Jаmes W. STREIGHT et al v. Charles D. RAGLAND, Arkansas Commissioner of Revenues
82-217
Supreme Court of Arkansas
July 25, 1983
Rehearing denied September 19, 1983.
655 S.W.2d 459
Timothy J. Leathers, Joseph V. Svoboda, Kelly S. Jennings, Wayne Zakrzewski, Ann Fuchs, Joe Morphew, by: John H. Theis, for appellee.
The within challenged legislation provides state income tax exemptions on retirement income of state and federal pensioners derived from certain government sources.1 The Appellants, plaintiffs below, are six private retired taxpayers. They sought to have their state income tax on retirement income derived from private sources in the years 1978, 1979, and 1980 declared “illegal еxactions”2 or the
In this case we are confronted with a legislative exercise of the state‘s power of taxation. Such a power is, as here, properly exercised by thе state legislature. It is not unbridled power however. The means are restricted by numerous
The Arkansas State Constitution imposes restrictions of its own on the power to tax and the corresponding power to grant immunities from taxation. The General Assembly is prohibited under
Appellants, as private retired taxpayеrs, argue that the within tax exemptions constitute an immunity which does not upon the same terms apply to all citizens and further that the tax exemptions legislation are special acts, and therefore are in violation of the plain language of
To accomplish our examination, we must first determine what standard is to be applied and the extent of our own constitutional power of judicial review.
We have reviewed the numerous decisions issued by this Court in the past as well as those of the United States Supreme Court involving constitutional challenges based on equal protection type arguments as here. And, although we find the courts employing varying standards of review to
“The Court can only disregard the Act of the legislature when those who have the right to make laws have not merely mаde a mistake, but have made a very clear one — so clear that it is not open to rational questioning. That is the standard of duty to which courts bring legislative acts; that is the test which they apply — not merely their own judgment as to constitutionality, but their conclusion as to what judgment is permissible to another department which the constitution has charged with the duty of making it. This rule recognizes that having regard to the great, complex, ever-unfolding exigencies of government, much which will seem unconstitutional to onе man, or body of men, may reasonably not seem so to another; that the constitution often admits of different interpretation; that there is often a range of choice and judgment; that in such cases the constitution does not impose upon the legislature any one specific opinion, but leaves open this range of choice; and whatever choice is rational is constitutional.” JAMES THAYER, The Origin and Scope of the American Doctrine of Constitutional Law, 7 Harv. L. Rev. 129, 143-44 (1893).
The rational basis tеst has long been applied by the Supreme Court in reviewing state legislation under the equal protection clause of the
Under the rationality standard of review, we must presume the legislation is constitutional, i.e. that it is rationally related to achieving a legitimate governmental objective.11
The learned Special Chancellor below reasoned that the legislature may have sought to encourage entry into public service by granting the challenged tax exemptions. This superficially seems tо be a reasonably conceivable and legitimate state objective. And, appellants chose not to question what interest a state government might have in encouraging entry into the federal civil service and military since the exemptions extend to those public servants also. This possible over-inclusion was never challenged in spite of the Chancellor‘s correct assertion in his opinion that he possessed the power to fashion a partial remedy by holding the legislatiоn invalid only in part and leaving the remainder intact. We have long held that such a remedy is lawful even where no severance clause appears in the act. Stanley v. Gates, 179 Ark. 886, 19 S.W.2d 1000, 1007 (1929).
In any event, the judiciary is allowed to hypothesize and we now reach a conceivable basis for the exemptions which we conclude are rational, reasonably distinctive and not arbitrary. It causes us to defer to legislative purpose because there is a rational basis for the tax exemptions. The Genеral Assembly may have sought to encourage pensioners from without the state to relocate in Arkansas at retirement and for those who have worked here to remain. It cannot be
The legislature, who is better equipped to investigate such matters, might have reasonably concluded that the reduction in revenue resulting from the exemptions is only worth the sacrifice if the lure works. It may have decided that the lure would operate at the desired level only among those retirees who are strongly and uniformly organized such as former public employees. We take note of the fact, as perhaps the legislature did, that public retiree organizations have enormous membership roles and disseminate vast amounts of literature to their members advising them of which states provide the most incentives and benefits tо senior citizens who have retired. The legislature may have investigated and found that this disseminated literature and recommendations have a tremendous impact on where public employees live after retiring.
