Thomas A. LEONARD, et al., Appellee, v. Richard L. THORNBURGH, Governor, et al., Appellants.
Supreme Court of Pennsylvania.
Argued Jan. 24, 1985. Decided April 3, 1985.
489 A.2d 1349
Barbara W. Mather, Philadelphia, for City of Philadelphia at No. 94.
Maura A. Johnston, Deputy Atty. Gen., at No. 95.
Charles W. Bowser, Philadelphia, for amicus curiae City Council.
Thomas A. Leonard, James P. Leonard, Steven L. Friedman, Philadelphia, for Kathleen Leonard.
Edmunds J. Brokans, Elizabeth A. Read, Philadelphia, for amicus curiae Non-Resident Taxpayers.
Before NIX, C.J., and LARSEN, FLAHERTY, McDERMOTT, HUTCHINSON, ZAPPALA and PAPADAKOS, JJ.
OPINION OF THE COURT
FLAHERTY, Justice.
This is an appeal from an order of the Commonwealth Court which declared unconstitutiоnal Section 359(b) of the Tax Reform Code of 1971,
“All taxes shall be uniform, upon the same class of subjects, within the territorial limits of the authority levying the tax, and shall be levied and colleсted under general laws.”
The appellant, Secretary of Revenue James I. Scheiner, contends that the tax provisions in question comport with constitutional requirements2, under the Uniformity Clause of the Pennsylvаnia Constitution, supra, as well as under the equal protection clause of the Fourteenth Amendment. The appellee, Kathleen Leonard, a resident of Philadelphia who is aggrieved by having been assessed higher wage taxes than would have been payable had she not been a resident of Philadelphia, argues that the Uniformity Clause, rather than the Fourteenth Amendment, is the relevant constitutional standard, and that under that standard the tax provisions are invalid. It is well established, however, that in matters of taxation both constitutional standards are relevant, and that allegations of violations of the equal prоtection clause, and of the Uniformity Clause, are to be analyzed in the same manner. Aldine Apartments v. Commonwealth, 493 Pa. 480, 486-487, 426 A.2d 1118, 1121 (1981); Commonwealth v. Westinghouse Electric Corp., 478 Pa. 164, 168-169, 386 A.2d 491, 493 (1978), appeal dismissed, 439 U.S. 805, 99 S.Ct. 61, 58 L.Ed.2d 97 (1978); Fisher Controls Co. v. Commonwealth, 476 Pa. 119, 125, 381 A.2d 1253, 1256 (1977).
The principles which govern the analysis of claims of non-uniform taxation are well established. The legislature pоssesses wide discretion in matters of taxation. Aldine Apartments v. Commonwealth, 493 Pa. at 487, 426 A.2d at 1121. The burden is upon the taxpayer to demon-
Under the equal protection clause, and under the Uniformity Clause, absolute equality and perfect uniformity in taxation are not required. Columbia Gas Corp. v. Commonwealth, 468 Pa. 145, 151, 360 A.2d 592, 595 (1976). In cases where the validity of a classification for tax purposes is challenged, the test is whether the classification is based upon some legitimate distinction between the classes that provides a non-arbitrary and “reasonable and just” basis for the difference in treatment. Aldine Apartments v. Commonwealth, 493 Pa. at 487, 426 A.2d at 1121-1122. See also, F.J. Busse Co. v. Pittsburgh, 443 Pa. at 358, 279 A.2d at 19. Stated alternatively, the focus of judicial review is upon whether there can be discerned “some concrete justification” for treating the relevant group of taxpayers as members of distinguishable classes subject to different tax burdens. Columbia Gas Corp. v. Commonwealth, 468 Pa. at 150-153, 360 A.2d at 595-597. When there exists no legitimate distinction between the classes, and, thus, the tax scheme imposes substantially unequal tax burdens upon persons otherwise similarly situated, the tax is unconstitutional. Commonwealth v. Staley, 476 Pa. 171, 180, 381 A.2d 1280, 1284 (1978). See also, Amidon v. Kane, 444 Pa. at 55, 279 A.2d at 63.
Applying these principles to thе instant case, we find that the tax scheme in question meets constitutional re-
This is not a case, therefore, where mere residence, uncorrelated with concrete justifications related to the situs of residence, has been relied upon by the taxing authority as an asserted basis for differential tax treatment. In the past, it has been held that residence alone is an insufficient basis upon which to sustain differential tax treatment, absent further justifications which correlate with the status of residency. See Columbia Gas Corp. v. Commonwealth, 468 Pa. at 150-155, 360 A.2d at 595-597 (disparate rates of tax on foreign and domestic corporations invalid where Commonwealth offered no justification for taxing foreign corporаtions more heavily than domestic ones); Danyluk v. Johnstown, 406 Pa. 427, 178 A.2d 609 (1962) (city‘s capitation tax on non-residents held unauthorized and invalid, with dictum indicating that an occupation tax levied only against non-residents would violate constitutional uniformity standards); Carl v. Southern Columbia Area School District, 41 Pa.Commw.Ct. 527, 400 A.2d 650 (1979) (school district‘s tax invalid where, without reasonable justification, taxpayers residing in different counties were charged different amounts for precisely the same educational services).
In the instant case, it may clearly be presumed that non-resident wage earners utilize services provided by the City of Philadelphia to a lesser extent than do residents. Rather than benefit from twenty-four hour and seven day per week availability of such services, non-resident wage earners avail themselves of such services primarily during
An additional justification for differentiating the tax treatment of residents and non-residents is to be found in the extent of the political representation the two classes enjoy. The legislature, in capping the wage tax rate applicable to non-residents, afforded protection to persons who are subject to city wage taxes but who have no voiсe in the city council. In contrast, residents of the city have recourse through their own elected representatives, the members of city council, in the event that they believe their tax rates are еxcessive.
We conclude that valid reasons have been offered for imposing a higher tax rate on resident wage earners of the City of Philadelphia than is imposed upon non-resident wage earners. The wage tax scheme in question is, therefore, in compliance with constitutional requirements governing uniformity of taxation. Accordingly, the order of the Commonwealth Court, declaring the tax provisions in question unconstitutional, is reversed.
Order reversed.
ZAPPALA, J., joins this Majority Opinion and files a Concurring Opinion which is joined by HUTCHINSON, J.
ZAPPALA, Justice, concurring.
While I join in the majority opinion‘s resolution of the constitutionality of § 359(b) of the Tax Reform Code of 1971, Act of March 4, 1971, P.L. 6, as amended,
The Commonwealth Court denied preliminary objections in the nature of demurrer filed on behalf of Secretary of Revenue James Scheiner asserting that he was not a proper party to the action. Relying upon the enumeration of the Department of Revenue‘s duties and responsibilities,
The department is hereby charged with the enforcement оf the provisions of this article, and is hereby authorized and empowered to prescribe, adopt, promulgate and enforce rules and regulations relating to any matter or thing pertaining to the administration and enforcement of the provisions of this article and the collection of taxes imposed by this article.
Section 7354 was not intended to require the Secretary of Revenue to enforcе, and impliedly defend, a local tax ordinance such as that adopted by the City of Philadelphia. I would hold that the Secretary of Revenue was not a proper party in this action.
HUTCHINSON, J., joins in this concurring opinion.