CASES ADJUDGED
IN THE
SUPREME COURT OF THE UNITED STATES
AT
OCTOBER TERM, 1991
Syllabus
NORD LINGER
v. HAHN, IN HIS CAPACITY AS TAX ASSESSOR FOR
LOS ANGELES COUNTY, ET AL.
CERTIORARI TO THE COURT OF APPEAL OF CALIFORNIA, SECOND
APPELLATE DISTRICT
No. 90-1912. Argued February 25, 1992-Decided June 18, 1992
In response to rapidly rising real property taxes, California
voters approved a statewide ballot initiative, Proposition 13,
which added Article XIIIA to the State Constitution. Among other
things, Article XIIIA embodies an "acquisition value" system of
taxation, whereby property is reassessed up to current appraised
value upon new construction or a change in ownership. Exemptions
from this reassessment provision exist for two types of transfers:
exchanges of principal residences by persons over the age of 55 and
transfers between parents and children. Over time, the
acquisition-value system has created dramatic disparities in the
taxes paid by persons owning similar pieces of property. Longer
term owners pay lower taxes reflecting historic property values,
while newer owners pay higher taxes reflecting more recent values.
Faced with such a disparity, petitioner, a former Los Angeles
apartment renter who had recently purchased a house in Los Angeles
County, filed suit against respondents, the county and its tax
assessor, claiming that Article XIIIA's reassessment scheme
violates the Equal Protection Clause of the Fourteenth Amendment.
The County Superior Court dismissed the complaint without leave to
amend, and the State Court of Appeal affirmed.
Held: Article XIIIA's acquisition-value assessment scheme
does not violate the Equal Protection Clause. pp. 10-18.
2
Syllabus
(a) Unless a state-imposed classification warrants some form of
heightened review because it jeopardizes exercise of a fundamental
right or categorizes on the basis of an inherently suspect
characteristic, the Equal Protection Clause requires only that the
classification rationally further a legitimate state interest. P.
10.
(b) Petitioner may not assert the constitutional right to travel
as a basis for heightened review of Article XIIIA. Her complaint
does not allege that she herself has been impeded from traveling or
from settling in California because, before purchasing her home,
she already lived in Los Angeles. Prudential standing principles
prohibiting a litigant's raising another person's legal rights may
not be overlooked in this case, since petitioner has not identified
any obstacle preventing others who wish to travel or settle in
California from asserting claims on their own, nor shown any
special relationship with those whose rights she seeks to assert.
pp. 1O-1I.
(c) In permitting longer term owners to pay less in taxes than
newer owners of comparable property, Article XIIIA's assessment
scheme rationally furthers at least two legitimate state interests.
First, because the State has a legitimate interest in local
neighborhood preservation, continuity, and stability, it
legitimately can decide to structure its tax system to discourage
rapid turnover in ownership of homes and businesses. Second, the
State legitimately can conclude that a new owner, at the point of
purchasing his property, does not have the same reliance interest
warranting protection against higher taxes as does an existing
owner, who is already saddled with his purchase and does not have
the option of deciding not to buy his home if taxes become
prohibitively high. Pp. 11-14.
(d)
Allegheny Pittsburgh Coal Co. v.
County Comm'n of
Webster Cty., 488
U. S. 336, is not controlling here, since the facts of that
case precluded any plausible inference that the purpose of the tax
assessment practice there invalidated was to achieve the benefits
of an acquisitionvalue tax scheme. Pp. 14-16.
(e) Article XIIIA's two reassessment exemptions rationally
further legitimate purposes. The people of California reasonably
could have concluded that older persons in general should not be
discouraged from exchanging their residences for ones more suitable
to their changing family sizes or incomes, and that the interests
of family and neighborhood continuity and stability are furthered
by and warrant an exemption for transfers between parents and
children. Pp. 16-17.
(f) Because Article XIIIA is not palpably arbitrary, this Court
must decline petitioner's request to invalidate it, even if it may
appear to be
3
improvident and unwise yet unlikely ever to be reconsidered or
repealed by ordinary democratic processes. Pp. 17-18.
225 Cal. App. 3d 1259, 275 Cal. Rptr. 684, affirmed.
BLACKMUN, J., delivered the opinion of the Court, in which
REHNQUIST, C. J., and WHITE, O'CONNOR, SCALIA, KENNEDY, and SOUTER,
JJ., joined, and in which THOMAS, J., joined as to Part II-A.
THOMAS, J., filed an opinion concurring in part and concurring in
the judgment,
post, p. 18. STEVENS, J., filed a dissenting
opinion,
post, p. 28.
Carlyle W Hall, Jr., argued the cause and filed briefs
for petitioner.
Rex E. Lee argued the cause for respondents. With him on the
brief were Carter G. Phillips, Mark D. Hopson, DeWitt W Clinton,
David L. Muir, and Albert Ramseyer.
*
JUSTICE BLACKMUN delivered the opinion of the Court. In 1978,
California voters staged what has been described as a property tax
revolt 1 by approving a statewide ballot
*Briefs of
amici curiae urging reversal were filed for
the Building Industry Association of Southern California, Inc., et
al. by
Brent N. Rushforth, Bruce J. Ennis,
Jr., and
Anthony C.
Epstein; and for
William
K. Rentz, pro se.
Briefs of
amici curiae urging affirmance were filed for
the State of California by
Daniel E. Lungren, Attorney
General, and
Robert D. Milam, Deputy Attorney General; for
Pete Wilson, Governor of California, et al. by
L. Michael
Bogert; for the California Taxpayers' Association by
Robert
Joe Hull and
Douglas L. Kindrick; for the Howard Jarvis
Taxpayers Association et al. by
Ronald A. Zumbrun, John H.
Findley, Anthony T. Caso, and
Trevor A. Grimm; for the
People's Advocate, Inc., et al. by
Jayna P. Kapinski; and
for the Washington Legal Foundation et al. by
Daniel
J. Popeo and
John C.
Scully.
Briefs of
amici curiae were filed for the Senate of the
State of California by
Jeremiah F.
Hallisey; for the
American Planning Association et al. by
William W Abbott and
Marilee Hanson; for the California Assessors' Association by
Douglas J. Maloney and
Allen A. Haim;
for the International Association of Assessing Officers by
James F.
Gossett; and for the League of Women Voters
of California by
Steven C.
McCracken and
Robert E.
Palmer.
1 See N. Y. Times, June 8, 1978, p. 23, col. 1; Washington Post,
June 11, 1978, p. HI.
4
initiative known as Proposition 13. The adoption of Proposition
13 served to amend the California Constitution to impose strict
limits on the rate at which real property is taxed and on the rate
at which real property assessments are increased from year to year.
In this litigation, we consider a challenge under the Equal
Protection Clause of the Fourteenth Amendment to the manner in
which real property now is assessed under the California
Constitution.
I A
Proposition 13 followed many years of rapidly rising real
property taxes in California. From fiscal years 1967-1968 to
1971-1972, revenues from these taxes increased on an average of
11.5% per year. See Report of the Senate Commission on Property Tax
Equity and Revenue to the California State Senate 23 (1991) (Senate
Commission Report). In response, the California Legislature enacted
several property tax relief measures, including a cap on tax rates
in 1972.
Id., at 23-24. The boom in the State's real estate
market persevered, however, and the median price of an existing
home doubled from $31,530 in 1973 to $62,430 in 1977. As a result,
tax levies continued to rise because of sharply increasing
assessment values.
Id., at 23. Some homeowners saw their tax
bills double or triple during this period, well outpacing any
growth in their income and ability to pay.
Id., at 25. See
also Oakland, Proposition 13-Genesis and Consequences, 32 Nat. Tax
J. 387, 392 (Supp. June 1979).
By 1978, property tax relief had emerged as a major political
issue in California. In only one month's time, tax relief advocates
collected over 1.2 million signatures to qualify Proposition 13 for
the June 1978 ballot. See Lefcoe & Allison, The Legal Aspects
of Proposition 13: The
Amador Valley Case, 53 S. Cal. L.
Rev. 173, 174 (1978). On election day, Proposition 13 received a
favorable vote of 64.8% and carried 55 of the State's 58 counties.
California Secretary of State,
5
Statement of Vote and Supplement, Primary Election, June 6,
1978, p. 39. California thus had a novel constitutional amendment
that led to a property tax cut of approximately $7 billion in the
first year. Senate Commission Report 28. A California homeowner
with a $50,000 home enjoyed an immediate reduction of about $750
per year in property taxes.
Id., at 26.
As enacted by Proposition 13, Article XIIIA of the California
Constitution caps real property taxes at 1% of a property's "full
cash value." § l(a). "Full cash value" is defined as the assessed
valuation as of the 1975-1976 tax year or, "thereafter, the
appraised value of real property when purchased, newly constructed,
or a change in ownership has occurred after the 1975 assessment." §
2(a). The assessment "may reflect from year to year the
inflationary rate not to exceed 2 percent for any given year." §
2(b).
Article XIIIA also contains several exemptions from this
reassessment provision. One exemption authorizes the legislature to
allow homeowners over the age of 55 who sell their principal
residences to carry their previous base-year assessments with them
to replacement residences of equal or lesser value. § 2(a). A
second exemption applies to transfers of a principal residence (and
up to $1 million of other real property) between parents and
children. § 2(h).
