Tig Insurance Co Inc v. Department of Treasury

                                                                       Michigan Supreme Court
                                                                       Lansing, Michigan 48909
____________________________________________________________________________________________
                                                                C hief Justice                   Justices
                                                                Maura D. Cor rigan	



Opinion
                                                                                                 Michael F. Cavanagh
                                                                                                 Elizabeth A. Weaver
                                                                                                 Marilyn Kelly
                                                                                                 Clifford W. Taylor
                                                                                                 Robert P. Young, Jr.
                                                                                                 Stephen J. Markman
____________________________________________________________________________________________________________________________

                                                                                      FILED JULY 3, 2001





                TIG INSURANCE COMPANY, INC.,

                        Plaintiff-Appellee,

                v                                                                                No. 115915

                REVENUE DIVISION, DEPARTMENT
                OF TREASURY, STATE OF MICHIGAN,

                     Defendant-Appellant.
                ________________________________

                TIG PREMIER INSURANCE COMPANY, INC.,

                        Plaintiff-Appellee,

                v                                                                                No. 115916

                REVENUE DIVISION, DEPARTMENT
                OF TREASURY, STATE OF MICHIGAN,

                     Defendant-Appellant.
                ________________________________
                BEFORE THE ENTIRE BENCH
                CAVANAGH, J.

                        These consolidated cases require us to decide whether a

                1988 amendment of the Michigan Insurance Code’s retaliatory


                tax, MCL 500.476a, deprived plaintiffs TIG Insurance Company

and TIG Premier Insurance Company of equal protection of the


laws under US Const, Am XIV and Const 1963, art 1, § 2, or


violated the Uniformity of Taxation Clause of Const 1963, art


9, § 3.    Absent an imposition on a fundamental right or a


suspect   class,    tax   legislation     is   reviewed     to   determine


whether its classifications bear a rational relation to a


legitimate    state    purpose.      We    conclude       that   the    1988


amendments of the retaliatory tax, which changed the tax


calculation, are rationally related to the legitimate state


purpose of promoting the interstate business of domestic


insurers, the same legitimate purpose behind the retaliatory


tax itself.    Thus, the amendments of the retaliatory tax do

not violate equal protection, and also do not violate the


Uniformity of Taxation Clause.          Accordingly, the judgment of


the Court of Appeals is reversed.

                                   I


     This case involves the retaliatory tax that Michigan


imposes on foreign insurers doing business in Michigan. Under


the retaliatory tax, when an insurer’s state of incorporation


imposes a larger aggregate tax burden on a Michigan insurer


doing business in that state than Michigan imposes on a

company from that state doing business in Michigan, the


foreign   insurer     must   pay   Michigan     a   tax    equal   to    the

difference in the aggregate tax burdens.             See MCL 500.476a.

Thus, to compute the retaliatory tax due from a foreign


insurer, if any, Michigan tallies all the taxes, fines,


penalties, and other burdens it otherwise imposes on the


foreign insurer doing business in Michigan.                Michigan then


tallies the burden a hypothetical Michigan insurer would pay


                                   2

to that insurer’s home state were the hypothetical Michigan


insurer doing the same amount of business there. If the other


state’s total burden on the hypothetical Michigan insurer


doing the same amount of business in that state would be


larger    than    the   burden   Michigan   imposed      on   the   foreign


insurer, the actual burden Michigan imposes is subtracted from


the other state’s burden on the hypothetical insurer, and the


difference is the retaliatory tax the foreign insurer owes


Michigan.    These taxes have been common in insurance taxation


since the nineteenth century, see Western & Southern Life Ins


Co v State Bd of Equalization, 451 US 648, 668; 101 S Ct 2070;


68 L Ed 2d 514 (1981), and Michigan has had a form of a

retaliatory tax since 1871.         See 1871 PA 80, § 4 (adding what


was then § 28 to the insurance code). 


