TAXATION ‑- EXEMPTION ‑- INCOME QUALIFICATIONS FOR PROPERTY TAX EXEMPTION UNDER § 1, CHAPTER 126, LAWS OF 1972, EX. SESS
In computing the income of an applicant for the retired person's property tax exemption provided for by RCW 84.36.370, all of the applicant's income from a federal civil service or railroad retirement pension is to be counted in determining his eligibility for this exemption except such pension payments as represent a return of capital or investment.
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May 2, 1972
Honorable King Lysen
State Representative, 31st District
P.O. Box 66173
Seattle, Washington 98166
Cite as: AGO 1972 No. 10
By letter previously acknowledged you requested an opinion of this office on a question which we paraphrase as follows:
In computing the income of an applicant for the retired person's property tax exemption provided for by RCW 84.36.370, is all of the applicant's income from a federal civil service or railroad retirement pension to be counted?
We believe that this question must be answered in the affirmative as qualified in our analysis.
As with any question pertaining to property tax exemptions for certain elderly retired persons, our consideration of your inquiry must begin with a notation of the constitutional basis for this program of statutory exemptions. The basis for such exemptions is Article VII, § 10 (Amendment 47) of our state constitution, as approved by the voters in 1966, which provides as follows:
[[Orig. Op. Page 2]] "Notwithstanding the provisions of Article 7, section 1 (Amendment 14) and Article 7, section 2 (Amendment 17), the following tax exemption shall be allowed as to real property:
"The legislature shall have the power, by appropriate legislation, to grant to retired property owners relief from the property tax on the real property occupied as a residence by those owners. The legislature may place such restrictions and conditions upon the granting of such relief as it shall deem proper. Such restrictions and conditions may include, but are not limited to, the limiting of the relief to those property owners below a specific level of income and those fulfilling certain minimum residential requirements."
Various implementing statutes have been enacted by the legislature in accordance with this constitutional amendment ‑ the latest being chapter 126, Laws of 1972, Ex. Sess. See, also, chapter 168, Laws of 1965, Ex. Sess., as amended by chapter 132, Laws of 1967, Ex. Sess., and by chapter 262, Laws of 1969, Ex. Sess.; and also, chapter 288, Laws of 1971, 1st Ex. Sess., which repealed the earlier enactments and established a new statutory approach to the over-all problem of retired persons' property taxes. However, common to each of these enactments has been a statutory "income test" as one of the several qualifications to be met by any person applying for the tax exemption. Thus, for example, § 2 of the original, 1965, enactment provided (in material part) as follows:
"The following persons, as heads of households, shall be exempt from the first fifty dollars of real property taxes due and payable in any one year, provided they come within the following provisions:
". . .
"(7) The combined income of the head of the household and his spouse, from all sources whatsoever, shall not be in excess of three thousand dollars ($3,000) for the calendar year immediately preceding the year in which the real property is assessed and the taxes levied thereon."
[[Orig. Op. Page 3]]
In AGO 1967 No. 5 [[to Mrs. Joseph Hurley, State Representative on February 14, 1967]], copy enclosed, we were asked to consider a question very similar to that which you have now posed; namely, whether the term "income" as used in this 1965 enactment included monies received by a taxpayer in the form of social security benefits, railroad retirement benefits, teachers' retirement allowances or other state, municipal and county employees' retirement benefits, or private company pensions. We concluded that except to the extent that any of these benefits represented a return of capital or investment, each was required to be included within the income of an applicant for the (then) $50 property tax exemption provided for by the 1965 act.
With this in mind, we now turn to the legislature's most recent pronouncement on the subject ‑ § 1, chapter 126, Laws of 1972, Ex. Sess. By this section the legislature amended § 4, chapter 288, Laws of 1971, 1st Ex. Sess. (RCW 84.36.370), by which it had replaced the earlier provisions of the 1965 act and its 1967 and 1969 amendments. Set forth in bill form so as to indicate the deletions and additions to the previous statute which were made by the 1972 amendment, this section reads (in material part) as follows:
"A person shall be exempt from any legal obligation to pay a percentage of the amount of real property taxes due and payable in 1972 and subsequent years as the result of the levy of additional taxes in excess of regular property tax levies as that term is defined in RCW 84.04.140, as now or hereafter amended, and/or from such regular property tax levies in accordance with the following conditions:
"(1) . . .
"(2) . . .
"(3) . . .
No person who, during the preceding calendar year, has regularly occupied the residence on which the taxes have been imposed shall have received during the preceding calendar year any earnings of the type and amount which would cause any deduction from social security benefits for a recipient of [[Orig. Op. Page 4]] such benefits pursuant to 42 U.S.C. 403 as in effect on May 21, 1971: PROVIDED, That the earnings of any occupant living with and paying rent to the person claiming exemption shall not be included in the determination of the eligibility of such person for the exemption.
