HomeMy Public PortalAboutExhibit MSD 3B1- Legal Rattionale for Constitutionality of Residential Ad Valorem TaxMEMORANDUM
To: Rate Commission
From: Susan
Re: Legal Rationale for Constitutionality of Residential Ad Valorem Tax Component
Date: March 24, 2023
The Missouri Constitution’s tax uniformity clause provides that taxes “shall be uniform
upon the same class or subclass of subjects within the territorial limits of the authority levying
the tax.” Mo. Const, art. X, § 3. The Constitution also establishes a real property “class” of
taxable property, and creates residential, agricultural, and all other property (i.e., typically
denominated “commercial”) “subclasses” of real property. Mo. Const, art X, §§ 4(a), 4(b).
Case law provides that the “requirements of the uniformity clause are met when taxes are
(1) ‘uniform;’ (2) ‘upon the same class or subclass of subjects;’ (3) ‘within the territorial limits;’
(4) ‘of the authority levying the tax.’” Armstrong-Trotwood, LLC v. State Tax Comm ’n, 516
S.W.3d 830, 835-36 (Mo. banc 2017) (quoting Mo. Const, art. X, § 3). “The words of a
constitutional provision must be interpreted to give effect to their plain and ordinary meaning.”
Id. at 836. The Missouri Supreme Court has held that “uniformity” refers to the tax rate, not to
property valuation or the amount of the tax itself. Id. Therefore, the plain language of the
uniformity clause requires tax rates to be uniform upon the same class or subclass of property
within the District.
The proposed ad valorem tax will be levied only on the residential subclass of real
property within the District at a rate approved by the voters, and it will not be levied on the
commercial and agricultural subclasses. Thus, within each subclass, the tax rates will be uniform
and, therefore, in compliance with the uniformity clause.
Nothing in the plain language of the Constitution requires a taxing authority to levy its
tax on all classes or subclasses. See generally City of Cape Girardeau v. Fred A. Groves Motor
Co., 142 S.W.2d 1040, 1043 (Mo. 1940) (“Uniformity does not mean that the same rate must be
levied upon all subjects, but when the subjects are once classified the rate must be uniform upon
all subjects of the same class.”). Rather, the taxing authority is only required to levy the same
tax rate on all property in a class or subclass. “Or” is disjunctive, meaning the uniformity
requirement is met by levying the same tax rate upon either the same class or the same subclass.
See 801 Skinker Blvd. Corp. v. Dir. of Revenue, 395 S.W.3d 1, 6 (Mo. banc 2013) (“The word
‘or’ is ordinarily used as a disjunctive to mean ‘either’ as ‘either’ this or that.”). The proposed
residential ad valorem tax meets that requirement: all real property in the residential subclass
will be taxed at the same rate (as will all commercial and agricultural real property, i.e., a rate of
zero).
Exhibit MSD 3B1
Moreover, the uniformity clause does not require absolute uniformity of taxation. See,
e.g., Pipe Fabricators, Inc v Dir. of Revenue, 654 S.W.2d 74, 77 (Mo. banc 1983). Rather, the
uniformity clause “prohibits only distinctions between those in the same class or subclass.”
Michael Jaudes Fitness Edge, Inc v. Dir of Revenue, 248 S.W.3d 606, 610 (Mo. banc 2008). In
order to comply with this provision, there must be a reasonable basis for the differentiation or
classification, and all persons in the same class or subclass must be treated alike. See id. at 610-
11; City of Cape Girardeau, supra. The District’s rate proposal uses the subclassifications
specified in the Constitution, which, by definition, are reasonable and constitutional, and there
are no distinctions made within the same subclass.
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