. Bowers, 358 U.S. 522, 526 (1959). Moreover, the temporary nature of the § 10 remedy, by its own terms and
Secondly, the plaintiffs argue that § 10 violates the State Constitution’s mandate that taxes be levied on a “proportional and reasonable” basis.
Thus, contrary to the plaintiffs’ claims, § 10 prescribes a remedy which complies in all respects with the constitutional concept of proportionality. Any residual discrimination between the favored and the disfavored taxpayer occasioned by the use of the municipal average remedy, see Tregor v. Assessors of Boston, supra at 610 (reduction to municipal average results in favoritism to other taxpayers assessed below that average), however distasteful, does not obligate the disfavored taxpayer to contribute more than “his share.” Cf. Associated Indus. of Mass., Inc. v. Commissioner of Revenue, 378 Mass. 657, 663-666 (1979) (disparities in tax burdens inherent in piecemeal implementation of property tax classification acceptable); Springfield v. Assessors of Granville, 378 Mass. 159, 163 (1979) (principle of proportionality in taxation leaves room for Legislature to grant exemptions reasonably related to public interest). We have recognized that “practically it is impossible to secure exact equality or proportion in the imposition of taxes.” Bettigole v. Assessors of Springfield, 343 Mass. 223, 231 (1961), quoting from Cheshire v. County Comm’rs of Berkshire, 118 Mass. 386, 389 (1875). See County of Essex v. Newburyport, 254 Mass. 232, 236 (1926) (“[n]o tax system has been devised whereby a perfect equalization of its burdens” can be accomplished). Even as limited by § 10, the abatement remedy aims at the “equality by ‘approximation’” that
In light of the foregoing discussion, the plaintiffs’ reliance on Tregor v. Assessors of Boston, supra, for the proposition that a disproportionately assessed taxpayer has a constitutional right to an abatement to the average of the most favored class is misplaced. The plaintiffs nonetheless contend that after Tregor the substantive constitutional right to proportional taxation became so identified with the remedy for its violation that there is no right independent of the remedy.
It is beyond dispute that in Tregor we held that an aggrieved taxpayer is “entitled” to the most favored class remedy. Id. at 611-612. However, the plaintiffs overlook the fact that thé Tregor majority scrupulously avoided grounding its most favored class remedy in the Constitution, State or Federal. See id. at 613-614 (dissenting opinion). Indeed, Tregor approved the granting of abatements to the municipal average in certain instances and noted that “a taxpayer makes out at least a prima facie case of disproportionate assessment if he shows that his property is assessed at a percentage of fair cash value greater than the average percentage.” Id. at 609. Faced with a choice between a remedy which discriminated in favor of taxpayers assessed below the municipal average and a remedy which discriminated against taxpayers who failed to seek abatements, the court, in the absence of legislative guidance, chose the latter. Id. at 610-611.
In balancing these alternative remedies, the Tregor majority relied on a view of proportionality that evolved from dictum in Shoppers’ World, Inc. v. Assessors of Framingham, 348 Mass. 366, 377-378 n.10 (1965), which itself relied solely upon the Supreme Court decision of Sioux City Bridge Co. v. Dakota County, 260 U.S. 441 (1923). Both Shoppers’ World and Sioux City Bridge concerned a single tax
In sum, we view the most favored class remedy of Tregor as a policy-based remedy, not a constitutionally mandated one. Although this court considered and rejected Boston’s “doomsday” and “windfall” arguments, see Tregor v. Assessors of Boston, supra at 612, and id. at 613 (dissenting opinion), the Legislature was free to reconsider the impact of a most favored class remedy on the fiscal integrity of municipalities. See Zayre Corp. v. Attorney Gen., 372 Mass. 423, 433-434 (1977); Beals v. Commissioner of Corps. & Taxation, 370 Mass. 781, 785 (1976); Assessors of Newton v. Pickwick Ltd., 351 Mass. 621, 625 (1967). The Legislature could reasonably conclude that a most favored class remedy