In short, Article XIIIA combines a 1% ceiling on the property
tax rate with a 2% cap on annual increases in assessed valuations.
The assessment limitation, however, is subject to the exception
that new construction or a change of ownership triggers a
reassessment up to current appraised value. Thus, the assessment
provisions of Article XIIIA essentially embody an "acquisition
value" system of taxation rather than the more commonplace "current
value" taxation. Real property is assessed at values related to the
value of the property at the time it is acquired by the taxpayer
rather than to the value it has in the current real estate
market.
6
Over time, this acquisition-value system has created dramatic
disparities in the taxes paid by persons owning similar pieces of
property. Property values in California have inflated far in excess
of the allowed 2% cap on increases in assessments for property that
is not newly constructed or that has not changed hands. See Senate
Commission Report 31-32. As a result, longer term property owners
pay lower property taxes reflecting historic property values, while
newer owners pay higher property taxes reflecting more recent
values. For that reason, Proposition 13 has been labeled by some as
a "welcome stranger" system-the newcomer to an established
community is "welcome" in anticipation that he will contribute a
larger percentage of support for local government than his settled
neighbor who owns a comparable home. Indeed, in dollar terms, the
differences in tax burdens are staggering. By 1989, the 44% of
California homeowners who have owned their homes since enactment of
Proposition 13 in 1978 shouldered only 25% of the more than $4
billion in residential property taxes paid by homeowners statewide.
Id., at 33. If property values continue to rise more than
the annual 2% inflationary cap, this disparity will continue to
grow.
B
According to her amended complaint, petitioner Stephanie
Nordlinger in November 1988 purchased a house in the Baldwin Hills
neighborhood of Los Angeles County for $170,000. App. 5. The prior
owners bought the home just two years before for $121,500.
Id., at 6. Before her purchase, petitioner had lived in a
rented apartment in Los Angeles and had not owned any real property
in California.
Id., at 5; Tr. of Oral Arg. 12.
In early 1989, petitioner received a notice from the Los Angeles
County Tax Assessor, who is a respondent here, informing her that
her home had been reassessed upward to $170,100 on account of its
change in ownership. App. 7.
7
She learned that the reassessment resulted in a property tax
increase of $453.60, up 36% to $1,701, for the 1988-1989 fiscal
year.
Ibid.
Petitioner later discovered she was paying about five times more
in taxes than some of her neighbors who owned comparable homes
since 1975 within the same residential development. For example,
one block away, a house of identical size on a lot slightly larger
than petitioner's was subject to a general tax levy of only $358.20
(based on an assessed valuation of $35,820, which reflected the
home's value in 1975 plus the up-to-2% per year inflation factor).
Id., at 9-10.2 According to petitioner, her total property
taxes over the first 10 years in her home will approach $19,000,
while any neighbor who bought a comparable home in 1975 stands to
pay just $4,100. Brief for Petitioner 3. The general tax levied
against her modest home is only a few dollars short of that paid by
a pre-1976 owner of a $2.1 million Malibu beachfront home. App.
24.
After exhausting administrative remedies, petitioner brought
suit against respondents in Los Angeles County Superior Court. She
sought a tax refund and a declaration that her tax was
unconstitutional.3 In her amended com-
2 Petitioner proffered to the trial court additional evidence
suggesting that the disparities in residential tax burdens were
greater in other Los Angeles County neighborhoods. For example, a
small two-bedroom house in Santa Monica that was previously
assessed at $27,000 and that was sold for $465,000 in 1989 would be
subject to a tax levy of $4,650, a bill 17 times more than the $270
paid the year before by the previous owner. App. 76-77. Petitioner
also proffered evidence suggesting that similar disparities
obtained with respect to apartment buildings and commercial and
industrial income-producing properties.
Id., at 68-69,
82-85.
3 California by statute grants a cause of action to a taxpayer
"where the alleged illegal or unconstitutional assessment or
collection occurs as the direct result of a change in
administrative regulations or statutory or constitutionallaw that
became effective not more than 12 months prior to the date the
action is initiated by the taxpayer." Cal. Rev. & Tax. Code
Ann. § 4808 (West 1987). Although Proposition 13 was enacted 11
years before she filed her complaint, petitioner contended that the
relevant change in
8
plaint, she alleged: "Article XIIIA has created an arbitrary
system which assigns disparate real property tax burdens on owners
of generally comparable and similarly situated properties without
regard to the use of the real property taxed, the burden the
property places on government, the actual value of the property or
the financial capability of the property owner."
Id., at 12.
Respondents demurred.
Id., at 14. By minute order, the
Superior Court sustained the demurrer and dismissed the complaint
without leave to amend. App. to Pet. for Cert. D2.
The California Court of Appeal affirmed.
Nordlinger
v.
Lynch, 225 Cal. App. 3d 1259, 275 Cal. Rptr. 684 (1990).
It noted that the Supreme Court of California already had rejected
a constitutional challenge to the disparities in taxation resulting
from Article XIIIA. See
Amador Valley Joint Union High School
Dist. v.
State Bd. of Equalization, 22 Cal. 3d 208, 583
P. 2d 1281 (1978). Characterizing Article XIIIA as an "acquisition
value" system, the Court of Appeal found it survived equal
protection review, because it was supported by at least two
rational bases: First, it prevented property taxes from reflecting
unduly inflated and unforeseen current values, and, second, it
allowed property owners to estimate future liability with
substantial certainty. 225 Cal. App. 3d, at 1273, 275 Cal. Rptr.,
at 691-692 (citing
Amador, 22 Cal. 3d, at 235, 583 P. 2d, at
1293).
The Court of Appeal also concluded that this Court's more recent
decision in
Allegheny Pittsburgh Coal Co. v.
County
Comm'n of Webster Cty., 488 U. S. 336 (1989), did
not warrant a different result. At issue in
Allegheny
Pittsburgh was the practice of a West Virginia county tax
assessor of assessing recently purchased property on the basis of
its pur-
law was this Court's decision in
Allegheny Pittsburgh Coal
Co. v.
County Comm'n of Webster Cty., 488 U. S. 336 (1989),
decided 9 months before petitioner filed her amended complaint.
Because the California courts did not discuss whether petitioner's
action was timely under § 4808, we do not do so.
9
chase price, while making only minor modifications in the
assessments of property that had not recently been sold. Properties
that had been sold recently were reassessed and taxed at values
between 8 and 35 times that of properties that had not been sold.
Id., at 341. This Court determined that the unequal
assessment practice violated the Equal Protection Clause.
The Court of Appeal distinguished
Allegheny Pittsburgh on
the grounds that "California has opted for an assessment method
based on each individual owner's
acquisition cost," while,
"[i]n marked contrast, the West Virginia Constitution requires
property to be taxed at a uniform rate statewide according to its
estimated
current market value" (emphasis in original). 225
Cal. App. 3d, at 1277-1278,275 Cal. Rptr., at 695. Thus, the Court
of Appeal found:
"Allegheny does not prohibit the states
from adopting an acquisition value assessment method. That decision
merely prohibits the arbitrary enforcement of a current value
assessment method" (emphasis omitted).
Id., at 1265, 275
Cal. Rptr., at 686.
The Court of Appeal also rejected petitioner's argument that the
effect of Article XIIIA on the constitutional right to travel
warranted heightened equal protection review. The court determined
that the right to travel was not infringed, because Article XIIIA
"bases each property owner's assessment on acquisition value,
irrespective of the owner's status as a California resident or the
owner's length of residence in the state."
Id., at 1281, 275
Cal. Rptr., at 697. Any benefit to longtime California residents
was deemed "incidental" to an acquisition-value approach. Finally,
the Court of Appeal found its conclusion was unchanged by the
exemptions in Article XIIIA.
Ibid.
The Supreme Court of California denied review. App. to Pet. for
Cert. B1. We granted certiorari. 502 U. S. 807 (1991).
10
II
The Equal Protection Clause of the Fourteenth Amendment, § 1,
commands that no State shall "deny to any person within its
jurisdiction the equal protection of the laws." Of course, most
laws differentiate in some fashion between classes of persons. The
Equal Protection Clause does not forbid classifications. It simply
keeps governmental decisionmakers from treating differently persons
who are in all relevant respects alike.
F. S.
Royster
Guano Co. v.
Virginia, 253 U. S. 412, 415
(1920).
As a general rule, "legislatures are presumed to have acted
within their constitutional power despite the fact that, in
practice, their laws result in some inequality."
McGowan v.
Maryland, 366
U. S. 420, 425-426 (1961). Accordingly, this Court's cases are
clear that, unless a classification warrants some form of
heightened review because it jeopardizes exercise of a fundamental
right or categorizes on the basis of an inherently suspect
characteristic, the Equal Protection Clause requires only that the
classification rationally further a legitimate state interest. See,
e. g., Cleburne v.
Cleburne Living Center, Inc.,
473 U. S. 432,
439-441 (1985);
New Orleans v.
Dukes, 427 U. S. 297, 303
(1976).
A
At the outset, petitioner suggests that Article XIIIA qualifies
for heightened scrutiny because it infringes upon the
constitutional right to travel. See,
e. g., Zobel v.
Williams, 457
U. S. 55, 60, n. 6 (1982);
Memorial Hospital v.