     Until 1987, the retaliatory tax was one of two taxes

imposed on foreign insurers.        The other was the premiums tax,


MCL 500.440, repealed by 1987 PA 261, which taxed a percentage


of the insurers’ business.          However, in 1987, the Court of


Appeals held that the premiums tax violated equal protection,


and struck it as unconstitutional.          See Penn Mut Life Ins Co


v Dep’t of Licensing & Reg, 162 Mich App 123, 130-133; 412

NW2d 668 (1987).        After the Court of Appeals decision in Penn


Mutual, which was not appealed to this Court, the Legislature

revised     the    Michigan    Insurance    Code   tax    provisions     by

repealing    the    premiums     tax,   subjecting    foreign       insurers


instead to the Single Business Tax, MCL 208.1 et seq., and


repealing and reenacting the retaliatory tax.                 See 1987 PA


261, 262. The new retaliatory tax, MCL 500.476a, mirrored the


prior retaliatory tax. However, the revision added subsection


                                    3

(2), stating that “[T]he purpose of this section is to promote


the interstate business of domestic insurers by deterring


other states from enacting discriminatory or excessive taxes.”


     In 1988, actual revenue from insurance taxes was below


the level of projected revenue the Legislature had relied upon


in enacting 1987 PA 261 and 262.           One of the reasons that


revenue was lower than expected was that foreign insurers were


including assessments paid to private insurance associations


and facilities, such as the Worker’s Compensation Placement


Facility, among their Michigan burdens when calculating their


retaliatory taxes.     When these assessments were included in


the foreign insurers’ Michigan burden, their Michigan burden

grew larger, and any differences between the Michigan burden


and the burden the insurers’ home states imposed shrank.            The


result was less retaliatory tax revenue.

        After these facts were clear, the Legislature enacted


1988 PA 349.      This provision did not affect the retaliatory


tax’s    scope.     Instead,   it   only   changed   the   method    of


calculating the tax by providing that payments to private


insurance associations and facilities are not counted as part


of the Michigan burden when calculating retaliatory taxes.

The resulting statute provides:


             (5) Any premium or assessment levied by an

        association or facility, or any premium or

        assessment of a similar association or facility

        formed under a law in force outside this state, is

        not a burden or special burden for purposes of a

        calculation under section 476a, and any premium or

        assessment paid to an association or facility shall

        not be included in determining the aggregate amount

        a foreign insurer pays to the commissioner under

        section 476a.


             (6) As used in this section, “association or

        facility” means an association of insurers created


                                    4

        under this act and any other association or

        facility formed under this act as a non-profit

        organization of insurer members, including, but not

        limited to, the following:


             (a)   The  Michigan   worker’s  compensation

        placement facility created under [MCL 500.2301 et

        seq.]


             (b) The Michigan basic property insurance

        association created under [MCL 500.2901 et seq.]


             (c)   The  catastrophic   claims          association

        created under [MCL 500.3101 et seq.]


             (d)   The   Michigan   automobile  insurance

        placement facility created under [MCL 500.3301 et

        seq.]


             (e) The Michigan life and health insurance

        placement facility created under [MCL 500.7701 et

        seq.]


             (f) The property and casualty guaranty

        association created under [MCL 500.7901 et seq.]

        [MCL 500.134(5), (6).][1]


Hence, payments to these and other similar facilities are not


part of the Michigan burden on foreign insurers, and such


payments required by other states cannot be considered part of

those states’ burden when calculating retaliatory taxes.


        The dispute in this case originally involved plaintiffs’


retaliatory tax returns for 1990, 1991, and 1996.                   In those

years,     plaintiffs   had   made        payments    to     the    Worker’s


Compensation Placement Facility, the Basic Property Insurance

Association, and the Automobile Insurance Placement Facility.

