Summary
stating "a tax on rental income is a tax on property, and not an excise tax"
Summary of this case from Quinn v. State, Dep't of RevenueOpinion
No. 35276.
April 14, 1960.
CONSTITUTIONAL LAW — TAXATION — CONSTITUTIONAL REQUIREMENTS — UNIFORMITY — TAX ON REAL ESTATE RENTALS. A tax of one quarter of one per cent of the gross income of any person, exceeding three hundred dollars per month, derived from the business of renting or leasing real estate, provided for in Laws of 1959, Ex. Ses., chapter 5, § 4 and Laws of 1959, Ex. Ses., chapter 5, § 7, lacked the uniformity required by the fourteenth amendment to the state constitution, because the tax was a tax on property and a second tax upon real estate, and was not levied against all gross income from rentals or leasing, nor was it levied against all real estate.
COURTS — RULES OF DECISION — PREVIOUS DECISIONS AS CONTROLLING — CONSTITUTIONAL QUESTIONS. The Supreme Court will not recede from the position announced in repeated previous decisions relating to the constitutionality of an income tax because an argument is made that the state faces a financial crisis; since the constitution may be amended by the vote of the people.
See Ann. 11 A.L.R. 313, 70 A.L.R. 468, 97 A.L.R. 1488; Ann. Jur., Income Taxes, § 19.
Appeal from a judgment of the Superior Court for Thurston county, No. 31407, James W. Hodson, J., entered July 16, 1959, upon findings in favor of the plaintiffs, in an action for declaratory judgment to determine the validity of a tax on gross income derived from the renting or leasing of real property. Affirmed.
The Attorney General and John W. Riley, Deputy, for appellants.
Merges Brain and Eugene D. Zelensky, for respondents.
The members of the state tax commission appeal from a declaratory judgment enjoining the enforcement of Laws of 1959, Ex. Ses., chapter 5, § 4, p. 1667, providing for the collection of a tax on rents which exceed three hundred dollars per month. The statute, so far as material, is as follows:
"Upon every person engaging within this state in the business of: . . . (5) the renting or leasing of real property; as to such persons, the amount of tax on such business shall be equal to the gross income of the business multiplied by the rate of one-quarter of one percent."
Laws of 1959, Ex. Ses., chapter 5, § 7, p. 1669, exempts from the tax gross rental income of under three hundred dollars per month.
With commendable candor and admirable simplicity, the attorney general, in his brief, states the single issue presented in the following words:
"It is appellant's belief that the foregoing assignments of error are individually and collectively hinged to a single question of law:
"Is the tax in question an excise tax or a property tax?"
The question is foreclosed by prior decisions of this court. The attorney general, with the same commendable forthrightness and candor, states in the printed brief:
"We recognize that this court has held that `income' is `property.' Jensen v. Henneford, 185 Wn. 209 [ 53 P.2d 607]; ( cf. Petroleum Navigation Co. v. Henneford, 185 Wn. 495 [ 55 P.2d 1056]; Power, Inc. v. Huntley, 39 Wn.2d 191 [ 235 P.2d 173]; Aberdeen Savings and Loan Ass'n v. Chase, 157 Wn. 351 [ 289 P. 536, 290 P. 697]; and Culliton v. Chase, 174 Wn. 363 [ 25 P.2d 81].)"
[1] Under those decisions, a tax on rental income is a tax on property, and not an excise tax. Furthermore, a tax upon rents from real estate is a tax upon the real estate itself, and is, thus, a second tax upon real estate. There is no tax levied by the act upon unrented real estate. For such reasons (the exclusion of gross income of under three hundred dollars and the second tax upon rental realty), the instant tax lacks the uniformity required by the fourteenth amendment to the state constitution. The argument is again pressed upon us that these cases were wrongly decided. The court is unwilling, however, to recede from the position announced in its repeated decisions.
[2] Among other things, the attorney general urges that the result should now be different because the state is confronted with a financial crisis. If so, the constitution may be amended by vote of the people. Such a constitutional amendment was rejected by popular vote in 1934.
The judgment is affirmed.
September 13, 1960. Petition for rehearing denied.