Maricopa County, 415 U. S. 250, 254-256
(1974). In particular, petitioner alleges that the exemptions to
reassessment for transfers by owners over the age of 55 and for
transfers between parents and children run afoul of the right to
travel, because they classify directly on the basis of California
residency. But the complaint does not allege that petitioner
herself has been impeded from traveling or from settling in
California because, as has been noted, prior to purchasing her
home,
11
petitioner lived in an apartment in Los Angeles. This Court's
prudential standing principles impose a "general prohibition on a
litigant's raising another person's legal rights."
Allen v.
Wright, 468 U.
S. 737, 751 (1984). See also
Moose Lodge No. 107 v.
Irvis, 407 U.
S. 163, 166 (1972). Petitioner has not identified any obstacle
preventing others who wish to travel or settle in California from
asserting claims on their own behalf, nor has she shown any special
relationship with those whose rights she seeks to assert, such that
we might overlook this prudential limitation.
Caplin &
Drysdale, Chartered v.
United States, 491 U. S. 617, 623, n. 3
(1989). Accordingly, petitioner may not assert the constitutional
right to travel as a basis for heightened review.
B
The appropriate standard of review is whether the difference in
treatment between newer and older owners rationally furthers a
legitimate state interest. In general, the Equal Protection Clause
is satisfied so long as there is a plausible policy reason for the
classification, see
United States Railroad Retirement Bd. v.
Fritz, 449 U.
S. 166, 174, 179 (1980), the legislative facts on which the
classification is apparently based rationally may have been
considered to be true by the governmental decisionmaker, see
Minnesota v.
Clover Leaf Creamery Co., 449 U. S. 456, 464
(1981), and the relationship of the classification to its goal is
not so attenuated as to render the distinction arbitrary or
irrational, see
Cleburne v.
Cleburne Living Center,
Inc., 473 U. S., at 446. This standard is especially
deferential in the context of classifications made by complex tax
laws. "[I]n structuring internal taxation schemes 'the States have
large leeway in making classifications and drawing lines which in
their judgment produce reasonable systems of taxation.'"
Williams v.
Vermont, 472 U. S. 14, 22 (1985),
quoting
Lehnhausen v.
Lake Shore Auto Parts Co.,
410 U. S. 356,
359 (1973). See also
Regan v.
Taxation with
Representation of Wash., 461
12
u. S. 540, 547 (1983) ("Legislatures have especially broad
latitude in creating classifications and distinctions in tax
statutes").
As between newer and older owners, Article XIIIA does not
discriminate with respect to either the tax rate or the annual rate
of adjustment in assessments. Newer and older owners alike benefit
in both the short and long run from the protections of a 1% tax
rate ceiling and no more than a 2% increase in assessment value per
year. New owners and old owners are treated differently with
respect to one factor only-the basis on which their property is
initially assessed. Petitioner's true complaint is that the State
has denied hera new owner-the benefit of the same assessment value
that her neighbors-older owners-enjoy.
We have no difficulty in ascertaining at least two rational or
reasonable considerations of difference or policy that justify
denying petitioner the benefits of her neighbors' lower
assessments. First, the State has a legitimate interest in local
neighborhood preservation, continuity, and stability.
Village of
Euclid v.
Ambler Realty Co., 272 U. S. 365 (1926). The
State therefore legitimately can decide to structure its tax system
to discourage rapid turnover in ownership of homes and businesses,
for example, in order to inhibit displacement of lower income
families by the forces of gentrification or of established,
"mom-and-pop" businesses by newer chain operations. By permitting
older owners to pay progressively less in taxes than new owners of
comparable property, the Article XIIIA assessment scheme rationally
furthers this interest.
Second, the State legitimately can conclude that a new owner at
the time of acquiring his property does not have the same reliance
interest warranting protection against higher taxes as does an
existing owner. The State may deny a new owner at the point of
purchase the right to "lock in" to the same assessed value as is
enjoyed by an existing owner of comparable property, because an
existing owner rationally
13
may be thought to have vested expectations in his property or
home that are more deserving of protection than the anticipatory
expectations of a new owner at the point of purchase. A new owner
has full information about the scope of future tax liability before
acquiring the property, and if he thinks the future tax burden is
too demanding, he can decide not to complete the purchase at all.
By contrast, the existing owner, already saddled with his purchase,
does not have the option of deciding not to buy his home if taxes
become prohibitively high. To meet his tax obligations, he might be
forced to sell his home or to divert his income away from the
purchase of food, clothing, and other necessities. In short, the
State may decide that it is worse to have owned and lost, than
never to have owned at all.
This Court previously has acknowledged that classifications
serving to protect legitimate expectation and reliance interests do
not deny equal protection of the laws.4 "The protection of
reasonable reliance interests is not only a legitimate governmental
objective: it provides an exceedingly persuasive justification ....
"
Heckler v.
Mathews, 465 U. S. 728, 746 (1984)
(internal quotation marks omitted). For example, in
Kadrmas
v.
Dickinson Public Schools, 487 U. S. 450 (1988), the
Court determined that a prohibition on user fees for bus service in
"reorganized" school districts, but not
4 Outside the context of the Equal Protection Clause, the Court
has not hesitated to recognize the legitimacy of protecting
reliance and expectational interests. See,
e. g., Rakas v.
Illinois, 439
U. S. 128, 143 (1978) ("[P]rotection of the Fourth Amendment
depends ... upon whether the person who claims the protection of
the Amendment has a legitimate expectation of privacy in the
invaded place");
Penn Central Transportation Co. v.
New
York City, 438 U.
S. 104, 124 (1978) (whether regulation of property constitutes
a "taking" depends in part on "the extent to which the regulation
has interfered with distinct investment-backed expectations");
Perry v.
Sindermann, 408 U. S. 593, 601 (1972)
(state-law "property" interest for purpose of federal due process
denotes "interests that are secured by existing rules or
understandings") (internal quotation marks omitted).
14
in "nonreorganized" school districts, does not violate the Equal
Protection Clause, because "the legislature could conceivably have
believed that such a policy would serve the legitimate purpose of
fulfilling the reasonable expectations of those residing in
districts with free busing arrangements imposed by reorganization
plans."
Id., at 465. Similarly, in
United States Railroad
Retirement Bd. v.
Fritz, the Court determined that a
denial of dual "windfall" retirement benefits to some railroad
workers, but not others, did not violate the Equal Protection
Clause, because "Congress could properly conclude that persons who
had actually acquired statutory entitlement to windfall benefits
while still employed in the railroad industry had a greater
equitable claim to those benefits than the members of appellee's
class who were no longer in railroad employment when they became
eligible for dual benefits." 449 U. S., at 178. Finally, in
New
Orleans v.
Dukes, 427 U. S. 297 (1976), the
Court determined that an ordinance banning certain street-vendor
operations, but grandfathering existing vendors who had been in
operation for more than eight years, did not violate the Equal
Protection Clause because the "city could reasonably decide that
newer businesses were less likely to have built up substantial
reliance interests in continued operation."
Id., at
305.5
Petitioner argues that Article XIIIA cannot be distinguished
from the tax assessment practice found to violate the Equal
Protection Clause in
Allegheny Pittsburgh. Like Article
XIIIA, the practice at issue in
Allegheny Pittsburgh
resulted in dramatic disparities in taxation of properties of
comparable value. But an obvious and critical factual differ-
5 Because we conclude that Article XIIIA rationally furthers the
State's interests in neighborhood stability and the protection of
property owners' reliance interests, we need not consider whether
it permissibly serves other interests discussed by the parties,
including whether it taxes real property according to the
taxpayers' ability to payor whether it taxes real property in such
a way as to promote stability of local tax revenues.
15
ence between this case and
Allegheny Pittsburgh is the
absence of any indication in
Allegheny Pittsburgh that the
policies underlying an acquisition-value taxation scheme could
conceivably have been the purpose for the Webster County tax
assessor's unequal assessment scheme. In the first place, Webster
County argued that "its assessment scheme is rationally related to
its purpose of assessing properties
at true current value"
(emphasis added). 488 U. S., at 343.6 Moreover, the West Virginia
"Constitution and laws provide that all property of the kind held
by petitioners shall be taxed at a rate uniform throughout the
State according to its estimated market value," and the Court found
"no suggestion" that "the State may have adopted a different system
in practice from that specified by statute."
Id., at
345.
To be sure, the Equal Protection Clause does not demand for
purposes of rational-basis review that a legislature or governing
decisionmaker actually articulate at any time the purpose or
rationale supporting its classification.
United States Railroad
Retirement Bd. v.
Fritz, 449 U. S., at 179. See also
McDonald v.
Board of Election Comm'rs of Chicago,
394 U. S. 802,
809 (1969) (legitimate state purpose may be ascertained even when
the legislative or administrative history is silent). Nevertheless,
this Court's review does require that a purpose may conceivably or
"may reasonably have been the purpose and policy" of the relevant
governmental decisionmaker.
Allied Stores of Ohio, Inc. v.
Bow-
6Webster County argued that the outdated assessments it used
were consistent with current-value taxation, because periodic
upward adjustments were made for inflation and it was not feasible
to reassess individually each piece of property every year.
Although the county obliquely referred in a footnote to the
advantages of historical cost accounting, Brief for Respondent in
Allegheny Pittsburgh Coal Co. v.
County Comm'n of Webster
Cty., O. T. 1988, No. 87-1303, p. 30, n. 23, this was not an
assertion of the general policies supporting acquisition-value
taxation. Even if acquisition-value policies had been asserted, the
assertion would have been nonsensical given its inherent
inconsistency with the county's principal argument that it was in
fact trying to promote current-value taxation.