2. We next examine the plaintiffs’ contention that the statute’s use of equalized valuations as a ceiling on the municipal fair cash value figures violates the due process clause of the Federal Constitution and parallel provisions of the Constitution of the Commonwealth. Section 10, it will be recalled, provides that the Appellate Tax Board shall compute the “measure of damages” of a disproportionately assessed taxpayer “by computing an equalized tax rate” equivalent to the ratio of total assessed taxes to total fair cash value of a city or town. The denominator of that ratio — the fair cash value of a city or town — “shall in no event be higher than the equalized value” of the city or town for the preceding two-year period as reported to the Legislature by the Commissioner of Revenue. See G. L. c. 58, § 10C. This language imposes a ceiling on the fair cash value of a city, which in effect may limit the level of abatements: the lower the fair cash value, the higher the ratio of assessed value to fair cash value and the less disproportion between any individual taxpayer’s ratio and the municipal average ratio. The plaintiffs argue that this ceiling deprives taxpayers of due process because it establishes an irrebuttable presumption of fair cash value; because it renders a prior determination of equalized value binding on a taxpayer who was not a party to that determination and consequently was not given an opportunity to be heard; and because it
The plaintiffs’ irrebuttable presumption claim must fail under the reasoning of Weinberger v. Salfi, 422 U.S. 749 (1975). As we observed in Rzeznik v. Chief of Police of Southampton, 374 Mass. 475, 483 (1978); “[T]he Supreme Court, in Weinberger v. Salfi . . . made clear that, at least in the area of economic and social welfare, it would not apply the doctrine disfavoring irrebuttable presumptions as ‘a virtual engine of destruction for countless legislative judgments . . . .’ Id. at 772. See Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 23 (1976). Thus, in upholding the validity of statutory requirements governing the eligibility for certain Social Security benefits, the Court declined to examine the stautory classification at issue to determine whether it was ‘necessarily or universally true in fact,’ Vlandis v. Kline, 412 U.S. 441, 452 (1973). Rather, the Court examined the statutory procedures to determine whether applicants for governmental benefits were able to present evidence that they met the challenged eligibility requirements. Weinberger v. Salfi, supra at 772. ‘[F]ailing in this effort,’ the Court noted, ‘[the applicants’] only constitutional claim is that the test they cannot meet is not so rationally related to a legitimate legislative objective that it can be used to deprive them of benefits available to those who do satisfy that test.’ Id.” See Rosary v. Commissioners of Pub. Welfare, 370 Mass. 862 (1976).
As in Weinberger, the plaintiffs and other taxpayers are free to present evidence that they are assessed above the municipal average as defined and consequently meet the specified requirement for abatement. The plaintiffs nonetheless challenge equalized values as irrational and artificial figures, which have little to do with actual value. They point to Sudbury v. Commissioner of Corps. & Taxation, 366 Mass. 558, 560 (1974), which recounts a master’s finding that, with regard to 1974 figures at least, “there is no assurance that the final . . . equalized valuations approx
Despite our acknowledgement of the difficulties in achieving equalized valuations, Sudbury v. Commissioner of Corps. & Taxation, supra at 566-567, we have upheld the equalization statutes and the conclusiveness of findings made under them notwithstanding their “indirect financial impact” on other taxpayers. Malden v. Appellate Tax Bd., 367 Mass. 395, 400-403 (1975) (1974 equalization figures). Moreover, we have encouraged taxpayer reliance on equalized valuations in establishing a prima facie case of disproportionate assessment. Tregor v. Assessors of Boston, 377 Mass. 602, 609, cert. denied, 444 U.S. 841 (1979). Cf. G. L. c. 58A, § 12G, inserted by St. 1979, c. 383, § 3. Determination of equalized values, just as determination of § 10’s “equalized tax rate” or municipal average percentage, requires proof of the fair cash value of all taxable property in a city or town. The inherent difficulty in determining the fair cash value of a municipality carries over into individual tax abatement cases, where the desirability of a consistent determination of that amount in cases involving taxpayers of the same community is readily apparent. In light of the foregoing, the Legislature could conclude that using, as a ceiling, the fair cash values of cities as established by a statutory process which had already been scrutinized and upheld, see Malden v. Appellate Tax Bd., supra at 400-403, constituted a reasonable method for determining the municipal averages for all taxable property. Accordingly, contrary to the plaintiffs’ claim, the entitlement to an abatement is made available by the Legislature through § 10 upon compliance with an “objective criterion, one which the Legislature considered to bear a sufficiently close nexus with underlying policy objectives.” Rzeznik v. Chief of Police of Southampton, supra at 484, quoting from Weinberger v. Salfi, supra at 772.
