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Wednesday, February 29, 2012

Ind. Decisions - "Tax forgiveness and equality"

As noted in this post last evening, the SCOTUS is hearing the case of Armour v. Indianapolis this morning.

Lyle Denniston of SCOTUSblog has written a very lengthy and valuable "argument preview" of the case. Here are just the part of the intro and then, the conclusion:

Arguing for the challenging taxpayers will be Mark T. Stancil of the Washington office of Robbins, Russell, Englert, Orseck, Untereiner & Sauber. Arguing for the city of Indianapolis, local officials, and agencies will be Paul D. Clement of the Washington law firm of Bancroft PLLC. * * *

Sometimes, simplicity is a better strategy for winning a Supreme Court case, if it is argued well and makes the Justices suspicious of the nuance, qualification, and rationalization that the other side has offered. The 31 Indianapolis homeowners may have done both: it is no exaggeration that they simply paid much more than the installment plan taxpayers did — 80 percent of the sewer tax collections — and it is plain that the city’s several justifications for the forgiveness do not do as much work as they need to do to explain away the refusal to provide refunds.

The class-based difference in treatment may well be the city’s weakest argument, since there is no evidence that the city did any actual calculations about who could afford to pay up front and who needed to stretch out payments. From all that appears, that was mere supposition, and yet it is that argument that should have provided the most sympathy for treating homeowners in the same subdivision differently. Instead of calculating ability to pay, the city pigeon-holed household income within the unexplained individual choice of pay schedule. Such choices might well have been made at random, rather than as calculations of how much cushion there was in a given family’s budget.

There is nothing about this case that would prevent a city from shifting its tax policy or revising its plans for financing civic improvements. No one is claiming that Indianapolis was stuck with one way to pay for hooking up homes with city sewers, and no one is arguing that a city cannot create legitimate classifications between taxpayers who are convincingly placed in different circumstances. The homeowners’ lawyers have made those points clearly.

There is a good deal of energy spent in this case over how important the Court’s prior precedents are to the outcome here — that is, whether Allegheny Pittsburgh is still good law, or whether Nordlinger speaks more directly to tax classifications. This dispute in Indianapolis has quite a different focus: the Court may well have to start fresh to analyze whether tax forgiveness, or any other form of “amnesty,” to use Indianapolis’s provocative analogy, is something that has to satisfy equal protection principles.

Posted by Marcia Oddi on February 29, 2012 10:30 AM
Posted to Ind. Sup.Ct. Decisions