16
ers, 358 U.
S. 522, 528-529 (1959). See also
Schweiker v.
Wilson, 450 U.
S. 221, 235 (1981) (classificatory scheme must "rationally
advanc[e] a reasonable and
identifiable governmental
objective" (emphasis added)).
Allegheny Pittsburgh was the
rare case where the facts precluded any plausible inference that
the reason for the unequal assessment practice was to achieve the
benefits of an acquisition-value tax scheme.7 By contrast, Article
XIIIA was enacted precisely to achieve the benefits of an
acquisition-value system.
Allegheny Pittsburgh is not
controlling here.8
Finally, petitioner contends that the unfairness of Article
XIIIA is made worse by its exemptions from reassessment for two
special classes of new owners: persons aged 55 and older, who
exchange principal residences, and children who acquire property
from their parents. This Court previously has declined to hold that
narrow exemptions from a general scheme of taxation necessarily
render the overall scheme in-
7 In
Allied Stores of Ohio, Inc. v.
Bowers,
358 U. S. 522
(1959), the Court distinguished on similar grounds its decision in
Wheeling Steel Corp. v.
Glander, 337 U. S. 562 (1949),
which invalidated a state statutory scheme exempting from taxation
certain notes and accounts receivable owned by residents of the
State but not notes and accounts receivable owned by nonresidents.
358 U. S., at 529. After the Court in
Wheeling Steel
determined that the statutory scheme's stated purpose was not
legitimate, the other purposes did not need to be considered
because "[h]aving themselves specifically declared their purpose,
the Ohio statutes left no room to conceive of any other purpose for
their existence." 358 U. S., at 530.
8 In finding
Allegheny Pittsburgh distinguishable, we do
not suggest that the protections of the Equal Protection Clause are
any less when the classification is drawn by legislative mandate,
as in this case, than by administrative action, as in
Allegheny
Pittsburgh. See
Sunday Lake Iron Co. v.
Township of
Wakefield, 247 U.
S. 350, 352 (1918). Nor do we suggest that the Equal Protection
Clause constrains administrators, as in
Allegheny
Pittsburgh, from violating state law requiring uniformity of
taxation of property. See
Nashville, C. &
St. L. R.
Co. v.
Browning, 310 U. S. 362, 368-370 (1940);
Puget
Sound Power &
Light Co. v.
County of King,
264 U. S. 22,
27-28 (1924). See generally
Snowden v.
Hughes, 321 U.
S. 1, 8-11 (1944).
17
vidiously discriminatory. See,
e. g., Regan v.
Taxation with Representation of Wash., 461 U. S., at 550-551
(denial of tax exemption to nonprofit lobbying organizations, but
with an exception for veterans' groups, does not violate equal
protection). For purposes of rational-basis review, the "latitude
of discretion is notably wide in ... the granting of partial or
total exemptions upon grounds of policy."
F. S.
Royster
Guano Co. v.
Virginia, 253 U. S., at 415.
The two exemptions at issue here rationally further legitimate
purposes. The people of California reasonably could have concluded
that older persons in general should not be discouraged from moving
to a residence more suitable to their changing family size or
income. Similarly, the people of California reasonably could have
concluded that the interests of family and neighborhood continuity
and stability are furthered by and warrant an exemption for
transfers between parents and children. Petitioner has not
demonstrated that no rational bases lie for either of these
exemptions.
III
Petitioner and
amici argue with some appeal that Article
XIIIA frustrates the "American dream" of home ownership for many
younger and poorer California families. They argue that Article
XIIIA places startup businesses that depend on ownership of
property at a severe disadvantage in competing with established
businesses. They argue that Article XIIIA dampens demand for and
construction of new housing and buildings. And they argue that
Article XIIIA constricts local tax revenues at the expense of
public education and vital services.
Time and again, however, this Court has made clear in the
rational-basis context that the "Constitution presumes that, absent
some reason to infer antipathy, even improvident decisions will
eventually be rectified by the democratic process and that judicial
intervention is generally unwarranted no matter how unwisely we may
think a political branch has
18
Opinion of THOMAS, J.
acted" (footnote omitted).
Vance v.
Bradley,
440 U. S. 93, 97
(1979). Certainly, California's grand experiment appears to vest
benefits in a broad, powerful, and entrenched segment of society,
and, as the Court of Appeal surmised, ordinary democratic processes
may be unlikely to prompt its reconsideration or repeal. See 225
Cal. App. 3d, at 1282, n. 11, 275 Cal. Rptr., at 698, n. 11. Yet
many wise and wellintentioned laws suffer from the same malady.
Article XIIIA is not palpably arbitrary, and we must decline
petitioner's request to upset the will of the people of
California.
The judgment of the Court of Appeal is affirmed.
It is so ordered.
JUSTICE THOMAS, concurring in part and concurring in the
judgment.
In
Allegheny Pittsburgh Coal Co. v.
County Comm'n of
Webster Cty., 488
U. S. 336 (1989), this Court struck down an assessment method
used in Webster County, West Virginia, that operated precisely the
same way as the California scheme being challenged today. I agree
with the Court that Proposition 13 is constitutional. But I also
agree with JusTICE STEVENS that
Allegheny Pittsburgh cannot
be distinguished. See
post, at 31-32. To me
Allegheny
Pittsburgh represents a "needlessly intrusive judicial
infringement on the State's legislative powers,"
New Orleans
v.
Dukes, 427
U. S. 297, 306 (1976)
(per curiam), and I write
separately because I see no benefit, and much risk, in refusing to
confront it directly.
I
Allegheny Pittsburgh involved a county assessment scheme
indistinguishable in relevant respects from Proposition 13. As the
Court explains, California taxes real property at 1% of "full cash
value," which means the "assessed value" as of 1975 (under the
previous method) and after 1975-1976 the "appraised value of real
property when pur-
19
chased, newly constructed, or a change in value has occurred
after the 1975 assessment." The assessed value may be increased for
inflation, but only at a maximum rate of 2% each year. See
California Const., Art. XIIIA, §§ l(a), 2(a);
ante, at 5.
The property tax system worked much the same way in Webster County,
West Virginia. The tax assessor assigned real property an
"appraised value," set the "assessed value" at half of the
appraised value, then collected taxes by multiplying the assessed
value by the relevant tax rate. For property that had been sold
recently, the assessor set the appraised value at the most recent
price of purchase. For property that had not been sold recently,
she increased the appraised price by 10%, first in 1976, then again
in 1981 and 1983.
The assessor's methods resulted in "dramatic differences in
valuation between ... recently transferred property and otherwise
comparable surrounding land." 488 U. S., at 341; cf. Glennon,
Taxation and Equal Protection, 58 Geo. Wash. L. Rev. 261, 269-270
(1990) (discussing the effects of Proposition 13); Cohen, State Law
in Equality Clothing: A Comment on
Allegheny Pittsburgh Coal
Company v.
County Commission, 38 UCLA L. Rev. 87, 91,
and n. 29 (1990); Hellerstein & Peters, Recent Supreme Court
Decisions Have Far-Reaching Implications, 70 J. Taxation 306,
308-310 (1989). Several coal companies that owned property in
Webster County sued the county assessor, alleging violations of
both the West Virginia and the United States Constitutions. The
Supreme Court of Appeals of West Virginia upheld the assessment
against the companies, but this Court reversed.
The
Allegheny Pittsburgh Court asserted that with respect
to taxation, the Equal Protection Clause constrains the States as
follows. Although "[t]he use of a general adjustment as a
transitional substitute for an individual reappraisal violates no
constitutional command," the Clause requires that "general
adjustments [be] accurate enough over a short period of time to
equalize the differences in proportion be-
20
Opinion of THOMAS, J.
tween the assessments of a class of property holders." 488 U.
S., at 343. "[T]he constitutional requirement is the seasonable
attainment of a rough equality in tax treatment of similarly
situated property owners."
Ibid. (citing
Allied Stores of
Ohio, Inc. v.
Bowers, 358 U. S. 522, 526-527
(1959)). Moreover, the Court stated, the Constitution and laws of
West Virginia "provide that all property of the kind held by
petitioners shall be taxed at a rate uniform throughout the State
according to its estimated market value," and "[t]here [was] no
suggestion ... that the State may have adopted a different system
in practice from that specified by statute." 488 U. S., at 345.
"Indeed, [the assessor's] practice seems contrary to that of the
guide published by the West Virginia Tax Commission as an aid to
local assessors in the assessment of real property."
Ibid.;
see also
ibid. ("We are not advised of any West Virginia
statute or practice which authorizes individual counties of the
State to fashion their own substantive assessment policies
independently of state statute"). The Court refused to decide
"whether the Webster County assessment method would stand on a
different footing if it were the law of a State, generally applied,
instead of the aberrational enforcement policy it appears to be."
Id., at 344, n. 4. Finally, the Court declared:
"'[I]ntentional systematic undervaluation by state officials of
other taxable property in the same class contravenes the
constitutional right of one taxed upon the full value of his
property.'"
Id., at 345 (quoting
Sunday Lake Iron Co.
v.
Township of Wakefield, 247 U. S. 350, 352-353
(1918), and citing
Sioux City Bridge Co. v.
Dakota
County, 260 U. S.