Subsections 134(5) and (6), however, required plaintiffs to


exclude    those   payments   from    their    Michigan      burdens    when

calculating     the   retaliatory     tax    they    owed.         Plaintiffs

initially excluded these payments from their Michigan burden



    1
      The Michigan Assigned Claims Facility created under MCL

500.3171 was subsequently added to the statute as subsection

6(g). See 1990 PA 256.

                                     5

and fully paid their retaliatory tax for each year.                Later,


though,   they    filed   amended   returns     that    included   these


payments in their Michigan burdens, claiming that requiring


them to exclude the payments violated the Equal Protection


Clauses of the state and federal constitutions, as well as the


Uniformity of Taxation Clause of the Michigan Constitution.


Plaintiffs,      therefore,   sought     a   refund    of   the   alleged


unconstitutional     overcharge.         Defendant,    however,    denied


refunds for all three years.


     Plaintiffs appealed the denial of refunds to the Michigan


Court of Claims, which consolidated their cases. The Court of


Claims held that MCL 500.134(5) violates equal protection

because it was enacted to raise revenue rather than to deter


other states from imposing discriminatory or excessive taxes


on Michigan insurers doing business in those other states.

Also, the court held that plaintiffs’ 1990 and 1991 claims

were time-barred by MCL 205.27a(6).            The court, therefore,


ordered defendant to pay plaintiffs refunds consistent with


their amended 1996 retaliatory tax returns.


     Both parties appealed, and the Court of Appeals affirmed.


That Court believed that when the Legislature revised the

retaliatory tax in 1987, the Legislature did not intend to


change the definition of “burden,” and later did so only

because revenues did not meet expectations.             Thus, the Court

concluded that equal protection was violated because it was


“abundantly clear that 1988 PA 349 was enacted as a stop-gap


measure to raise funds in response to a projected shortfall in


insurance tax revenues.         This is not a valid reason for


discriminating against foreign insurers.”             237 Mich App 219,


                                    6

230; 602 NW2d 839 (1999).       The Court of Appeals also affirmed


the Court of Claims conclusion that plaintiffs’ 1990 and 1991


claims were time-barred, leaving plaintiffs with a judgment


for refunds for 1996. Defendant appealed the Court of Appeals


conclusion that 1988 PA 349 violates equal protection, we


granted leave, 463 Mich 905 (2000), and we now reverse.


                                     II


     The     United    States       Supreme   Court    addressed       the


constitutionality of retaliatory taxes in Western & Southern


Life Ins Co v State Bd of Equalization, supra.              In that case,


California    had     adopted   a     retaliatory     tax    similar    to


Michigan’s,     and    an   Ohio      corporation     challenged       its

constitutionality.       The Supreme Court noted that several


provisions of the constitution generally limit states’ ability


to regulate foreign corporations, but under the Commerce

Clause, US Const, art 1, § 8, Congress has delegated insurance


regulation to the states, see 15 USC 1011 et seq., and the


privileges and immunities clause, US Const, art 4, § 2, does


not apply to corporations, see Hemphill v Orloff, 277 US 537,


548-550; 48 S Ct 577; 72 L Ed 978 (1928), leaving only the


Equal Protection Clause as a basis for the challenge. Western

& Southern at 656.      After reviewing its prior decisions, the


Court concluded that a state’s authority to treat foreign

corporations differently than domestic corporations should be

upheld if the different treatment bears a rational relation to


a legitimate state purpose. California’s retaliatory tax, the


Court held, had the legitimate state purpose of promoting


domestic insurers in other states by discouraging other states


from excessively taxing domestic insurers.                  The tax was


                                     7

reasonably related to that purpose because the California


Legislature could have believed that the tax would “induce


other States to lower the burdens on California insurers in


order    to       spare    their    domestic          insurers   the    cost    of   the


retaliatory tax in California.”                         Id. at 672.           Thus, the


Supreme Court confirmed that retaliatory taxes do not violate


equal protection, and do not violate the constitution.


