The taxpayers contend that the Tax violates the due process provision of the Fourteenth Amendment to the United States Constitution as it relates to nonresident taxpayers who work in Montgomery Comity. As demonstrated below, the taxpayers' due process argument must fail for a variety of reasons.
The nonresident taxpayers concede, as they must, that they receive governmental services and benefits while working in Montgomery County. (Taxpayers' Consolidated Post-Hearing Brief, p. 52). Indeed, the nonresident taxpayers who work in Montgomery County receive all of the general services that the County furnishes its residents. Nonresident taxpayers travel on Montgomery County roads, receive protection from the Montgomery County Sheriffs Department and are entitled to the legal protections of the Montgomery County District Attorney and the Montgomery County District and Circuit Courts while in Montgomery County.
In addition, the Montgomery County Board of Education educates the majority of the supervisors, coworkers and service personnel with whom the nonresident taxpayers interface while in Montgomery County. Moreover, Montgomery 35 County and The Montgomery County Board of Education provide those same services, benefits and protections to the employers of those nonresidents, thus allowing those employers to continue to employ the nonresident taxpayers in Montgomery County.
While admitting there would be sufficient taxable "nexus" for Montgomery County to impose an occupational tax for the benefit of its general fund (Taxpayers' Consolidated Post-Hearing Brief, p. 52), the taxpayers nonetheless argue that the Tax violates due process because the tax proceeds benefit public schools and the nonresident taxpayers do not send their children to Montgomery County public schools.
There are a number of things wrong with that argument. As an initial matter, none of the cases cited in the Taxpayers' post-hearing brief hold that a taxpayer must be directly benefited by a particular tax (i.e., have a child attending Montgomery County public schools) before he or she may be required to pay the tax. To the contrary, the courts have repeatedly held: "It is no constitutional defense to a tax that the taxpayer is not directly benefited thereby, or is less benefited than others who pay the same or less tax. [Citations omitted.]
For example, "every citizen is bound to pay his proportion of a school tax, although he has no children, or is not a resident, and this applies also to corporations . . . ." T. Cooley, (The Law of Taxation 36 Vol. I, 4th ed. 1924; Sec. 89, p. 214.)
The fact of living in an organized society carries with it the obligations to contribute to its general welfare, whether or not the recipient of particular benefits. Morton Salt Co. v. City of South Hutchinson, 159 F.2d, 897, 900-01 (10th Cir. 1947)(emphasis in original). See also, Morion Salt Co. v. City of South Hutchinson, 177 F.2d 889, 892 (10th Cir. 1949); United School Dist. No. 229 v. State, 256 Kan. 232, 885 P.2d 1170,1195 (1994).
A leading treatise on the law of taxation summarily dismissed the same due process argument raised by the taxpayer in this case: [T]he contention has often been presented that property receiving no direct benefit from a tax for a particular purpose should not be taxed for such purpose.
However, it is almost unanimously held that it is no defense to the collection of a tax for a special purpose that a person liable for the tax is not benefited by the expenditure of the proceeds of the tax or not as much benefited as others. For instance, every citizen is bound to pay his proportion of a school tax although he has no children, or is not a resident. T. Cooley, The Law of Taxation, Vol. I, p. 214 (4th ed. 1924).
Therefore, the test to determine whether a tax on a nonresident comports with due process is not whether the taxpayer receives a direct benefit from the tax. Rather, "the simple but controlling question is whether the [County] has given anything for which it can ask return." Wisconsin v. J.C. Penney, 311 U.S. 435, 444 (1940). See also Olson v. Dept. of Revenue, 223 Mont. 464, 726 P.2d 1162, 1169-1170 (1986) ("where a tax is alleged to be unconstitutional because the claimants, whether they are residents or 37 nonresidents, do not enjoy the same benefits as others who reside within this State, the controlling test in determining the constitutionality of the tax is 'whether the State has given anything for which it can ask return.'") (quoting Wisconsin v. J.C. Penney Co., supra.}.
The taxpayers have admitted that they receive significant governmental services and benefits while working in Montgomery County. It is unnecessary further to point out that this test has been adequately met. The Taxpayers have failed to cite a single case, from Alabama or any other jurisdiction, holding that the due process clause mandates that a person receive a direct benefit from a particular tax before it may be collected. The taxpayers' reliance on City of Prattville v. Joyner, 698 So.2d 122 (1997) is clearly misplaced.
Joyner considered the issue of whether a municipality can be required to continue providing governmental services to businesses located outside its city limits but within its police jurisdiction. The Court reiterated the general rule that a municipality can impose taxes and license fees on residents and businesses in the police jurisdiction, if the amount collected is reasonably related to the cost of the services furnished.
Joyner does not hold, as the Taxpayers suggest, that the tax collected from the businesses within the police jurisdiction must be used for the direct benefit of those particular businesses. Similarly, there is no constitutional requirement that the 38 nonresident taxpayers receive a direct benefit from the "Tax" at issue in this case. Moreover, carried to its illogical extreme, the taxpayers' due process argument, if implemented, would invalidate every state and local tax earmarked for public education to the extent the tax may be collected from any person who does not directly benefit from the tax by having a child eligible to attend the public school system that benefits expenditures of the tax.
Indeed, Montgomery County residents who do not have school age children could not be subject to the Tax, or to property tax earmarked for public education for that matter, under the taxpayers' flawed interpretation of the due process clause. That is precisely why courts have repeatedly held that "[I]t is no constitutional defense to a tax that the taxpayer is not directly benefited thereby." Unified School Dist. No. 229 v. State, 256 Kan. 232, 885 P.2d 1170,1195 (1994).