Before it is said that such hypothesizing is far afield, we re-emphasize that our role is not to discover the actual basis for the legislation. Our task is merely to consider if any rational basis exists which demonstrates the possibility of a deliberate nexus with state objectives so that the legislation is not the product of utterly arbitrary and capricious govеrnment and void of any hint of deliberate and lawful purpose. Since we can reasonably conceive of lawful purposes for the state‘s classification scheme, it may not be held to have been arbitrarily enacted. Therefore, since the state‘s classification confers a benefit upon public employees which is available to all workers of this calling and class throughout Arkansas, we hold that
The burden fell upon Aрpellants to demonstrate that no rational basis whatsoever could reasonably be conceived that demonstrated lawful purpose on the part of the legislature in passing the tax exemption legislation. The Chancellor was correct in his finding that Appellants failed to carry this admittedly heavy burden.
We note the reference in the opinion written by Justice Hays in DuPree, supra, at 9:
“This court is not now engaged in — nor is it about to undertake — the ‘search for tax equity’ which defendants prefigure. As defendants themselves recognize, it is the Legislature which by virtue of institutional competency as well as constitutional function is assigned that difficult and perilous quest.”
All tax measures usually involve some discrimination. The very graduated income tax system under which we all live requires some to pay a larger portion of their earnings in taxes than others and allows certain exemptions to some persons but none to others, but these discriminations are not constitutionally impermissible as long as they are not arbitrary and arе supported by a rational and legitimate basis. It is simply impermissible for us to evaluate the wisdom of legislation. After all, certain legislation may seem foolhardy, absurd, and unfair to one person, or group of persons, but on the other hand, appear wise, prudent, and reasonable to another person, or group of persons. In sum, the interpretations and choices for kinds and types of legislation for the legislature are many and whatever choice, be it a mistake or not, is constitutional if that choice is rational.
The Decree of the Special Chancellor is affirmed.
Joining in this decision are Special Chief Justice RICHARD L. MAYS and Special Justices GEORGE PLASTIRAS, WILLIAM M. CLARK and JERRY B. DOSSEY.
Special Justice RICE VAN AUSDALL concurs.
RICE VAN AUSDALL, Special Justice, concurring. Legal training, scholarship, intellectual honesty, and a firm belief in judicial restraint, dictate I join in the majority opinion. Conscience dictates that I write this concurrence.
Were this Court coming to this question anew, without the prior decisions standing clearly as precedents setting out the strained distinctions and somewhat tortuous reasoning justifying the exemptions, this decision might well be different. But while it may be true such precedents are not rules of property (Board of Trustees v. Beard, 237 Ark. 423, 620 S.W.2d 295 [1981]), it has, at least to this writer‘s mind, become a part of the “constitutional fabric.” (See 13 Ark. L. Rev. 238, 249). When considering this question, the words of Omar come rushing back to mind: “Could you and I, with Him conspire, to grasp this sorry scheme of things entire; Would not we shatter it to bits; And remould it, nearer to the heart‘s desire?” That the present scheme of things, with exemption heaрed upon exemption, distinctions overdrawn, and fanciful reasons grasped out of the air to justify a special interest, is sorry, seems to only state the obvious.
But this writer, well steeped in the tradition of judicial restraint, and whose warp and woof of his early legal learning was that the role of the judiciary is to construe the law, and leave the law making to the legislature, must abstain from, at this late date, agreeing that the “rational basis” and “reasonable distinction” tests are to be overturned. They havе become a part of this State‘s “constitutional fabric.”
Probably no useful purpose is served by observing that these exemptions point out the inordinate, and unhealthy, influence that the beneficiaries of these enactments have in the legislative halls. But in the interest of conscience, this observation must be made.
We are not unmindful of the concept of thе “result oriented” method of deciding constitutional questions, and that this approach enjoys considerable popular currency in the legal community. 27 Ark. L. Rev. 583, 601. This approach frankly admits the role of the judiciary to be a law giver, governed not so much by the written words of the constitution, and the precedents, but by the needs of society. This concept views the constitution as Darwinian in nature, always in a state of becoming, changing as the forces in society change. This view appears tо be premised on the notion that judges are best equipped to determine what is best for the common weal. In addition to this premise having doubtful validity in fact, it smacks of elitism.
To a free society, the constitution is the political and governmental Holy Writ. It is the shrine before which every knee must bend, and every tongue confess. This fidelity is demanded no less from judges, elected or appointed, than any other member of society. Changes in this document should proceed only from the collective genius оf the body politic.
Notes
Art. 2, § 29 provides, among other things, that: “... we declare that everything in this article is excepted out of the general powers of the government, and shall forever remain inviolate; and that all laws contrary thereto, or to the other provisions herein contained, shall be void.”
Although the parties have not raised or argued the application of the equal protection clause of the