        In        light    of      Western        &     Southern,       the     general


constitutionality of Michigan’s retaliatory tax is clear. The


question in this case surrounds 1988 PA 349.                           That amendment


of   Michigan’s            retaliatory          tax      did     not     change       the


classification            plan   drawn     by     Michigan’s     retaliatory         tax.

Rather, it only changed the calculation method of a foreign


insurer’s          Michigan      burden    by     providing      that    payments      to


certain private insurance associations and facilities are not

included in the burden.                  Whether the amendment violates the


state        or    federal       Equal     Protection       Clauses,      which       are


coextensive, see Armco Steel v Dep’t of Treasury, 419 Mich


582, 591; 358 NW2d 839 (1984), or Michigan’s Uniformity of


Taxation Clause, which is not discernably different from equal


protection in cases involving tax statutes, see id. at 592,

presents a question of law.                     We review questions of law de


novo.        See Tolksdorf v Griffith, 464 Mich 1; ___ NW2d ___

(2001).

        As Western & Southern declared, rational basis review


applies in challenges of retaliatory taxes.                         “Rational basis


review does not test the wisdom, need, or appropriateness of


the legislation, or whether the classification is made with


‘mathematical nicety,’ or even whether it results in some


                                             8

inequity when put into practice.”             Crego v Coleman, 463 Mich


248, 260; 615 NW2d 218 (2000).          Rather, it tests only whether


the   legislation      is   reasonably       related    to    a     legitimate


governmental        purpose.      The        legislation          will      pass


“constitutional        muster   if    the    legislative       judgment       is


supported by any set of facts, either known or which could


reasonably be assumed, even if such facts may be debatable.”


Id. at 259-260.         To prevail under this standard, a party


challenging a statute must overcome the presumption that the


statute is constitutional.           Thoman v Lansing, 315 Mich 566,


576; 24 NW2d 213 (1946).              Thus, to have the legislation


stricken,     the   challenger       would    have     to    show    that    the

legislation is based “solely on reasons totally unrelated to


the pursuit of the State’s goals,” Clements v Fashing, 457 US


957, 963; 102 S Ct 2836; 73 L Ed 2d 508 (1982), or, in other

words, the challenger must “negative every conceivable basis


which might support” the legislation. Lehnhauser v Lake Shore


Auto Parts Co, 410 US 356, 364; 93 S Ct 1001; 35 L Ed 2d 351


(1973).


      In this case, plaintiffs claim that Michigan has exceeded


its authority to treat foreign corporations differently than

domestic corporations because the different treatment does not


bear a rational relation to a legitimate state purpose.                     This

is so, plaintiffs claim, because 1988 PA 349, which excluded

certain     payments    from    plaintiffs’      Michigan         burdens    for


retaliatory tax calculations, converted the retaliatory tax


from a tax intended to discourage other states from imposing


excessive levels of taxation on Michigan insurers to a tax


designed to raise revenue at the expense of foreign insurers.


                                      9

Thus,    plaintiffs    argue       that    the   1988    amendment     of   the


retaliatory tax cannot be constitutional.


        Initially, we emphasize that Michigan’s retaliatory tax


has never, either before or after the 1988 amendment, treated


foreign insurers as a single class.                 Rather, the subset of


foreign insurers that must pay Michigan any retaliatory tax is


actually      determined      by     the     laws       of   other    states.


Specifically, the subset is determined by the laws of those


states that impose more onerous burdens on Michigan insurers


than Michigan imposes on insurers from those states.                         The


Supreme Court made this same observation about the retaliatory


tax     it   held   constitutionally        permissible      in    Western    &

Southern, stating that “[t]he retaliatory tax is not imposed


on foreign corporations qua foreign corporations, as would be


expected were the purpose of the tax to raise revenue from

noncitizens; rather, it is imposed only on corporations whose


home States impose more onerous burdens on California insurers


than California otherwise would impose on those corporations.”


Western & Southern at 670, n 23. 