441 (1923);
Cumberland Coal Co. v.
Board of Revision
of Tax Assessments in Greene County, 284 U. S. 23 (1931)). The
Court concluded that the assessments for the coal companies'
properties had failed these requisites of the Equal Protection
Clause.
21
II
As the Court accurately states today, "this Court's
cases"-Allegheny Pittsburgh aside-"are clear that, unless a
classification warrants some form of heightened review because it
jeopardizes [the] exercise of a fundamental right or categorizes on
the basis of an inherently suspect characteristic, the Equal
Protection Clause requires only that the classification rationally
further a legitimate state interest."
Ante, at 10; see also
Burlington Northern R. Co. v.
Ford, 504 U. S. 648,
651 (1992);
Lehnhausen v.
Lake Shore Auto Parts
Co., 410 U. S.
356, 359 (1973). The California tax system, like most, does not
involve either suspect classes or fundamental rights, and the Court
properly reviews California's classification for a rational basis.
Today's review, however, differs from the review in
Allegheny
Pittsburgh.
The Court's analysis in
Allegheny Pittsburgh is
susceptible, I think, to at least three interpretations. The first
is the one offered by petitioner. Under her reading of the case,
properties are "similarly situated" or within the same "class" for
the purposes of the Equal Protection Clause when they are located
in roughly the same types of neighborhoods, for example, are
roughly the same size, and are roughly the same in other,
unspecified ways. According to petitioner, the Webster County
assessor's plan violated the Equal Protection Clause because she
had failed to achieve a "seasonable attainment of a rough equality
in tax treatment" of all the objectively comparable properties in
Webster County, presumably those with about the same acreage and
about the same amount of coal. Petitioner contends that Proposition
13 suffers from similar flaws. In 1989, she points out, "the
long-time owner of a stately 7,800-square-foot, sevenbedroom
mansion on a huge lot in Beverly Hills (among the most luxurious
homes in one of the most expensive neighborhoods in Los Angeles
County) ... paid
less property tax annually than the new
homeowner of a tiny 980-square-foot home on a small lot in an
extremely modest Venice neighbor-
22
Opinion of THOMAS, J.
hood." Brief for Petitioner 5; see also
id., at 7
(Petitioner's "1988 property tax assessment on her unpretentious
Baldwin Hills tract home is almost identical to that of a pre-1976
owner of a fabulous beach-front Malibu residential property worth
$2.1 million, even though her property is worth only 1/12th as much
as his"). Because California not only has not tried to repair this
systematic, intentional, and gross disparity in taxation, but has
enacted it into positive law, petitioner argues, Proposition 13
violates the Equal Protection Clause.
This argument rests, in my view, on a basic misunderstanding of
Allegheny Pittsburgh. The Court there proceeded on the
assumption of law (assumed because the parties did not contest it)
that the initial classification, by the State, was constitutional,
and the assumption of fact (assumed because the parties had so
stipulated) that the properties were comparable under the State's
classification. But cf. Glennon, 58 Geo. Wash. L. Rev., at 271-272
(noting that some of the properties contained coal and others did
not). In referring to the tax treatment of a "class of property
holders," or "similarly situated property owners," 488 U. S., at
343, the Court did not purport to review the constitutionality of
the initial classification, by market value, drawn by the State, as
opposed to the further subclassification within the initial class,
by acquisition value, drawn by the assessor. Instead,
Allegheny
Pittsburgh assumed that whether properties or persons are
similarly situated depended on state law, and not, as petitioner
argues, on some neutral criteria such as size or location that
serve as proxies for market value. Under that theory, market value
would be the
only rational basis for classifying property.
But the Equal Protection Clause does not prescribe a single method
of taxation. We have consistently rejected petitioner's theory,
see,
e. g., Ohio Oil Co. v.
Conway, 281 U. S. 146 (1930);
Bell's Gap R. Co. v.
Pennsylvania, 134 U. S. 232 (1890), and
the Court properly rejects it today.
23
Allegheny Pittsburgh, then, does not prevent the State of
California from classifying properties on the basis of their value
at acquisition, so long as the classification is supported by a
rational basis. I agree with the Court that it is, both for the
reasons given by this Court, see
ante, at 11-14, and for the
reasons given by the Supreme Court of California in
Amador
Valley Joint Union High School Dist. v.
State Bd. of
Equalization, 22 Cal. 3d 208, 583 P. 2d 1281 (1978). But the
classification employed by the Webster County assessor,
indistinguishable from California's, was rational for all those
reasons as well. In answering petitioner's argument that
Allegheny Pittsburgh controls here, respondents offer a
second explanation for that case. JUSTICE STEVENS gives much the
same explanation, see
post, at 31-32, though he concludes in
the end that Proposition 13, after
Allegheny Pittsburgh, is
unconstitutional.
According to respondents, the Equal Protection Clause permits a
State itself to determine which properties are similarly situated,
as the State of California did here (classifying properties by
acquisition value) and as the State of West Virginia did in
Allegheny Pittsburgh (classifying properties by market
value). But once a State does so, respondents suggest, the Equal
Protection Clause requires after
Allegheny Pittsburgh that
properties in the same class be accorded seasonably equal treatment
and not be intentionally and systematically undervalued.
Proposition 13 provides for the assessment of properties in the
same statedetermined class regularly and at roughly full value;
this contrasts with the tax scheme in Webster County, where by
dividing property in the same class (by market value) into a
subclass (by acquisition value), the assessor regularly undervalued
the property similarly situated. This, according to respondents,
made the Webster County scheme unconstitutional, and distinguishes
Proposition 13.
Respondents' reading of
Allegheny Pittsburgh is, in my
view, as misplaced as petitioner's; their test, for starters,
24
Opinion of THOMAS, J.
comes with a dubious pedigree. In one of the cases cited in
Allegheny Pittsburgh, Allied Stores, we upheld against an
equal protection challenge a statute that exempted some
corporations from ad valorem taxes imposed on others. Not only does
Allied Stores not even hint that the Constitution
"require[s] ... the seasonable attainment of a rough equality in
tax treatment of similarly situated property owners," 488 U. S., at
343, we took pains there to stress a very different
proposition:
"The States have very wide discretion in the laying of their
taxes .... Of course, the States, in the exercise of their taxing
power, are subject to the 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 ...
is not required to resort to close distinctions or to maintain a
precise, scientific uniformity with reference to composition, use
or value." Allied Stores, 358 U. S., at 526-527.
Two of the other cases cited in
Allegheny Pittsburgh, Sunday
Lake Iron and
Sioux City Bridge, also rejected equal
protection challenges, see also
Charleston Fed. Sav. &
Loan Assn. v.
Alderson, 324 U. S. 182 (1945), and
the case in which the words intentional, systematic, and
undervaluation first appeared,
Coulter v.
Louisville
&
Nashville R. Co., 196 U. S. 599, 609
(1905), did not explain where the test came from or why.
It is true that we applied the rule of
Coulter to strike
down a tax system in
Cumberland Coal, also cited in
Allegheny Pittsburgh. Cumberland Coal, however, reflects the
most serious of the problems with respondents' reading of
Allegheny Pittsburgh. As respondents understand these two
cases, their rule is categorical: A tax scheme violates the Equal
Protection Clause unless it provides for "the sea-
25
sonable attainment of a rough equality in tax treatment" or if
it results in "'intentional systematic undervaluation'" of
properties similarly situated by state law. 488 U. S., at 343, 345.
This would be so regardless of whether the inequality or the
undervaluation, which may result (as in Webster County) from
further classifications of properties within a class, is supported
by a rational basis. But not since the coming of modern equal
protection jurisprudence has this Court supplanted the rational
judgments of state representatives with its own notions of "rough
equality," "undervaluation," or "fairness."
Cumberland Coal,
which fails even to mention rational-basis review, conflicts with
our current case law.
Allegheny Pittsburgh did not, in my
view, mean to return us to the era when this Court sometimes
secondguessed state tax officials. In rejecting today respondents'
reading of
Allegheny Pittsburgh, the Court, as I understand
it, agrees.
This brings me to the third explanation for
Allegheny
Pittsburgh, the one offered today by the Court. The Court
proceeds in what purports to be our standard equal protection
framework, though it reapplies an old, and to my mind discredited,
gloss to rational-basis review. The Court concedes that the "Equal
Protection Clause does not demand for purposes of rational-basis
review that a legislature or governing decisionmaker actually
articulate at any time the purpose or rationale supporting its
classification."
Ante, at 15 (citing
United States
Railroad Retirement Bd. v.
Fritz, 449 U. S. 166, 179
(1980)). This principle applies, the Court acknowledges, not only
to an initial classification but to all further classifications
within a class. "Nevertheless, this Court's review does require
that a purpose may conceivably or 'may reasonably have been the
purpose and policy' of the relevant governmental decisionmaker,"
the Court says,
ante, at 15 (quoting
Allied Stores,
supra, at 528-529), and
"Allegheny Pittsburgh was the
rare case where the facts precluded any plausible inference that
the reason for the un-
26
Opinion of THOMAS, J.
equal assessment practice was to achieve the benefits of an
acquisition-value tax scheme,"
ante, at 16. Rather than
obeying the "law of a State, generally applied," the county
assessor had administered an "aberrational enforcement policy." 488
U. S., at 344, n. 4. See
ante, at 15. According to the
Court, therefore, the problem in
Allegheny Pittsburgh was
that the Webster County scheme, though otherwise rational, was
irrational because it was contrary to state law. Any rational bases
underlying the acquisition-value scheme were "implausible" (or
"unreasonable") because they were made so by the Constitution and
laws of the State of West Virginia.
