Lead Opinion
Plаintiff appeals as of right the trial court’s declaration upholding the constitutionality on the challenged grounds of the "Single Business Tax Act”,
"The Plaintiff Lawrence J. Stockier, is a resident of the Township of West Bloomfield, County of Oakland, Stаte of Michigan, and is doing business at 1924 Guardian Building, Detroit, Michigan.
"That on the 8th day of October 1975, Plaintiff commenced litigation in the Circuit Court for the County of Wayne seeking to have declared unconstitutional Act 228 of PA 1975, being known as the Single Business Tax Act.
"In response to Plaintiffs Complaint, the Defendant filed a Motion for Summary Judgmеnt, an Amended Complaint was filed and thereupon Motion for Summary Judgment was filed on behalf of the Plaintiff as to Count 1 and the parties respectfully submitted their issues to be determined by the Trial Court as a matter of law upon the briefs. On the 10th day of February, 1976, the Trial Court wrote its Opinion Denying Plaintiffs Motion for Summary Judgment as to Count 1, and granting Summary Judgment as to Defendant’s Motion for Summary Judgment on all counts. On the 20th day of February, 1976, the Circuit Court Judge entered an Order accordingly.”
The SBTA is a new and experimental piece of legislation. No other state has a similar statute. We admit some confusion in trying to understand the various provisions and the eсonomic theory of the SBTA. It has been analyzed as a "pseudo” value-added tax in that it taxes what one has added to the economy in contrast to an income tax which taxes what one has derived from the econ
Plaintiff raises five issues, all challenging the constitutionality of the SBTA. As did the trial court, we will address each issue individually; however, before proceeding to do so we think it wise to make a few general comments and observations.
Statutes are presumed to be constitutional. When one contends that a statute is unconstitutional the burden rests on him to point out with specificity the provision of the constitution that is violated. Huron-Clinton Metropolitan Authority v Boards of Supervisors of Five Counties,
The instant case was filed on October 8, 1975.
As will become clear in the discussion of the individual issues, many of the challenges here presented are nonjusticiable. A decision as to those issues would be based on speculation. Should we decide those issues today, it would be an imposition on the Legislature and would possibly impede future litigants who may well have a factual controversy. Accordingly, we will address the issues as they are raised and where the same are premature we will decline to render a decision.
I
Did the trial court err in ruling as a matter of law that the Michigan single business tax does not violate the Michigan Constitutiоn by imposing, levying and enforcing a tax upon the privilege of
Plaintiffs argument within issue one is twofold; first, that it is a fundamental right to engage in business activity and therefore this right cannot be taxed and, second, that the SBT, not being speсifically enumerated in the Michigan Constitution, is invalid.
Plaintiff cites Murdock v Pennsylvania,
We reprint the identical portion of Young v Ann Arbor, supra, that the trial court quoted in response to plaintiffs contention that taxes not specifically provided for in the Michigan Constitution are invalid.
"A different rule of construction applies to the Consti*647 tution of the United States than the Constitution of a State. The Federal government is one of delegated powers, and all powers not delegated are reserved to the States or to the pеople. When the validity of an act of congress is challenged as unconstitutional, it is necessary to determine whether the power to enact it has been expressly or impliedly delegated to congress. The legislative power, under the Constitution of the State, is as broad, comprehensivе, absolute and unlimited as that of the parliament of England, subject only to the Constitution of the United States and the restraints and limitations imposed by the people upon such power by the Constitution of the State itself.
" 'The purpose and object of a State Constitution are not to make specifiс grants of legislative power, but to limit that power when it would otherwise be general or unlimited.’ ” (Citations omitted.)267 Mich 241 , 243-244.
See also Huron-Clinton Metropolitan Authority v Supervisors of Five Counties, supra, Bowerman v Sheehan,
Although the Michigan Constitution lists various types of taxes and limits thereto, Const 1963, art 9, §§ 3, 7, 8, that list is not exhaustive. Other taxes may be enacted by the Legislature provided the same are constitutionally firm. Huron-Clinton Metropolitan Authority v Supervisors of Five Counties, supra, Walcott v People,
II
Does the SBTA violate equal protection of the laws under the Federal and state constitutions in that plaintiff is subjected to pay both the state income tax and the SBT while others (corpora
Plaintiff argues that the operation of § 6(1)
Our Supreme Court has held that the Legislature may choose to exempt certain persons from taxation. C F Smith Co v Fitzgerald, supra. In Lenhausen v Lake Shore Auto Parts Co,
"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 US 663 , 666 [86 S Ct 1079 ;16 L Ed 2d 169 (1966)]. Where taxation is concerned and no specific federal right, apart from equal protection, is imрeriled, 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 US 522 , 526-527 [79 S Ct 437 ;3 L Ed 2d 480 (1959)]:
" 'The States have a very wide discretion in the laying of their taxes. When dealing with their proper domestic concerns, and not trenching upon the preroga*649 tives of the National Government or violating the guaranties of the Federal Constitution, the States have the attribute of sovereign powers in devising their fiscal systems to ensure revenue and foster their local interests. Of course, the States, in the exercise of their taxing power, are subject to thе requirements of the Equal Protection Clause of the Fourteenth Amendment. But that clause imposes no iron rule of equality, prohibiting the flexibility and variety that are appropriate to reasonable schemes of state taxation. The State may impose different specific taxes upon diffеrent trades and professions and may vary the rate of excise upon various products. It is not required to resort to close distinctions or to maintain a precise, scientific uniformity with reference to composition, use or value.’ ”410 US 356 , 359-360.