        Absent a change in the legislative classification, we


cannot agree with plaintiffs’ claim that a 1988 amendment

converted the retaliatory tax into a tax designed to raise


revenue      from   foreign    insurers.         Rather,     the     selective

imposition of the tax on only those insurers incorporated in

states that tax Michigan insurers more heavily than Michigan


taxes them indicates that the purpose of the legislation is to


pressure those states to relieve the tax burden on Michigan


insurers doing business in those states.                This is the precise


purpose the Legislature stated for adopting the retaliatory


                                      10

tax, see MCL 500.476a(2), and the same purpose the Supreme


Court found “not difficult to discern” in Western & Southern


at 668.      Further, in Western & Southern, the Supreme Court


held, without discussing the means a state may adopt to


calculate the retaliatory tax, that states are reasonable to


suppose that a retaliatory tax will induce other states to


lower their insurance tax rates.             Id. at 672.     Even with the


change      in   the   method    of   calculation      of   the   burden     of


Michigan’s retaliatory tax, the tax remains rationally related


to this legitimate purpose, and plaintiffs cannot prevail.


      However, even presuming that 1988 PA 349 can somehow be


viewed separately from Michigan’s retaliatory tax structure,

the Legislature could have rationally decided to exclude


payments to certain insurance associations and facilities from


Michigan’s retaliatory tax burden.                 The three facilities in

this case, the Worker’s Compensation Placement Facility, the


Automobile       Insurance      Placement    Facility,      and   the   Basic


Property Insurance Association, exist to provide insurance


coverage to insureds that may be unable to “procure the

insurance through ordinary methods.”                 MCL 500.2301(a); see


also MCL 500.3301(a) and MCL 500.2925 (describing eligibility

for Basic Property Insurance). Because high risk or otherwise


uninsurable insureds are provided for outside the normal

insurance market, insurers doing business in Michigan need not

bear the risks of insuring them, at least arguably benefitting


such insurers. The Legislature could have believed that if it


did   not    require    payments      to   these    facilities    not   to   be


excluded from the retaliatory tax burden, other states would


not be discouraged from establishing similar facilities to


                                       11

grant the same benefit to insurers doing business in those


states, including Michigan insurers. Indeed, if another state


had facilities and associations that paralleled the facilities


and    associations         mentioned    in      MCL     500.134,        then   any


retaliatory tax that insurers from the other state may owe


Michigan would not be affected by 1988 PA 349 at all.2                      Again,


then, the Legislature could have had the permissible purpose


of promoting domestic insurers abroad, the same purpose it


stated in the retaliatory tax legislation.                  Because it is at


least debatable that excluding payments to such facilities


from Michigan’s retaliatory tax burden would encourage other


states to establish such facilities, the 1988 amendment is

rationally      related     to   a   legitimate        purpose,     and    is   not


constitutionally infirm.

       Plaintiffs maintain, however, that the 1988 amendment

conflicts with the Supreme Court’s decision in Western &


Southern because it was designed entirely “to generate revenue


at    the   expense    of    out-of-state      insurers.”           As    we    have


explained, the tax does not affect foreign insurers as a


single      class.     Further,      though,     plaintiffs       overlook      the


presumption of constitutionality, and cannot account for the

legitimate bases of the legislation. Instead, plaintiffs seek


one    possible       illegitimate       basis     for     the    legislation.

Plaintiffs’ approach conflicts with Supreme Court precedent

because they have not shown that the legislation rests “solely


on reasons totally unrelated to the pursuit of the State’s



        2
        We note that several other states similarly exclude

payments to special associations and facilities from their

retaliatory tax burdens. See, e.g., Conn Gen Stat, 12-211;

215 Ill Comp Stat, 5/444.1(2).

                                        12

goals . . . .”       Clements at 963.           Because there is at least


one    conceivable       rational     basis     that   might   support     the


legislation,        plaintiffs      have        not    “negative[d]      every


conceivable basis which might support” it, and cannot prevail.


