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Under the equal protection clause, U.S. Const. amend. XIV, and under the uniformity clause, Pa. Const. art. VIII, § 1, absolute equality and perfect uniformity in taxation are not required. In cases where the validity of a classification for tax purposes is challenged, the test is whether the classification is based upon some legitimate distinction between the classes that provides a non-arbitrary and reasonable and just basis for the difference in treatment. Stated alternatively, the focus of judicial review is upon whether there can be discerned some concrete justification for treating the relevant group of taxpayers as members of distinguishable classes subject to different tax burdens. When there exists no legitimate distinction between the classes, and, thus, the tax scheme imposes substantially unequal tax burdens upon persons otherwise similarly situated, the tax is unconstitutional.
Appellants, city and its mayor, filed a petition for review seeking a declaration that § 14 of the Local Tax Enabling Act (LTEA), 53 P.S. § 6914, and § 302(a)(7) of the Home Rule Charter and Optional Plans Law (HRC), 53 P.S. § 1-302(a)(7), which prevented appellants from collecting its wage tax from non-city residents who worked within the city's boundaries, were unconstitutional as violative of the uniformity clause, Pa. Const. art. VIII, § 1, and the equal protection clause, U.S. Const. amend. XIV. Appellees, commonwealth and its secretary of revenue, filed preliminary objections contending that appellant city lacked standing to assert the constitutional rights of its residents and that classifications distinguishing between resident and non-resident wage earners were valid. The trial court sustained all the preliminary objections and dismissed the petition for review. Appellant challenged the decision.
Were the challenged statutes unconstitutional for being violative of the uniformity clause and the equal protection clause?
Affirming the dismissal, the court found that there was a reasonable basis for the classification based upon residency. According to the court, residents and non-residents were utilizing city services to different extents, non-residents, in some instances, not at all. As such, residents and non-residents were not similarly situated in this context. Furthermore, the court held that neither of the challenged statutes violated constitutional provisions.