The Court added:
"There is a presumption of constitutionality which can be overcome 'only by the most explicit demonstration that a classification is a hostile and oppressive discrimination against particular persons and classes.’ * * * 'The burden is on the one attacking the legislative arrangement to negative every conceivable basis which might support it.’ ”410 US 356 , 364, quoting Madden v Kentucky,309 US 83 , 88;60 S Ct 406 ;84 L Ed 590 (1940).
Plaintiff hаs failed to sustain this burden. It appears that plaintiff’s actual quarrel is that the act is oppressive. That may well be true; however, harshness does not render a tax unconstitutional. C F Smith Co v Fitzgerald, supra, Moore v Harrison, supra.
Ill
Did the trial court err in ruling as a matter of law that the Michigan Single Business Tax does
Plaintiff contends that § 92 of the SBTA infringes on freedom of speech, US Const, Am I; Const 1963, art 1, § 5, and the right to counsel, US Const, Am VI; Const 1963, art 1, § 20, in that the power to withhold a license amounts to a denial of those rights.
Section 92 provides:
"The commissioner may utilize the services, information, or records of any other department or agency of the state government, including the withholding of state licenses or permits, in the performance of its duties hereunder, and other departments or agencies of the state government shall furnish the services, information, or records, and withhold issuance of licenses or permits, uрon the request of the department.” (Emphasis supplied.) MCLA 208.92; MSA 7.558(92).
Plaintiffs argument is premature. The section provides that the commissioner may direct the withholding of licenses, not that he must. As of this date, we do not know how this section will be utilized. It is possible that the withholding of licenses under this section within the context of a particular fact situation may be constitutionally void. It is equally possible that actions pursuant to this section will be reasonable and constitutionally sound. We will not partake in speculation as to what the commissioner will do. Nor will we presume that the commissioner will act so as to unconstitutionally infringe on one’s fundamental rights. See United Public Workers of America v Mitchell, supra.
Plaintiff has demonstrated no facial constitutional violation nor has he presented actual facts
IV
Did the trial court err in ruling as a matter of law that the Michigan Single Business Tax as applied does not violate the Michigan constitutional prohibition against a graduated statе income tax nor result in unconstitutional double taxation?
Article 9, § 7 of the Michigan Constitution provides:
"No income tax graduated as to rate or base shall be imposed by the state or any of its subdivisions.”
Plaintiff contends that the SBT is a tax on income and that the § 35 small business exemption amounts to a graduation of base.
Section 31 states explicitly:
"There is hereby levied and imposed a specific tax of 2.35% upon the adjusted tax base of every person with business activity in this state which is allocated or apportioned to this state.
"The tax so levied and imposed is upon the privilege of doing business and not upon income.” MCLA 208.31(1) and (4); MSA 7.558(31)(1) and (4).
We do not perceive the SBT as an inсome tax. Although Federal taxable income is used as the starting point in computing the tax base, it is
Assuming arguendo that the SBT is an income tax, it does not offend the constitutional prohibition against graduated income taxes. The rate is a flat 2.35%. The base does not become graduated merely because of exemptions or exclusions. Kuhn v Department of Treasury.
The SBT is a specific tax. The rule of uniformity is therefore inapplicable, Shapero v Department of Revenue,
V
Did the trial court err in ruling as a matter of law that the Michigan Single Business Tax does not violate the interstate commerce clause of the Federal Constitution?
Plaintiff, relying on Spector Motor Service, Inc v O’Connor,
The burden is upon plaintiff to demonstrate and prove the alleged infringement. He has failed to inform us exactly what activity he is engaging in
In sum, plaintiff has presented no argument so as to persuade this Court that the SBTA is unconstitutional. No costs, a public question being involved.
Notes
Hereinafter the Single Business Tax Act will be referred to as the SBTA or the Act and Single Business Tax will be referred to as SBT.
" 'Person’ means an individual, firm, bank, financial institution, limited partnеrship, copartnership, partnership, joint venture, association, corporation, receiver, estate, trust, or any other group or combination acting as a unit.” MCLA 208.6(1); MSA 7.558(6X1).
"For the 1976 tax year the first $34,000.00 of the tax base of every person, $36,000.00 for the 1977 tax year, and each year thereafter. * * * This exemption shall be reduced by $2.00 for each $1.00 that business income exceeds the amount of the exemption.” MCLA 208.35(a); MSA 7.558(35)(a).
Concurrence Opinion
(concurring). I concur in the result reached by the majority. As to issue no III, however, it is my belief that § 92 of SBTA, MCLA 208.92; MSA 7.558(92), is unconstitutional and will be so declared on procedural and substantive due process grounds if not on the grоunds urged by plaintiff. Of course if the commissioner never exercises the authority conveyed by that section an actual controversy would never arise. It may be gratuitous to do so but for my part I would indicate so great an aversion to the tax collection power granted the commissioner under § 92 that I would summarily declare it unconstitutional. To offer up the power to a tax collecting czar to revoke a doctor’s, lawyer’s, plumber’s or foodhan-dler’s licensing privileges in order to bludgeon the payment of a tax assessment, is an intolerable bureaucratic invasion of the people’s rights, privileges and expectations. (Plaintiffs counsel estimated that there were 400 such licenses and permits listed in the indices in this state and although we have not audited that count it is unlikely he was far from wrong.)
This prediction, for that is all it is, would have no effect on the remainder of the act because of MCLA 8.5; MSA 2.216, the severability clause.