Lehnhauser at 364.


       In response, plaintiffs have argued that they need not


negate every conceivable basis for the legislation.                   This is


because, they claim, in equal protection cases, the Court


“need not . . . accept at face value assertions of legislative


purposes, when an examination of the legislative scheme and


its history demonstrates that the asserted purpose could not


have    been   a    goal    of   the    legislation.”          Weinberger    v

Weisenfeld, 420 US 636, 648, n 16; 95 S Ct 1225; 43 L Ed 2d


514 (1975).        However, as discussed, an examination of the


legislative scheme in this case indicates that the asserted

purpose could well have been the goal of the legislation. For


plaintiffs to prevail, they must negate every conceivable


basis of the legislation.           Because plaintiffs have not, they


cannot prevail.


       Finally, plaintiffs attempt to distinguish this case from


Western & Southern by arguing that the tax revenue generated

in that case was “relatively modest,” see Western & Southern


at 669, but under the amendment, Michigan’s retaliatory tax

immodestly generates over a third of Michigan’s insurance tax

revenue.       As    a     preliminary       point,    the   fact   that    the


retaliatory tax raises revenue does not prove that raising


revenue was the state’s goal in adopting the tax. On rational


basis    review,     this     Court      only     considers    whether      the


legislation is reasonably related to a legitimate purpose, and


                                       13

does not test for “some inequity when [the legislation is] put


into practice.”       Crego at 260.          But further, though the


Western & Southern Court’s statement strikes us simply as an


observation and not, as plaintiffs contend, as the linchpin of


the Court’s analysis, even if it is an important point, this


case is distinguishable.          Michigan’s retaliatory tax may


generate a third of Michigan’s insurance tax revenue, but the


Supreme Court did not state that the retaliatory tax it


approved raised a relatively modest amount of insurance tax


revenue, just that it raised a modest amount of revenue.            The


joint     appendix    shows     that     although   Michigan    raised


approximately $67 million annually in retaliatory taxes for

the years 1991 through 1995, for example, when compared with


Michigan’s overall tax revenue for that period, which ranged


from $10.5 billion to $17.2 billion annually, see Michigan

Dep’t of Treasury, Annual Report of the State Treasurer

(1996), p 25, retaliatory tax revenue is certainly “relatively


modest.”      Thus, even if retaliatory tax revenue must be


modest, as compared with Michigan’s overall tax revenue,


retaliatory     tax   revenue    is    not    immodestly   large,   and


plaintiffs again have not shown Michigan’s retaliatory tax or

1998 PA 349 to be unconstitutional.          Again, plaintiffs cannot


prevail.

                                  III

        In conclusion, neither Michigan’s retaliatory tax nor the


1988 amendment of that tax violates the state or federal


constitutions, which are coextensive in their equal protection


provisions.     The retaliatory tax, and the amendments of it,


are rationally related to the legitimate governmental purpose


                                  14

of promoting Michigan insurers in other states.         Because the


tax and its amendment do not violate equal protection, they


also do not violate the Michigan Constitution’s Uniformity of


Taxation Clause, which is not discernibly different from the


Equal Protection Clause when the constitutionality of a tax


statute is being reviewed.      Plaintiffs have not carried their


considerable burden, and the judgment of the Court of Appeals


is reversed.

     CORRIGAN , C.J., and WEAVER , TAYLOR , YOUNG , and MARKMAN , JJ.,

concurred with CAVANAGH , J.





