U.S. Justices Open Door to Attack on Fairness of Prop. 13 Tax System

The Supreme Court today opened the door to a legal attack on California’s property tax system, ruling that the Constitution demands “rough equality in tax treatment of similarly situated property owners.”

In a unanimous opinion striking down an unequal taxing system in West Virginia, Chief Justice William H. Rehnquist said “we need not and do not decide today” whether Proposition 13 in California is also unconstitutional because new home buyers pay sharply higher taxes than longtime owners of similar homes.

But Rehnquist goes on to say that “intentional systematic undervaluation by state officials of comparable property” violates the Constitution’s guarantee of equal treatment under law.

35 Times Higher

In the West Virginia case, the justices struck down a tax in a West Virginia county that permitted some property to be taxed at up to 35 times more than neighboring comparable property.

Such a so-called “welcome stranger” provision is a key part of the Prop. 13 property tax rollback approved by California voters in 1978. For longtime homeowners, property assessments were frozen at the 1975 level. For new homeowners, the assessment is based on purchase price.

The court today threw out a Webster County, W. Va., tax that was challenged principally by Allegheny Pittsburgh Coal Co.

The coal company opposed a change that raised the assessed value of 7,400 acres of Webster County land it owned from $488,000 to $12.3 million in one year. The company bought the land in 1974 for about $24.6 million and sold it, along with mineral rights, for $29.8 million in 1982.

Joined by Other Firms

Three other coal companies, East Kentucky Energy, Oneida Coal and Shamrock Coal, joined the challenge.

Rehnquist, writing for the court, said West Virginia’s Constitution and laws “provide that all property of the kind held by (the coal companies) shall be taxed at a rate uniform throughout the state according to its estimated market value. The relative undervaluation of comparable property in Webster County over time therefore denies (the coal companies) the equal protection of law.”

In another major case today, the court overruled more than 150 trial judges by upholding a tough, year-old sentencing system for people convicted of federal crimes.

Constitutional Rules

By an 8-1 vote, the justices said the U.S. Sentencing Commission rules or “guidelines” that took effect in late 1987 are constitutional.

Thousands of defendants sentenced by judges who, citing constitutional flaws, refused to abide by the rules now must be resentenced.

Although more than 150 judges struck down the guidelines, a greater number of judges had chosen to implement them. Defendants sentenced under the guidelines since November, 1987, do not have to be resentenced.