That explanation, like petitioner's and respondents', is in
tension with settled case law. Even if the assessor did violate
West Virginia law (and that she did is open to question, see
In
re 1975
Tax Assessments Against Oneida Coal Co., 178 W.
Va. 485, 489, 360 S. E. 2d 560, 564 (1987)), she would not have
violated the Equal Protection Clause. A violation of state law does
not by itself constitute a violation of the Federal Constitution.
We made that clear in
Snowden v.
Hughes, 321 U. S. 1 (1944), for
instance, where a candidate for state office complained that
members of the local canvassing board had refused to certify his
name as a nominee to the Secretary of State, thus violating an
Illinois statute. Because the plaintiff had not alleged, say, that
the defendants had meant to discriminate against him on racial
grounds, but merely that they had failed to comply with a statute,
we rejected the argument that the defendants had thereby violated
the Equal Protection Clause.
"[N]ot every denial of a right conferred by state law involves a
denial of the equal protection of the laws, even though the denial
of the right to one person may operate to confer it on another ....
[W]here the official action purports to be in conformity to the
statutory classification, an erroneous or mistaken performance of
the statutory duty, although a violation of the statute, is not
27
without more a denial of the equal protection of the laws."
Id., at 8.
See also Nashville, C. & St. L. R. Co. v. Browning,
310 U. S. 362 (1940).
The Court today promises not to have overruled
Snowden,
see
ante, at 16, n. 8, but its disclaimer, I think, is in
vain. For if, as the Court suggests, what made the assessor's
method unreasonable was her supposed violation of state law, the
Court's interpretation of
Allegheny Pittsburgh recasts in
this case the proposition that we had earlier rejected. See
Glennon, 58 Geo. Wash. L. Rev., at 268-269; Cohen, 38 UCLA L. Rev.,
at 93-94; Ely, Another Spin on
Allegheny Pittsburgh, 38 UCLA
L. Rev. 107, 108-109 (1990). In repudiating
Snowden,
moreover, the Court threatens settled principles not only of the
Fourteenth Amendment but of the Eleventh. We have held that the
Eleventh Amendment bars federal courts from ordering state actors
to conform to the dictates of state law.
Pennhurst State School
and Hospital v.
Halderman, 465 U. S. 89 (1984). After
today, however, a plaintiff might be able to invoke federal
jurisdiction to have state actors obey state law, for a claim that
the state actor has violated state law appears to have become a
claim that he has violated the Constitution. See Cohen,
supra, at 103; Ely,
supra, at 109-110 ("[B]y the
Court's logic, all violations of state law-at least those
violations that end (as most do) in the treatment of some people
better than others-are theoretically convertible into violations of
the Equal Protection Clause").
I understand that the Court prefers to distinguish
Allegheny
Pittsburgh, but in doing so, I think, the Court has left our
equal protection jurisprudence in disarray. The analysis
appropriate to this case is straightforward. Unless a
classification involves suspect classes or fundamental rights,
judicial scrutiny under the Equal Protection Clause demands only a
conceivable rational basis for the challenged state distinction.
See
Fritz, supra; Kassel v.
Consolidated Freight-
28
ways Corp. of Del., 450 U. S. 662, 702-706,
and n. 13 (1981) (REHNQUIST, J., dissenting). This basis need not
be one identified by the State itself; in fact, States need not
articulate any reasons at all for their actions. See
ibid.
Proposition 13, I believe, satisfies this standard-but so, for the
same reasons, did the scheme employed in Webster County. See Brief
for Pacific Legal Foundation et al. as
Amici Curiae 7, 9-10,
Brief for National Association of Counties et al. as
Amici
Curiae 9-13, and Brief for Respondent 31-32, in
Allegheny
Pittsburgh Coal Co. v.
County Comm'n of Webster County,
o. T. 1988, Nos. 87-1303, 87-1310;
ante, at 11-14.
Allegheny Pittsburgh appears to have survived today's
decision. I wonder, though, about its legacy.
***
I concur in the judgment of the Court and join Part II-A of its
opinion.
JUSTICE STEVENS, dissenting.
During the two past decades, California property owners have
enjoyed extraordinary prosperity. As the State's population has
mushroomed, so has the value of its real estate. Between 1976 and
1986 alone, the total assessed value of California property subject
to property taxation increased tenfold. 1 Simply put, those who
invested in California real estate in the 1970's are among the most
fortunate capitalists in the world.
Proposition 13 has provided these successful investors with a
tremendous windfall and, in doing so, has created se-
1 Glennon, Taxation and Equal Protection, 58 Geo. Wash. L. Rev.
261, 270, n. 49 (1990). "For the same period, [property values in]
Hawaii rose approximately 450%; Washington, D. C. approximately
350%; and New York approximately 125%."
Ibid. (citing 2 U.
S. Dept. of Commerce, Bureau of Census, Taxable Property Values
86-111 (1987) (Table 12); 2 U. S. Dept. of Commerce, Bureau of
Census, Taxable Property Values and Assessment/Sales Price Ratios
42 (1977) (Table 2)).
29
vere inequities in California's property tax scheme.2 These
property owners (hereinafter Squires) are guaranteed that, so long
as they retain their property and do not improve it, their taxes
will not increase more than 2% in any given year. As a direct
result of this windfall for the Squires, later purchasers must pay
far more than their fair share of property taxes.
The specific disparity that prompted petitioner to challenge the
constitutionality of Proposition 13 is the fact that her annual
property tax bill is almost five times as large as that of her
neighbors who own comparable homes: While her neighbors' 1989 taxes
averaged less than $400, petitioner was taxed $1,700. App. 18-20.
This disparity is not unusual under Proposition 13. Indeed, some
homeowners pay 17 times as much in taxes as their neighbors with
comparable property. See
id., at 76-77. For vacant land, the
disparities may be as great as 500 to 1. App. to Pet. for Cert. A7.
Moreover, as Proposition 13 controls the taxation of commercial
property as well as residential property, the regime greatly favors
the commercial enterprises of the Squires, placing new businesses
at a substantial disadvantage.
As a result of Proposition 13, the Squires, who own 44% of the
owner-occupied residences, paid only 25% of the total taxes
collected from homeowners in 1989. Report of Senate Commission on
Property Tax Equity and Revenue to the California State Senate 33
(1991) (Commission Report). These disparities are aggravated by § 2
of Proposition 13, which exempts from reappraisal a property
owner's home and up to $1 million of other real property when that
property is transferred to a child of the owner. This exemption can
be invoked repeatedly and indefinitely, allowing the Proposition 13
windfall to be passed from generation to generation. As the
California Senate Commission on Property Tax Equity and Revenue
observed:
2 Proposition 13 was codified as Article XIIIA of the California
Constitution; for convenience sake, however, I refer to it by its
colloquial name.
30
"The inequity is clear. One young family buys a new home and is
assessed at full market value. Another young family inherits its
home, but pays taxes based on their parents' date of acquisition
even though both homes are of identical value. Not only does this
constitutional provision offend a policy of equal tax treatment for
taxpayers in similar situations, it appears to favor the housing
needs of children with homeowner-parents over children with
non-homeowner-parents. With the repeal of the state's gift and
inheritance tax in 1982, the rationale for this exemption is
negligible." Commission Report 9-10.
The commission was too generous. To my mind, the rationale for
such disparity is not merely "negligible," it is nonexistent. Such
a law establishes a privilege of a medieval character: Two families
with equal needs and equal resources are treated differently solely
because of their different heritage.
In my opinion, such disparate treatment of similarly situated
taxpayers is arbitrary and unreasonable. Although the Court today
recognizes these gross inequities, see
ante, at 7, n. 2, its
analysis of the justification for those inequities consists largely
of a restatement of the benefits that accrue to long-time property
owners. That a law benefits those it benefits cannot be an adequate
justification for severe inequalities such as those created by
Proposition 13.
I
The standard by which we review equal protection challenges to
state tax regimes is well established and properly deferential.
"Where 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). Thus, as the Court today notes, the issue in this case is
"whether the difference in
31
treatment between newer and older owners rationally furthers a
legitimate state interest."
Ante, at 11.3
But deference is not abdication and "rational-basis scrutiny" is
still scrutiny. Thus we have, on several recent occasions,
invalidated tax schemes under such a standard of review. See,
e.
g., Allegheny Pittsburgh Coal Co. v.
County Comm'n of
Webster Cty., 488
U. S. 336 (1989);
Hooper v.
Bernalillo County
Assessor, 472 U.
S. 612, 618 (1985);
Williams v.
Vermont, 472 U. S. 14 (1985);
Metropolitan Life Ins. Co. v.
Ward, 470 U. S. 869 (1985); cf.
Zobel v.
Williams, 457 U. S. 55, 60-61
(1982).
Just three Terms ago, this Court unanimously invalidated Webster
County, West Virginia's assessment scheme under rational-basis
scrutiny. Webster County employed a
de facto Proposition 13
assessment system: The county assessed recently purchased property
on the basis of its purchase price but made only occasional
adjustments (averaging 3-4% per year) to the assessments of other
properties. Just as in this case, "[t]his approach systematically
produced dramatic differences in valuation between ... recently
transferred property and otherwise comparable surrounding land."
