1. introduction: the power of legislature to allocate wealth

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City of Pittsburgh v. Alco Parking Corp. (1974) - private owners of parking garages could be taxed at a higher rate than a public garages

      • Court rejects claim of “taking” because finds that together the city and private parking lots don’t have enough spaces to satisfy need for parking lots in the city = parking lot operators could raise prices and pass tax to consumers

      • Powell’s Concurrence  says that there could be situations where the city’s imposition of a tax on a business that is competing with the city could constitute a taking without just compensation = might be cases where the court would strike down a tax if used to drive competitors out of the business competing with the government

B. Proposition 13

  • Pre-Proposition 13

    • method of assessment: assessors usually only assessed when something was bought or sold. This was not a problem when there was no inflation.

    • Once price increases: there was a huge inequity between taxes that people with identical property paid

  • Proposition 13

    • As of 1978, rolls back assessments to 1975-6 value  if new construction, or if property is sold, basis of reassessment is the sales price or building price.

    • Changes from a current value method to an acquisition value

    • Adopted as an amendment to the State Constitution, legalizing an assessment process which has been used for years

    • Effect is that people with same property pay vastly different rates depending on when they bought it or if they renovated it.

    • Deters businesses from expanding or changing location = only speaks to homeowners and residential problems

  • Justification for Proposition 13

  1. Legitimate regulatory purpose of keeping control of runaway inflation and real estate prices by fixing tax assessment could be imagined by court.

  2. Protect expectations – land should be valued at what you expected it to be when you bought it = taxes shouldn’t increase just by virtue of the fact that you live in a newly attractive neighbourhood since you had no choice in the matter

  3. State has legitimate interest in neighbourhood continuity, stability and preservation

  • Criticisms of Proposition 13

    • Opponents argue that it hurts all those who own land in CA after 1975, i.e. poor, young, and out-of-staters. Also minorities will not own and therefore will not be able to take advantage of this windfall.

    • Opponents also argue that under Sioux City, people being taxed at different assessments and not at the true value of their land, even if they own similar property.

    • Created many practical problems = shows danger of having unsophisticated lay people draft laws about complex matters

    • Point of Proposition 13 was to lower taxes, which leads to reduced public services  the victims of whom are the poor, minorities, those without health insurance, the education system

  • There are federalism concerns in these cases = there is no need for a uniform national rule (states can tax how they want).

    • In order to protect federalism the supreme court will not enforce an iron rule of equality when it comes to taxation = most of the time states can do what they want to do (Nordlinger)

    • The courts have almost no weapons for enforcing an order to a legislature to tax equally

    • Concern that giving localities choice might turn into a race to the bottom  if the Supreme Court can’t demand a uniform tax rule the states won’t do it because if one state has more onerous tax requirements than another they will lose out on business

  • What is the appropriate role of the courts? 2 views:

      1. courts should protect insular minorities that can not protect themselves.

      2. courts can never create ideal society. Courts don't have ability or resources to get rid of injustice only legislature can do this.

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