Allegheny Pittsburgh Coal Co. v. Cty. Com. - 488 U.S. 336, 109 S. Ct. 633 (1989)

Rule:

The West Virginia Constitution guarantees to its citizens that, with certain exceptions, taxation shall be equal and uniform throughout the state, and all property, both real and personal, shall be taxed in proportion to its value. W.Va. Const. art. X, § 1. If a county tax assessor values owners' real property on the basis of its recent purchase price, but makes only minor modifications in the assessments of land which had not been recently sold, which resulted in gross disparities in the assessed value of generally comparable property, then the owners are denied the equal protection of the laws guaranteed to them by the Fourteenth Amendment.

Facts:

The West Virginia constitution provided, in relevant part, that taxation shall be uniform throughout the state, and that all real and personal property shall be taxed in proportion to its value. Between 1975 and 1986, the Webster County, West Virginia, tax assessor, apparently acting on her own initiative, assessed, for tax purposes, recently purchased real properties on the basis of their recent purchase prices, but made only minor modifications in the assessments of land that had not been recently sold. Such tax assessments were challenged by coal companies whose recently purchased real properties were assessed and taxed at rates that were approximately 8 to 35 times the rates that were applied to neighboring comparable properties that had not been recently sold. The Circuit Court of Webster County, concluding that the real property assessment system used by the Webster County assessor systematically and intentionally discriminated against the coal companies, in violation of the West Virginia constitution, and in violation of the equal protection clause of the Federal Constitution's Fourteenth Amendment, ordered the county commission to reduce the tax assessments on the coal companies' property to the levels recommended in the state tax commissioner's valuation guidelines that were provided for local assessors. The Supreme Court of Appeals of West Virginia reversed, holding that the assessments did not constitute intentional and systematic discrimination, because an assessment based upon the price paid for property in an arms-length transaction was an appropriate measure of the property's true value. The Court further held that the fact that other properties might be undervalued relative to the coal companies' properties did not require that the coal companies' assessments be reduced, and the coal companies should instead seek to have the assessments of other taxpayers' real properties raised to reflect market value. The Court granted certiorari.

Issue:

Did the tax assessments on the coal companies’ real property violate the equal protection clause of the Fourteenth Amendment?

Answer:

Yes.

Conclusion:

The Court held that the assessments on the coal companies’ land violated the Equal Protection Clause because the state provided that land was to be taxed uniformly, but the tax assessor did not apply that policy evenhandedly to all similar property. Even though taxes on the coal companies' land may have complied with state law, the relative undervaluation of comparable property over time denied them equal protection. According to the Court, the coal companies did not have to try to have taxes on other land raised because equal protection was not satisfied if a state did not itself remove the discrimination. Accordingly, the Court reversed the judgment of the lower court and remanded.