Nordlinger v. Hahn
505 U.S. 1 (1992)
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Rule of Law:
A state's property tax system that bases assessments on acquisition value, thereby creating large disparities between the taxes paid by new and long-time owners of similar property, does not violate the Equal Protection Clause of the Fourteenth Amendment so long as the classification rationally furthers a legitimate state interest.
Facts:
- In 1978, California voters enacted Proposition 13, amending the state constitution to cap property taxes at 1% of a property's assessed value.
- Proposition 13 defined assessed value as the value in the 1975-76 tax year or, thereafter, the appraised value at the time of purchase, new construction, or change of ownership.
- The assessed value of a property could only increase by a maximum of 2% per year for inflation, unless the property was sold, at which point it would be reassessed at its current market value.
- In November 1988, Stephanie Nordlinger purchased a home in Los Angeles for $170,000.
- Due to the reassessment upon purchase, Nordlinger's property tax was approximately five times higher than that of her neighbors who lived in comparable homes but had owned them since before 1978.
- For example, a nearby house of identical size was taxed based on an assessed value of $35,820, reflecting its 1975 value plus inflation, resulting in a significantly lower tax bill for its long-time owner.
Procedural Posture:
- Stephanie Nordlinger brought suit against the Los Angeles County Tax Assessor in the Los Angeles County Superior Court (a trial court), seeking a tax refund and a declaration that Proposition 13 was unconstitutional.
- The Superior Court sustained the assessor's demurrer and dismissed Nordlinger's complaint.
- Nordlinger (as appellant) appealed to the California Court of Appeal (an intermediate appellate court).
- The Court of Appeal affirmed the trial court's dismissal, holding that Proposition 13 survived rational basis review.
- The Supreme Court of California (the state's highest court) denied Nordlinger's petition for review.
- The United States Supreme Court granted certiorari to review the judgment of the California Court of Appeal.
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Issue:
Does California's 'acquisition value' property tax system under Proposition 13, which creates significant tax disparities between new and long-time property owners, violate the Equal Protection Clause of the Fourteenth Amendment?
Opinions:
Majority - Justice Blackmun
No, California's property tax system does not violate the Equal Protection Clause. The law is presumed to be valid and is reviewed under the rational basis standard, which requires only that the classification rationally further a legitimate state interest. California has at least two legitimate interests that are rationally served by this system: 1) promoting local neighborhood stability and continuity by discouraging rapid turnover of homes and businesses, and 2) protecting the reliance interests of existing homeowners, whose vested expectations in their property are more deserving of protection than the anticipatory expectations of new buyers who have full information about their future tax liability before purchasing. This case is distinguishable from Allegheny Pittsburgh Coal Co. v. County Comm’n of Webster Cty., because there the tax assessor's practice was an aberrant policy that violated a state constitutional requirement of uniform taxation based on current value, whereas California's system is a constitutional scheme explicitly designed to achieve the benefits of an acquisition-value system.
Dissenting - Justice Stevens
Yes, California's property tax system violates the Equal Protection Clause. The gross and arbitrary disparities created by Proposition 13 are not rationally related to a legitimate state interest. The law provides a massive windfall to long-time owners (Squires) at the expense of new owners, creating severe inequities without adequate justification. This case is constitutionally indistinguishable from Allegheny Pittsburgh; the fact that the discrimination is enshrined in state law makes it more, not less, invidious than an individual assessor's maladministration. The justifications offered by the majority are unpersuasive; the law is too broad and indiscriminate to be a rational means of preserving neighborhoods or protecting a small number of vulnerable homeowners, and the 'reliance interest' argument is circular because the law itself created the expectation it purports to protect.
Concurring-in-part-and-dissenting-in-part - Justice Thomas
No, the law does not violate the Equal Protection Clause, but the majority's reasoning is flawed. While Proposition 13 is constitutional under rational basis review, it cannot be meaningfully distinguished from the scheme struck down in Allegheny Pittsburgh. The majority’s attempt to distinguish the cases by claiming the West Virginia practice was an 'aberrational' violation of state law is unconvincing and threatens to turn any violation of state law into a federal constitutional claim, contrary to precedent like Snowden v. Hughes. The better course would be to admit that Allegheny Pittsburgh was wrongly decided as a 'needlessly intrusive judicial infringement on the State's legislative powers' and reaffirm that states have broad latitude under rational basis review to create tax classifications.
Analysis:
This decision solidified the Supreme Court's highly deferential approach to economic and tax legislation under rational basis review. It severely limited the precedential reach of Allegheny Pittsburgh, confining its holding to situations where an administrative practice is an 'aberrational' departure from a state's own law requiring uniform taxation. By upholding California's 'welcome stranger' tax system, the Court affirmed that states have broad latitude to create classifications in tax law, even if they result in dramatic inequalities, as long as any conceivable rational basis exists. This ruling makes it exceedingly difficult to successfully challenge state tax schemes on federal equal protection grounds unless they involve a suspect class or a fundamental right.
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