(5))) The amount that the person shall be exempt from an obligation to pay shall be calculated, on the basis of the combined income, from all sources whatsoever, of the person claiming the exemption and his or her spouse for the preceding calendar year, in accordance with the following schedule:
"Income Percentage of Excess
"Range Levies Exemption
"$4,000 or less One hundred percent
"$4,001 ‑ $6,000 Fifty percent
"PROVIDED, HOWEVER, That, solely with respect to a person within the income range of $4,000 or less, in the event that taxes due and payable include no excess levies or include excess levies less than $50.00, the amount of the exemption shall be $50.00 and the difference shall be attributed pro rata to regular property tax levies of each of the taxing districts: AND PROVIDED FURTHER, That only two-thirds of any social security benefits shall be considered as income for the purposes of this section."
In addition to AGO 1967 No. 5, supra, we are also enclosing herewith a copy of AGO 1971 No. 27 [[to Prosecuting Attorney, Wahkiakum County on August 31, 1971]], which construed the provisions of the earlier, 1971, version of this section. In that opinion we concluded that:
"If a property owner claiming a tax exemption under § 4, chapter 288, Laws of 1971, 1st Ex. Sess., received income during the preceding calendar year 'of the type and amount which [[Orig. Op. Page 5]] would cause any reduction from social security benefits for a recipient of such benefits pursuant to 42 U.S.C. 403 as in effect on the effective date of this 1971 amendatory act,' then such taxpayer is disqualified for the subject tax exemption even though his or her total amount of income was less than the $4,000 annual maximum provided for in subsection (5) for a one hundred percent excess levy exemption."
Obviously, the 1972 amendments to subsections (4) and (5) of the 1971 act must be viewed as manifesting an intent on the part of the legislature tochange this particular result. Accord,Dando v. King County, 75 Wn.2d 598, 452 P.2d 955 (1969). Instead of disqualifying a taxpayer for the exemption if he received income during the preceding calendar year "of the type and amount which would cause any reduction from social security benefits" the legislature (in effect) has said that from now on an applicant's eligibility should be based upon his income perse ‑ subject only to the following specific proviso:
". . . AND PROVIDED FURTHER, That only two-thirds of any social security benefits shall be considered as income for the purposes of this section."
Insofar as the over-all question of whether railroad retirement benefits or federal civil service pension payments (together with social security) constitute "income" within the meaning of the present law, we believe that the reasoning contained in AGO 1967 No. 5, supra, is sound and should be followed. Accordingly, we begin our direct answer to your question by concluding that any benefits received by a taxpayer under any of these pension programs must be counted as "income" in determining his eligibility for a property tax exemption ‑ except (again) to the extent that any such payments represent a return of capital or investment (e.g., employee contributions to the particular plan). This brings us, then, to the significance of the above‑quoted amendatory proviso ‑ which clearly qualifies the foregoing analysis insofar as social security benefits are concerned. With regard to these particular benefits, the legislature has stated that only two-thirds thereof shall be considered as income for the purposes of the statute in question. Query: Does this same qualification apply to federal civil service retirement benefits or payments received under the railroad retirement system?
[[Orig. Op. Page 6]]
Based upon the fundamental rule of statutory construction commonly referred to asexpressio unius est exclusio alterius, we believe that this question must be answered in the negative. Freely translated, this rule means that where the legislature, in enacting a statute, makes an express reference to a particular item or subject as beingincluded within the purview of the enactment it is to be regarded as having intended to exclude all similar items or subjects from the scope of the act. See, e.g.,State v. Roadhs, 71 Wn.2d 705, 430 P.2d 586 (1967); also,Bradley v. Dept. Labor & Ind., 52 Wn.2d 780, 329 P.2d 196 (1958).
Here, we have an instance where the legislature determined to give special treatment to one particular type of "retirement allowance" related income ‑ namely, social security benefits. By this term "social security benefits" the legislature presumably had in mind those benefits payable under the federal old age and survivors insurance program ‑ 42 U.S.C. § 403, et seq. ‑ as this was the manner in which this term was used in the earlier portion of the statute which was repealed by the 1972 enactment. Accord,Hatzenbuhler v. Harrison, 49 Wn.2d 691, 306 P.2d 745 (1957). Thus, this term must (in our opinion) be regarded as describing only those benefits ‑ and not as including any other retirement allowances such as railroad retirement benefits or federal civil service retirement pensions. On this basis, our answer to your question must be that the full amount of such excluded benefits, except to the extent that they represent a return of capital or investment, are to be included in computing the over-all income of an applicant for the subject tax exemption under the provisions of the current law. Of course, if the legislature desires to modify this result by adding either or both of these two types of benefits to the present proviso relating to social security benefits, it is entirely free to do so.
We trust that the foregoing will be of some assistance to you.
Very truly yours,
PHILIP H. AUSTIN
Deputy Attorney General