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COURT OF APPEALS DECISION DATED AND RELEASED November 5, 1996 |
NOTICE |
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A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62, Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 95-3129
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT I
John D. Hennick and
Jane A. Hennick,
Petitioners-Appellants,
v.
Wisconsin Department
of Revenue,
Respondent-Respondent.
APPEAL from a judgment
of the circuit court for Milwaukee County:
MICHAEL J. SKWIERAWSKI, Judge. Affirmed.
Before Wedemeyer, P.J.,
Schudson and Curley, JJ.
PER CURIAM. John D. Hennick and Jane A. Hennick, pro
se, appeal from a judgment of the circuit court affirming the Wisconsin Tax
Appeals Commission's decision that denied their claim for an income tax refund
for taxes paid on income from a private pension. The Hennicks argue that § 71.05(1)(a), Stats. (1989-1990),[1]
which exempts certain public employee pension income from taxation, violates
the uniformity clause of the Wisconsin Constitution and the equal protection
clauses of the United States and Wisconsin Constitutions.[2] We reject their arguments and affirm.
Mr. Hennick receives
pension income due to his employment from 1956 through 1983 with a private
entity, the Public Expenditure Survey of Wisconsin. In 1993, the Hennicks filed amended tax returns for the years
1989 through 1992 seeking a refund of approximately $2,000. Following the Wisconsin Department of Revenue's
conclusion that Mr. Hennick's pension income was not exempt from taxation, the
Hennicks sought review before the Commission.[3]
When review is sought in
the court of appeals on an administrative agency's ruling, we review the
agency's conclusions independent of the trial court's decision. Davis v. Psychology Examining Bd.,
146 Wis.2d 595, 599, 431 N.W.2d 730, 732 (Ct. App. 1988). The facts of this case are undisputed, and
we are presented only with the Hennicks' constitutional challenges. “We generally accord deference to the Tax
Appeal Commission's legal conclusions” on challenges regarding the
constitutionality of a tax statute, “although we are not bound by those
conclusions.” See McManus
v. DOR, 155 Wis.2d 450, 453, 455 N.W.2d 906, 907 (Ct. App. 1990).
The Hennicks first argue
that § 71.05(1)(a), Stats.,
violates the uniformity clause of the Wisconsin Constitution. We disagree. Our state constitution's uniformity clause applies only to
taxation of property, not income. See
McManus, 155 Wis.2d at 454, 455 N.W.2d at 907.
The Hennicks next argue
that § 71.05(1)(a), Stats.,
violates the equal protection clauses of the Wisconsin and United States
Constitutions.[4] When dealing with equal protection
challenges, “[t]he general rule is that legislation is presumed to be valid and
will be sustained if the classification drawn by the statute is rationally
related to a legitimate state interest.”
City of Cleburne, Tex. v. Cleburne Living Center, 473 U.S.
432, 440 (1985). When no suspect
classifications are present, however, the presumption of validity is even
greater. See City of New
Orleans v. Dukes, 427 U.S. 297, 303 (1976). Further, “where a tax measure is involved, the presumption of
constitutionality is strongest.” Simanco,
Inc. v. DOR, 57 Wis.2d 47, 54, 203 N.W.2d 648, 651 (1973). “The burden is upon the challenger ... to
prove abuse of legislative discretion beyond a reasonable doubt.” Racine Steel Castings v. Hardy,
144 Wis.2d 553, 560, 426 N.W.2d 33, 35 (1988).
The standard used for determining whether the legislature has abused its
discretion is “not whether some inequality results from the classification, but
whether there exists any reasonable basis to justify the classification.” Omernik v. State, 64 Wis.2d 6,
19, 218 N.W.2d 734, 742 (1974).
First, there are no
“inherently suspect distinctions” involved in § 71.05(1)(a), Stats.
Second, as noted in the October 12, 1989, decision of the Tax Appeals
Commission involving the Hennicks, the statute is not without a reasonable
basis—“namely[,] that the exclusion was thought by its framers as desirable to
correct or ameliorate pay inequities for Milwaukee municipal employees, perhaps
to keep those employees from moving on to other more lucrative positions.” Finally, the Hennicks' evidentiary
submissions only demonstrated that Mr. Hennick's pension income was taxed
differently. As the Commission
accurately explained, “the mere establishment of a difference in the taxation
treatment accorded certain types of incomes does not per se indicate
that those differences result from distinctions made through legislative
enactments which are not reasonable.”
Therefore, we affirm the
judgment of the circuit court, which affirmed the Commission's ruling that Mr.
Hennick's pension income was not exempt from taxation.
By the Court.—Judgment
affirmed.
This opinion will not be
published. See Rule 809.23(1)(b)5, Stats.
[1]
Section 71.05(1)(a), Stats.
(1989-1990), provides that the following shall be exempt from state taxation:
All payments received from the
U.S. civil service retirement system, the U.S. military employe retirement
system, the employe's retirement system of the city of Milwaukee, Milwaukee
county employes' retirement system, sheriff's annuity and benefit fund of
Milwaukee county, police officer's annuity and benefit fund of Milwaukee, fire
fighter's annuity and benefit fund of Milwaukee, or the public and employe
trust fund as successor to the Milwaukee public school teachers' annuity and
retirement fund and to the Wisconsin state teachers retirement system, which
are paid on the account of any person who was a member of the paying or
predecessor system or fund as of December 31, 1963, or was retired from any of
the systems or funds as of December 31, 1963, but such exemption shall not
exclude from gross income tax sheltered annuity benefits.
This section has subsequently been amended, but such amendments are not relevant to this decision.
[2] See Article VIII, § 1 and Article I, § 1 of the Wisconsin Constitution, and U.S. Const. amend. XIV, § 1.
[3] This was actually the Hennicks' third challenge to the State's taxation of Mr. Hennick's pension benefits. The Commission noted that the issues presented in this case were “fundamentally identical” with the issues raised in the two earlier cases, with the only real difference being the set of years under review. Although the Department of Revenue raised claim preclusion as a defense, neither the Commission nor circuit court addressed the issue. Because we address the Hennicks' constitutional arguments, we need not address the application of claim preclusion. See Gross v. Hoffman, 227 Wis. 296, 300, 277 N.W. 663, 665 (1938) (only dispositive issue need be addressed).