Supreme Court hears arguments on equal protection in taxation

[JURIST] The US Supreme Court [official website] heard oral arguments [day call, PDF] on Wednesday in Armour v. Indianapolis [transcript; JURIST report] on tax equality under the Equal Protection clause [text] of the Constitution. In Indianapolis, a tax scheme was changed mid-project, and several residents were forgiven the remainder of their balances on that tax. The petitioners, a group of citizens who paid their taxes in full, argued that this amnesty program violates the Fourteenth Amendment: "The fact that an arbitrary classification may yield a desirable result does not render it any less arbitrary. The city must have a reason for drawing the distinction; but paying one's taxes in good faith does not equal treatment." The city argued that it was good public policy to forgive the remainder of taxes when they switched plans: "[S]ometimes things that make policy sense that the public likes also make good government sense." The city continued that an interest in making public policy that pleases people is rational enough that the classification should not be seen as arbitrary.

Indianapolis assessed a property tax [SCOTUSBlog report] on citizens in a certain residential area to fund a new sanitation project in 2001. Residents were given the option of paying the $9,278 tax in full, or paying it in increments over several decades. Several paid in full, while others paid considerably under the installment plan. In 2005, the city decided to revise the tax policy to fund the plan, and forgave the remaining balances on all of the residents. This put many in the position where they had paid above the new $2,500 fee for the sanitation project. The city government refused to refund those taxes, but property owners were refunded in a private suit. They then pursued litigation against the forgiveness policy that had allowed other property owners to pay below the initial tax. The Indiana Supreme Court [official website] ruled for the city [opinion text].

 

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