The case at bar parallels Malden in that statutory reliance on a prior determination of municipal fair cash value sets a ceiling on one of four factors which will influence the amount of tax abatement the plaintiffs and other taxpayers will receive. However, the most important issue in an abatement proceeding, the fair cash value of the taxpayer’s property, is open to full adjudication before the Appellate Tax Board. We conclude therefore that the financial impact of the municipal fair cash value determination is as indirect in the tax abatement process as it is in the computation of the local aid formula. Consequently, any “collateral estoppel effect” occasioned by § 10’s use of that determination is not unconstitutional.
3. In their final challenge, the plaintiffs assert that St. 1979, c. 797, § 24, is unconstitutional because it has the effect of applying § 10 both retroactively and in a discriminatory manner. Section 24 directs the Appellate Tax Board to apply the provisions of § 10 to “all cases before [it] upon the effective date of this act [November 16, 1979] and all other cases filed thereafter relative to assessments for the fiscal years ending on or before [June 30, 1983].” The plaintiffs argue that an application to pending cases retroactively abrogates their right to an abatement to the most favored class average, which allegedly vested as of the date the particular contested assessments were determined, in violation of the due process clause of the Federal Constitution and arts. 10, 11, 12 and 30 of the Declaration of Rights of the Massachusetts Constitution. The plaintiffs advance the additional argument that § 24 works an impermissible discrimination in that different remedial formulas will have been applied to taxpayers who have sought abatements for the same fiscal years solely on the basis of the timing of the final decisions of the Appellate Tax Board.
We think it clear that, in the circumstances of this case, § 24 does not comport with principles of due process. In ex
While it is true that not all retroactive tax legislation is “necessarily” unconstitutional, courts have nevertheless held that retroactive tax legislation constitutes a denial of due process when, in the light of “the nature of the tax and the circumstances in which it is laid,” the law is “so harsh and oppressive as to transgress the constitutional limitation.” E.g., Welch v. Henry, 305 U.S. 134, 146-147 (1938). The standard of oppressiveness is “usually a question of degree.” New York ex rel. Beck v. Graves, 280 N.Y. 405, 409 (1939). The statute must not operate retroactively for “more than a reasonable period.” Merchants Nat’l Bank v. Merchants Nat'l Bank, 318 Mass. 563, 571 (1945). The potential scope of § 24’s retroactivity is readily discernible from the facts in the instant proceedings, which relate to assessments levied as far back as the 1976 fiscal year. We think that, in the circumstances of this case, the period of retroactivity reaches assessments levied so far back as to be oppressive and unjust under the due process clause. See Lacidem Realty Corp. v. Graves, 288 N.Y. 354, 357 (1942).
Although the statute legitimately seeks to avoid a drastic shift in real property tax burdens, its retroactive application to all pending proceedings would improperly penalize these plaintiffs and other taxpayers for municipalities’ long-standing disregard of proper assessment procedures. See Slewett & Farber v. Assessors of the County of Nassau, 97 Misc. 2d
However, the limited measure of retroactivity necessary to apply § 10 to fiscal year 1980
4. All that we have said supports our conclusion that St. 1979, c. 797, § 10 (G. L. c. 58A, § 14), is constitutionally permissible legislation and that St. 1979, c. 797, § 24, as limited to abatement cases for fiscal years after 1979, is likewise constitutional. Judgment is to be entered in the county court accordingly.
So ordered.
Statutes 1979, c. 797, § 10, is codified as G. L. c. 58A, § 14; § 24 is not codified.
As demonstrated in our discussion; infra, the plaintiffs do not establish unconstitutionality with regard to prospective application, but they clearly demonstrate detrimental and discriminatory aspects of the challenged sections. The statutory remedy terminates in 1983 by its own terms, St. 1979, c. 797, § 24, consistent with a reasonable time schedule for Statewide revaluation. If the life of the statutory scheme were to be extended beyond that time, it would be indicative of more of the same persisting unfair tax practices against which this court has spoken many times, and it would make a stronger case tending to prove unconstitutionality.
