Bodman v. State

Chief Justice TOAL.

I concur in the majority’s well-reasoned decision, but write separately to emphasize our conclusion that today’s result does not foreclose a future challenge based on the content of individual exemptions and caps. In my opinion, many of these exemptions and caps could not withstand even a minimal level of scrutiny under an equal protection analysis. The most egregious violation of equal protection is the sales tax cap found in section 12-36-2110(A) of the South Carolina Code. 5.C.Code Ann. § 12-36-2110(A) (2000 & Supp.2012).6 That *74section provides a maximum $300 sales tax cap on all sales and leases of aircrafts, motor vehicles, motor cycles, boats, certain trailers, and recreational vehicles.

To determine whether a statute violates equal protection we utilize a three prong test examining (1) whether the law treats “similarly situated” entities differently, and if so, (2) whether the General Assembly has a rational basis for that disparate treatment, and (3) whether that disparate treatment bears a rational relationship to a legitimate governmental purpose. See Ed Robinson Laundry and Dry Cleaning, Inc. v. S.C. Dep’t of Revenue, 356 S.C. 120, 123-24, 588 S.E.2d 97, 99 (2003). In my opinion, under the exemptions and caps scheme, retailers who specialize in selling exempted products are treated differently from retailers who sell non-exempted products, and this disparate treatment extends to manufacturers of exempted and non-exempted products. In my view, this disparate treatment does not bear a rational relationship to a legitimate governmental purpose.

In 2009, the General Assembly created the South Carolina Taxation Realignment Commission (TRAC). The General Assembly directed TRAC to undertake a thorough assessment of the State’s current tax structure. In its December 2010 report, TRAC noted that South Carolina adopted its motor vehicles sales tax cap of $300 in 1984 to compete with a similar cap utilized in North Carolina. Final Report of the S.C. Taxation Realignment Comm’n, at 55 (Dec.2010) (hereinafter TRAC Report ).7 The General Assembly sought to appease automobile dealers, particularly in border counties, who complained of lost sales to North Carolina car dealers. Id. While originally intended to place South Carolina on competitive footing with North Carolina, the sales tax cap no longer serves this purpose because North Carolina has moved away from a *75flat, across the board tax cap on motor vehicles. Id. at 55-58. Indeed, TRAC noted the obsolete nature of the cap, concluding, “South Carolina’s $300 maximum sales tax cap on motor vehicle purchases is truly unique among the 50 states. The cap, entirely appropriate and necessary in 1984, 26 years later, represents one of the most regressive aspects of the State’s entire sales and use tax code today.”8 Id. at 73.

From my perspective, while South Carolina’s sales tax cap for motor vehicles had a rational basis connected to a legitimate governmental purpose in 1984, in 2012, it has outlived the intended purpose of making South Carolina competitive with neighboring states with regard to the motor vehicle market. Moreover, section 12-36-2110’s regressive nature is clearly evident in its application to consumers who purchase old or debilitated motor vehicles and those consumers with the financial means to afford modern luxury motor vehicles and private aircraft. Thus, in my view, section 12-36-2110(A) of the South Carolina Code represents an arbitrary and capricious exception to the sales tax.

It is likely that the same can be said for many of the other exemptions or caps when viewed on an individual basis. However, the nature of Bodman’s argument prevents this Court from exercising such a review.

. (A) The maximum tax imposed by this chapter is three hundred dollars for each sale made after June 30, 1984, or lease executed after August 31, 1985, of each:

(1) aircraft, including unassembled aircraft which is to be assembled by the purchaser, but not items to be added to the unassembled aircraft;

(2) motor vehicle;

(3) motorcycle;

(4) boat;

(5) trailer or semitrailer, pulled by a truck tractor, as defined in Section 56-3-20, and horse trailers, but not including house trailers or campers as defined in Section 56-3-710 or a fire safety education trailer;

*74(6) recreational vehicle, including tent campers, travel trailer, park model, park trailer, motor home, and fifth wheel; or

(7) self-propelled light construction equipment with compatible attachments limited to a maximum of one hundred sixty net engine horsepower.

S.C.Code Ann. § 12-36-2110(A) (2000 & Supp.2012).

. South Carolina Taxation Realignment Commission, www.scstate house.gov/citizensinterestpage/TRAC/TRAC.html (last visited Apr. 11, 2013).

. TRAC explained:

As case in point, a resident purchasing a $6,000 car pays an effective sale tax rate of 5 percent — a tax rate that is 10 times HIGHER than a resident buying a car that costs $56,000, whose effective tax rate in South Carolina is just 0.54 percent — a tax rate 10 times less on a car that costs 10 times more. That is the definition of a regressive tax. TRAC therefore recommends repeal of South Carolina’s outdated and regressive sales tax cap on cars.

TRAC Report, supra, at 73 (emphasis in original).