Allegheny Pittsburgh, 488 U. S., at 341.
The "'[i]ntentional systematic undervaluation,'"
id., at
345, found constitutionally infirm in
Allegheny Pittsburgh
has been codified in California by Proposition 13. That the
discrimination in
Allegheny Pittsburgh was
de facto
and the discrimination in this case
de jure makes little
difference. "The purpose of the equal protection clause of the
Fourteenth Amendment is to secure every person within the
3 As the Court notes,
ante, at 10, petitioner contends
that Proposition 13 infringes on the constitutional right to travel
and that, accordingly, a more searching standard of review is
appropriate. There is no need to address that issue because the
gross disparities created by Proposition 13 do not pass even the
most deferential standard of review. Cf.
Hooper v.
Bernalillo County Assessor, 472 U. S. 612, 618
(1985);
Zobel v.
Williams, 457 U. S. 55, 60-61
(1982).
32
State's jurisdiction against intentional and arbitrary
discrimination,
whether occasioned by express terms of a statute
or by its improper execution through duly constituted agents."
Sunday Lake Iron Co. v.
Township of Wakefield, 247 U. S. 350, 352-353
(1918) (emphasis added). If anything, the inequality created by
Proposition 13 is constitutionally more problematic because it is
the product of a statewide policy rather than the result of an
individual assessor's maladministration.
Nor can
Allegheny Pittsburgh be distinguished because
West Virginia law established a market-value assessment regime.
Webster County's scheme was constitutionally invalid not because it
was a departure from
state law, but because it involved the
relative" 'systematic undervaluation ... [of] property
in the
same class'" (as that class was defined by state law).
Allegheny Pittsburgh, 488 U. S., at 345 (emphasis added).
Our decisions have established that the Equal Protection Clause is
offended as much by the arbitrary delineation of classes of
property (as in this case) as by the arbitrary treatment of
properties within the same class (as in
Allegheny
Pittsburgh). See
Brown-Forman Co. v.
Kentucky,
217 U. S. 563,
573 (1910);
Cumberland Coal Co. v.
Board of Revision of
Tax Assessments of Greene County, 284 U. S. 23, 28-30
(1931). Thus, if our unanimous holding in
Allegheny
Pittsburgh was sound-and I remain convinced that it was-it
follows inexorably that Proposition 13, like Webster County's
assessment scheme, violates the Equal Protection Clause. Indeed, in
my opinion, statewide discrimination is far more invidious than a
local aberration that creates a tax disparity.
The States, of course, have broad power to classify property in
their taxing schemes and if the "classification is neither
capricious nor arbitrary, and rests upon some reasonable
consideration of difference or policy, there is no denial of the
equal protection of the law."
Brown-Forman Co. v.
Kentucky, 217 U. S., at 573. As we stated in
Allegheny
Pitts-
33
burgh, a "State may divide different kinds of property
into classes and assign to each class a different tax burden so
long as those divisions and burdens are reasonable." 488 U. S., at
344.
Consistent with this standard, the Court has long upheld tax
classes based on the taxpayer's ability to pay, see,
e.
g., Fox v.
Standard Oil Co. of New Jersey,
294 U. S. 87, 101
(1935); the nature (tangible or intangible) of the property, see,
e. g., Klein v.
Board of Tax Supervisors of Jefferson
County, 282 U. S.
19, 23-24 (1930); the use of the property, see,
e. g.,
Clark v.
Kansas City, 176 U. S. 114 (1900); and
the status (corporate or individual) of the property owner, see,
e. g., Lehnhausen v.
Lake Shore Auto Parts Co.,
410 U. S. 356
(1973). Proposition 13 employs none of these familiar
classifications. Instead, it classifies property based on its
nominal purchase price: All property purchased for the same price
is taxed the same amount (leaving aside the 2% annual adjustment).
That this scheme can be named (an "acquisition value" system) does
not render it any less arbitrary or unreasonable. Under Proposition
13, a majestic estate purchased for $150,000 in 1975 (and now worth
more than $2 million) is placed in the same tax class as a humble
cottage purchased today for $150,000. The only feature those two
properties have in common is that somewhere, sometime a sale
contract for each was executed that contained the price "$150,000."
Particularly in an environment of phenomenal real property
appreciation, to classify property based on its purchase price is
"palpably arbitrary."
Allied Stores of Ohio, Inc. v.
Bowers, 358 U.
S. 522, 530 (1959).
II
Under contemporary equal protection doctrine, the test of
whether a classification is arbitrary is "whether the difference in
treatment between [earlier and later purchasers] rationally
furthers a legitimate state interest."
Ante, at 11.
34
The adjectives and adverbs in this standard are more important
than the nouns and verbs.
A
legitimate state interest must encompass the interests
of members of the disadvantaged class and the community at large,
as well as the direct interests of the members of the favored
class. It must have a purpose or goal independent of the direct
effect of the legislation and one "'that we may reasonably presume
to have motivated an impartiallegislature.'"
Cleburne v.
Cleburne Living Center, Inc., 473 U. S. 432, 452, n. 4
(1985) (STEVENS, J., concurring) (quoting
United States Railroad
Retirement Bd. v.
Fritz, 449 U. S. 166, 180-181
(1980) (STEVENS, J., concurring in judgment)). That a
classification must find justification outside itself saves
judicial review of such classifications from becoming an exercise
in tautological reasoning.
"A State cannot deflect an equal protection challenge by
observing that in light of the statutory classification all those
within the burdened class are similarly situated. The
classification must reflect pre-existing differences; it cannot
create new ones that are supported by only their own bootstraps.
'The Equal Protection Clause requires more of a state law than
nondiscriminatory application within the class it establishes.'
Rinaldi v. Yeager, 384 U. S. 305, 308
(1966)." Williams v. Vermont, 472 U. S., at 27.
If the goal of the discriminatory classification is not
independent from the policy itself, "each choice [of
classification] will import its own goal, each goal will count as
acceptable, and the requirement of a 'rational' choice-goal
relation will be satisfied by the very making of the choice." Ely,
Legislative and Administrative Motivation in Constitutional Law, 79
Yale L. J. 1205, 1247 (1970).
A classification
rationally furthers a state interest
when there is some fit between the disparate treatment and the
legislative purpose. As noted above, in the review of tax
35
statutes we have allowed such fit to be generous and
approximate, recognizing that "rational distinctions may be made
with substantially less than mathematical exactitude."
New
Orleans v.
Dukes, 427 U. S. 297, 303
(1976). Nonetheless, in some cases the underinclusiveness or the
overinclusiveness of a classification will be so severe that it
cannot be said that the legislative distinction "rationally
furthers" the posited state interest.4 See,
e. g., Jimenez
v.
Weinberger, 417 U. S. 628, 636-638
(1974).
The Court's cursory analysis of Proposition 13 pays little
attention to either of these aspects of the controlling standard of
review. The first state interest identified by the Court is
California's "interest in local neighborhood preservation,
continuity, and stability."
Ante, at 12 (citing
Village
of Euclid v.
Ambler Realty Co., 272 U. S. 365 (1926)). It
is beyond question that "inhibit[ing the] displacement of lower
income families by the forces of gentrification,"
ante, at
12, is a legitimate state interest; the central issue is whether
the disparate treatment of earlier and later purchasers
rationally furthers this goal. Here the Court offers not an
analysis, but only a conclusion: "By permitting older owners to pay
progressively less in taxes than new owners of comparable property,
[Proposition 13] rationally furthers this interest."
Ibid.
I disagree. In my opinion, Proposition 13 sweeps too broadly and
operates too indiscriminately to "rationally further" the State's
interest in neighborhood preservation. No doubt there are some
early purchasers living on fixed or limited incomes who could not
afford to pay higher taxes and
4 "Herod, ordering the death of all male children born on a
particular day because one of them would some day bring about his
downfall, employed such a[n overinc1usive] classification[, as did
t]he wartime treatment of American citizens of Japanese ancestry
[which imposed] burdens upon a large class of individuals because
some of them were believed to be disloyal." Tussman & tenBroek,
The Equal Protection of the Laws, 37 Calif. L. Rev. 341, 351
(1949).
36
still maintain their homes. California has enacted special
legislation to respond to their plight.5 Those concerns cannot
provide an adequate justification for Proposition 13. A statewide,
across-the-board tax windfall for
all property owners and
their descendants is no more a "rational" means for protecting this
small subgroup than a blanket tax exemption for all taxpayers named
Smith would be a rational means to protect a particular taxpayer
named Smith who demonstrated difficulty paying her tax bill.
Even within densely populated Los Angeles County, residential
property comprises less than half of the market value of the
property tax roll. App. 45. It cannot be said that the legitimate
state interest in preserving neighborhood character is "rationally
furthered" by tax benefits for owners of commercial, industrial,
vacant, and other nonresidential properties.6 It is just short of
absurd to conclude that the legitimate state interest in protecting
a relatively small
5 As pointed out in the Commission Report, California has
addressed this specific problem with specific legislation. The
State has established two programs:
"Senior Citizens Property Tax Assistance. Provides
refunds of up to ninety-six percent of property taxes to low income
homeowners over age 62.
