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Bob Ferguson

AGO 1954 No. 320 - Sep 23 1954
Attorney General Don Eastvold


Classification of income from real property leading to its taxation renders any act so classifying it, unconstitutional because of non-uniformity.

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                                                              September 23, 1954

Honorable Tom Hall
Senator, 18th District
Skamokawa, Washington                                                                                                              Cite as:  AGO 53-55 No. 320

Dear Sir:

            In a recently acknowledged letter, you state:

            "Would you please give me your opinion as to whether or not it would be constitutional to classify all income as one class of property and make it subject to the Ad Valorem Tax the same as personal property.  If so, would it have to be levied on gross income or could it be levied on net income?"

            It is our opinion that the classification as outlined in your letter would be unconstitutional.


            The constitutionality of any proposed classification for taxing purposes necessarily depends upon the construction of Amendment 14 to the Washington State Constitution.  The portion of that amendment necessary for the consideration of this question reads as follows:

            "s 1. TAXATION.  The power of taxation shall never be suspended, surrendered or contracted away.  All taxes shall be uniform upon the same class of property within the territorial limits of the authority  [[Orig. Op. Page 2]] levying the tax and shall be levied and collected for public purposes only.  The word 'property' as used herein shall mean and includeeverything, whether tangible or intangible, subject to ownership.  Allreal estate shall constitute one class:  * *" (Emphasis ours)

            It appears clear from the underlined portion of the above, that real property must be contained, for taxing purposes at least, in one classification.  It then becomes pertinent to consider whether or not the income from real property is real or personal property.

            Our Supreme Court in the case of Jensen v. Henneford, 185 Wash. 209, said at page 222:

            "A tax upon rents from real estate is a tax upon the real estate itself.  Pollock v. Farmers' Loan & Trust Co., 157 U.S. 429, 480, 15 S.Ct. 673, 39 L.Ed. 759.  Hence, a tax upon rents, as in the case of respondent Hoffman, is a second tax upon real estate.  * * *"

            In the face of this definite language on the part of our Supreme Court we can come to no other conclusion but that the income from real estate is real property and that thus the classification of all income as one class of property would be impossible unless all income were to be classified as real property.

            We do not deem it necessary to explore the constitutionality of such a classification of all income, for the reason that in Jensen v. Henneford, supra, on the same page as above cited, our Supreme Court, in continuing from the previous quotation, says:

            "* * * There is no such tax levied by the act upon unrented real estate, nor upon rents from real estate which is owned by nonresidents.  The fourteenth amendment of the constitution, however, says that 'taxes shall be uniform upon the same class of property,' and that 'all real estate shall constitute one class,' the only exception being with reference to mines, mineral resources, and lands devoted to reforestation.  The 1935 act thus creates, for income tax purposes, two classes of real estate, (1) that which is income‑bearing, and (2) that which is either  [[Orig. Op. Page 3]] not income‑bearing or else is owned by non-residents.  Section 2 (a) therefore violates the uniformity provision of the constitution in a very vital particular an must be held void so far as rents from income‑producing real estate are concerned."

            In view of the above, your suggested classification would also be unconstitutional as it would also create two classes of real estate, namely that which is income‑bearing and that which is not income‑bearing or else is owned by nonresidents.

            If we correctly read your letter, this answer to the principal question prevents the necessity of answering the ancillary questions therein contained.  We sincerely hope that the above will be of assistance to you.

Very truly yours,

Attorney General

Assistant Attorney General