General Laws c. 58A, § 14, inserted by St. 1979, c. 797, § 10, provides: “In cases where the appellate tax board finds that a taxpayer is being assessed disproportionately with respect to other properties within the same city or town, the board shall compute the measure of damages in the following manner:
“ (1) by computing an equalized tax rate by dividing the total taxes as assessed for that city or town for the year for which the finding was made by the fair cash value of the city or town, which shall in no event be higher than the equalized value as finally reported to the general court by the state tax commission pursuant to section ten C of chapter fifty-eight for that city or town in the year next preceding the year for which the finding was made.
“ (2) by applying the rate as computed in accordance with subsection one to the fair cash value of the property and thereby determine the taxes which should have been paid.
“ (3) by subtracting the amount of taxes which should have been paid from those actually paid or assessed.
“In such cases within a city or town that has been certified for classification by the commissioner under the provision of section fifty-six of chapter forty and has implemented such classification system the measure of damages shall be computed on the basis of the tax rate of the class in which the property has been assessed.”
Applying the equalized tax rate to the. fair cash value of a particular parcel, as mandated by § 10, has the same effect as applying the actual tax rate to a percentage of the fair cash value which represents the municipal average.
Although § 10 refers to the State Tax Commission, a 1978 amendment, St. 1978, c. 514, §§ 40-42, substituted Commissioner of Revenue for the State Tax Commission in G. L. c. 58, §§ 9-10C.
Equalized valuations, see G. L. c. 58, §§ 9-10C, are primarily intended to provide a basis for the allocation of the county tax and certain State aid. They are designed to establish the fair cash value of the aggregates of taxable property within each municipality. See Malden v. Appellate Tax Bd., 367 Mass. 395, 398-399 (1975).
The plaintiffs’ reliance on Sioux City Bridge Co. v. Dakota County, 260 U.S. 441, 446 (1923), to support their equal protection claim is misplaced. That case is factually inapposite and therefore cannot be construed to mandate a lowest class remedy for all cases. See Tregor v. Assessors of Boston, 377 Mass. 602, 613 (1979) (dissenting opinion).
Section 10 must be judged apart from art. 112, the constitutional amendment authorizing the Legislature to classify property according to its use for the purposes of taxation, and its implementing statute, St. 1979, c. 797, § 11, which is applicable to revaluated communities in fiscal year 1981. St. 1979, c. 797, § 25.
The plaintiffs’ reliance on Bettigole v. Assessors of Springfield, 343 Mass. 223, 231 (1961), to establish the proposition that a most favored class remedy is constitutionally required is unfounded. That case involved declaratory and injunctive relief against an overt scheme of classification. The court never reached the issue of abatement levels.
We note that G. L. c. 58, § 10, as appearing in St. 1979, c. 797, § 8, now permits the Commissioner of Revenue to receive information from individual property owners prior to a determination of a community’s equalized valuation.
Fiscal year 1980 began July 1, 1979, with taxes assessed as of January 1, 1979. Since the effective date of the statute was November 16,1979, it is clear that some measure of retroactivity is involved if we are to apply § 10 to taxes for the 1980 fiscal year. Even if, as it appears, no cases concerning taxes for fiscal 1980 were “before” the board upon passage of §§10 and 24, there was taxpayer reliance in initiating abatement proceedings for 1980. Consequently, we do consider the retroactivity question with regard to abatements for fiscal year 1980.
Plurality Opinion
(concurring, with whom Kaplan, J., joins). I agree with the result reached by the court and with the conclusions expressed in parts one and two of the opinion. As to part three, I agree that equal protection principles bar the application of § 24 to Boston taxpayers merely because their cases are pending for a particular year in the Appellate Tax Board, where the board has granted relief to other Boston taxpayers for the same tax year on the basis of the holding of the court in the Tregor case. In joining the opinion on the equal protection point, I assume that some Boston taxpayers have received such abatements for years prior to fiscal year 1980. I do not join in any expression in the opinion as to the application of § 24 to pending applications for prior fiscal years in other municipalities.
I reject, however, the suggestion that due process considerations bar the application of § 24 to years prior to fiscal