WASHINGTON, June 4 (Reuters) - The U.S. Supreme Court ruled
on Monday that a city did not violate the Constitution when it
forgave some future property tax obligations for certain
taxpayers, but refused to refund payments made by other
taxpayers for the same assessments.
In a case that impacts tax policy, taxpayers and local
governments, the high court ruled by a 6-3 vote that authorities
in Indianapolis had a rational basis for making the distinction
and had not violated the Constitution's Equal Protection Clause
in their handling of a special sewer tax levied in 2004.
Property owners who paid the $9,278 tax up front were upset
when the Indianapolis Board of Public Works in 2005 decided to
forgive the obligations of those who chose to pay in monthly
installments, with interest, over 10, 15 or 30 years.
Under a new public improvements financing system adopted by
the city, which cited high administrative costs of the previous
policy, homeowners now pay a flat fee of $2,500 to connect to
the sewer line.
The property owners who had paid in full sued the city when
it refused their demands for a refund, noting that those on the
30-year installment plan had paid only $309.
A trial court and the Indiana Court of Appeals ruled that
their constitutional right to equal protection had been
violated, but the Indiana Supreme Court disagreed and ruled the
city had acted properly in seeking to reduce administrative
costs and preserve its limited resources.
On Monday, the Supreme Court upheld that decision. Writing
for the majority, Justice Stephen Breyer said it was rational
for the city to draw a line that avoided complex, expensive
burdens, and such administrative concerns ordinarily could
justify such a tax-related distinction.
He said the distinction between past payments and future
obligations was well known in the law.
Breyer said the city's tax classification did not involve a
fundamental constitutional right, describing the subject matter
as local, economic, social and commercial. No one has claimed
the city discriminated against out-of-state commerce or new
residents, he said.
Chief Justice John Roberts and Justices Antonin Scalia and
Samuel Alito dissented.
The Supreme Court case is Armour v. City of Indianapolis,
For Armour: Roy Englert of Robbins, Russell, Englert,
Orseck, Untereiner & Sauber.
For the City of Indianapolis: Paul Clement of Bancroft.
(Reporting by James Vicini)
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