"Senior Citizens Property Tax Postponement. Allows senior
citizens with incomes under $20,000 to postpone all or part of the
taxes on their homes until an ownership change occurs." Commission
Report 23.
6 The Court's rationale for upholding Proposition 13 does not
even arguably apply to vacant property. That, as the Court
recognizes, Proposition 13 discourages changes of ownership means
that the law creates an impediment to the transfer and development
of such property no matter how socially desirable its improvement
might be. It is equally plain that the competitive advantage
enjoyed by the Squires who own commercial property is wholly
unjustified. There is no rational state interest in providing those
entrepreneurs with a special privilege that tends to discourage
otherwise desirable transfers of income-producing property. In a
free economy, the entry of new competitors should be encouraged,
not arbitrarily hampered by unfavorable tax treatment.
37
number of economically vulnerable families is "rationally
furthered" by a tax windfall for all 9,787,887 property owners 7 in
California.
The Court's conclusion is unsound not only because of the lack
of numerical fit between the posited state interest and Proposition
13's inequities but also because of the lack of logical fit between
ends and means. Although the State may have a valid interest in
preserving some neighborhoods,s Proposition 13 not only "inhibit[s
the] displacement" of settled families, it also inhibits the
transfer of unimproved land, abandoned buildings, and substandard
uses. Thus, contrary to the Court's suggestion, Proposition 13 is
not like a zoning system. A zoning system functions by recognizing
different uses of property and treating those different uses
differently. See
Euclid v.
Ambler Realty Co., 272 U.
S., at 388-390. Proposition 13 treats all property alike, giving
all owners tax breaks, and discouraging the transfer or
improvement of
all property-the developed and the
dilapidated, the neighborly and the nuisance.
In short, although I agree with the Court that "neighborhood
preservation" is a legitimate state interest, I cannot agree that a
tax windfall for all persons who purchased property before 1978
rationally furthers that interest. To my mind, Proposition
13 is too blunt a tool to accomplish such a
7 Brief for California Assessors' Association as
Amicus
Curiae 2.
8 The ambiguous character of this interest is illustrated by the
options faced by a married couple that owns a three- or
four-bedroom home that suited their family needs while their
children lived at home. After the children have moved out,
increased taxes and maintenance expenses would-absent Proposition
13-tend to motivate the sale of the home to a younger family
needing a home of that size, or perhaps the rental of a room or two
to generate the income necessary to pay taxes. Proposition 13,
however, subsidizes the wasteful retention of unused housing
capacity, making the sale of the home unwise and the rental of the
extra space unnecessary.
38
specialized goal. The severe inequalities created by Proposition
13 cannot be justified by such an interest.9
The second state interest identified by the Court is the
"reliance interests" of the earlier purchasers. Here I find the
Court's reasoning difficult to follow. Although the protection of
reasonable reliance interests is a legitimate governmental purpose,
see
Heckler v.
Mathews, 465 U. S. 728, 746
(1984), this case does not implicate such interests. A reliance
interest is created when an individual justifiably acts under the
assumption that an existing legal condition will persist; thus
reliance interests are most often implicated when the government
provides some benefit and then acts to eliminate the benefit. See,
e. g., New Orleans v.
Dukes, 427 U. S. 297 (1976). In
this case, those who purchased property before Proposition 13 was
enacted received no assurances that assessments would only increase
at a limited rate; indeed, to the contrary, many purchased property
in the hope that property values (and assessments) would appreciate
substantially and quickly. It cannot be said, therefore, that the
earlier purchasers of property somehow have a reliance interest in
limited tax increases.
Perhaps what the Court means is that post-Proposition 13
purchasers have less reliance interests than pre-Proposition
9 Respondents contend that the inequities created by Proposition
13 are justified by the State's interest in protecting property
owners from taxation on unrealized appreciation. The California
Supreme Court relied on a similar state interest. See
Amador
Valley Joint Union High School Dist. v.
State Ed. of
Equalization, 22 Cal. 3d 208, 236-238, 583 P. 2d 1281,
1309-1311 (1978). This argument is closely related to the Court's
reasoning concerning "neighborhood preservation"; respondents claim
the State has an interest in preventing the situation in which
"skyrocketing real estate prices ... driv[e] property taxes beyond
some taxpayers' ability to pay." Brief for Respondents 19. As
demonstrated above, whatever the connection between acquisition
price and "ability to pay," a blanket tax windfall for all early
purchasers of property (and their descendants) is simply too
overinclusive to "rationally further" the State's posited interest
in protecting vulnerable taxpayers.
39
13 purchasers. The Court reasons that the State may tax earlier
and later purchasers differently because
"an existing owner rationally may be thought to have vested
expectations in his property or home that are more deserving of
protection than the anticipatory expectations of a new owner at the
point of purchase. A new owner has full information about the scope
of future tax liability before acquiring the property, and if he
thinks the future tax burden is too demanding, he can decide not to
complete the purchase at all. By contrast, the existing owner,
already saddled with his purchase, does not have the option of
deciding not to buy his home if taxes become prohibitively high."
Ante, at 12-13.10
This simply restates the effects of Proposition 13. A
preProposition 13 owner has "vested expectations" in reduced taxes
only because Proposition 13 gave her such expectations; a
later purchaser has no such expectations because Proposition 13
does not provide her such expectations. But the same can be said of
any arbitrary protection for an existing class of taxpayers.
Consider a law that establishes that homes with even street numbers
would be taxed at twice the rate of homes with odd street numbers.
It is certainly true that the even-numbered homeowners could not
decide to "unpurchase" their homes and that those considering
buying an even-numbered home would know that it came with an extra
tax burden, but certainly that would not justify the arbitrary
imposition of disparate tax burdens based on house numbers. So it
is in this case. Proposition 13 provides a benefit for earlier
purchasers and imposes a burden on later purchasers. To say that
the later purchasers know what they are getting into does not
answer the critical question: Is it reasonable
10 The Court's sympathetic reference to "existing owner[s]
already saddled" with their property should not obscure the fact
that these early purchasers have already seen their property
increase in value more than tenfold.
40
and constitutional to tax early purchasers less than late
purchasers when at the time of taxation their properties are
comparable? This question the Court does not answer.
Distilled to its essence, the Court seems to be saying that
earlier purchasers can benefit under Proposition 13 because earlier
purchasers benefit under Proposition 13. If, however, a law creates
a disparity, the State's interest preserving that disparity cannot
be a
"legitimate state interest" justifying that inequity.
As noted above, a statute's disparate treatment must be justified
by a purpose
distinct from the very effects created by that
statute. Thus, I disagree with the Court that the severe inequities
wrought by Proposition 13 can be justified by what the Court calls
the "reliance interests" of those who benefit from that
scheme.ll
In my opinion, it is irrational to treat similarly situated
persons differently on the basis of the date they joined the class
of property owners. Until today, I would have thought this
proposition far from controversial. In
Zobel v.
Williams, 457
U. S. 55 (1982), we ruled that Alaska's program of distributing
cash dividends on the basis of the recipient's years of residency
in the State violated the Equal Protection Clause. The Court
wrote:
"If the states can make the amount of a cash dividend depend on
length of residence, what would preclude varying university tuition
on a sliding scale based on years of residence-or even limiting
access of finite pub-
11 Respondents, drawing on the analysis of the California
Supreme Court, contend that the inequities created by Proposition
13 are also justified by the State's interest in "permitting the
taxpayer to make more careful and accurate predictions of future
tax liability."
Amador Valley, 22 Cal. 3d, at 239, 583 P.
2d, at 1312. This analysis suffers from the same infirmity as the
Court's "reliance" analysis. I agree that Proposition 13 permits
greater predictability of tax liability; the relevant question,
however, is whether the inequities between earlier and later
purchasers created by Proposition 13 can be justified by something
other than the benefit to the early purchasers. I do not believe
that they can.
41
lic facilities, eligibility for student loans, for civil service
jobs, or for government contracts by length of domicile? Could
states impose different taxes based on length of residence?
Alaska's reasoning could open the door to state apportionment of
other rights, benefits, and services according to length of
residency. It would permit the states to divide citizens into
expanding numbers of permanent classes. Such a result would be
clearly impermissible." Id., at 64 (emphasis added)
(footnotes omitted).
Similarly, the Court invalidated on equal protection grounds New
Mexico's policy of providing a permanent tax exemption for Vietnam
veterans who had been state residents before May 8, 1976, but not
to more recent arrivals.
Hooper v.
Bernalillo County
Assessor, 472 U.
S. 612 (1985). The Court expressly rejected the State's claim
that it had a legitimate interest in providing special rewards to
veterans who lived in the State before 1976 and concluded that
"[n]either the Equal Protection Clause, nor this Court's
precedents, permit the State to prefer established resident
veterans over newcomers in the retroactive apportionment of an
economic benefit."
Id., at 623.
As these decisions demonstrate, the selective provision of
benefits based on the timing of one's membership in a class
(whether that class be the class of residents or the class of
property owners) is rarely a "legitimate state interest." Similarly
situated neighbors have an equal right to share in the benefits of
local government. It would obviously be unconstitutional to provide
one with more or better fire or police protection than the other;
it is just as plainly unconstitutional to require one to pay five
times as much in property taxes as the other for the same
government services. In my opinion, the severe inequalities created
by Proposition 13 are arbitrary and unreasonable and do not
rationally further a legitimate state interest.
Accordingly, I respectfully dissent.
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