                                 15

                  S T A T E    O F     M I C H I G A N


                              SUPREME COURT





TIG INSURANCE COMPANY, INC.,

     Plaintiff-Appellee,

v                                                         No. 115915

REVENUE DIVISION, DEPARTMENT
OF TREASURY, STATE OF MICHIGAN,
     Defendant-Appellant.
____________________________________
TIG PREMIER INSURANCE COMPANY, INC.,
     Plaintiff-Appellee,

v                                                         No. 115916
REVENUE DIVISION, DEPARTMENT
OF TREASURY, STATE OF MICHIGAN,
     Defendant-Appellant.
____________________________________
KELLY, J. (concurring).
     While    I   agree   with   the    conclusion   reached   by   the


majority, I write separately to state my disagreement with

certain of the reasoning it employs.            Whereas the majority


articulates what would be legitimate purposes for adoption of


the amendment, it completely ignores the evidence presented by


plaintiffs.       This evidence throws into doubt whether the


Legislature's actual purpose was legitimate, as it has to be


in order to conform with precedent from the United States

Supreme Court.


       The states cannot impose more onerous taxes or other


burdens on foreign corporations than on domestic corporations,


unless they bear a rational relation to a legitimate state


purpose.       Western & Southern Life Ins Co v State Bd of


Equalization, 451 US 648, 667-668; 101 S Ct 2070; 68 L Ed 2d


514 (1981).       A retaliatory tax act, like that in question,


makes of foreign corporations a special classification of


taxpayers. 


       In    evaluating   the    constitutionality            of    a   challenged


classification, we must consider two separate issues.                       First,

whether the statute in question advances a legitimate purpose

and,    second,    whether,       in   passing      it,       the       Legislature


reasonably could have believed that the classification would

promote that purpose.           Id. at 668.      Only after a legitimate

purpose is ascertained does a rational relationship between


the    classification     and     purpose      become         relevant.         See

Metropolitan Life Ins Co v Ward, 470 US 869, 881; 105 S Ct

1676; 84 L Ed 2d 751 (1985).


       While this two-step inquiry does not require that the

Legislature articulate its purpose in forming the challenged


classification,      it   does     require     that       a    conceivable       or


reasonable purpose exist.          Nordlinger v Hahn, 505 US 1, 15;


112 S Ct 2326; 120 L Ed 2d 1 (1992).                      The United States


Supreme Court rejected the proposition that promotion of


domestic industry is always a legitimate purpose, reasoning


that    it     "eviscerate[s]      the      Equal   Protection             Clause."

Metropolitan Life, supra at 882.              The Court stated that, if

                                       2

this proposition were accepted, any discriminatory tax would


be   upheld   if    it    could   be   shown    that   it    was    reasonably


"intended to benefit domestic business."               Id.


      This appears to be the rationale used by the majority in


upholding the amendment at issue.                 The majority does not


discuss the evidence presented by plaintiffs or how this


evidence is insufficient to overcome the presumption of the


amendment's constitutionality.              Rather, it concludes that the


purpose of the amendment may have been the same as the purpose


stated in the underlying retaliatory tax act.                      That was to


promote domestic insurers abroad, a permissible purpose.

      It seems unlikely that was the Legislature's purpose

because, as stated by the majority, the amendment appeared


when the Legislature discovered that retaliatory tax revenue

was far less than expected.                  See slip op at p 4.            If


sufficient evidence had been presented by plaintiffs that the


purpose was to cover the shortfall, the legitimate purposes

opined by the majority would not necessarily carry the day.


      Therefore, this Court should state explicitly that the

rational basis test, while deferential, does not ensure that


all taxation legislation will pass constitutional muster.                   In

this case, plaintiffs presented evidence that employees from


the Department of Management and Budget and the Department of


Treasury advocated the amendment for a purpose that was

impermissible.           This     evidence     does    not    overcome      the


presumption        of    constitutionality       because      it     does   not

explicitly demonstrate that the "classification is a hostile



                                       3

and oppressive discrimination."            Lehnhausen v Lake Shore Auto


Parts Co, 410 US 356, 364; 93 S Ct 1001; 35 L Ed 2d 351


(1973).    But this is not to say that, in another case, the


burden in overcoming the presumption of constitutionality


cannot be met.


      In failing to address this fact, it appears that the


majority     would    uphold   any    classification,    regardless      of


evidence demonstrating an actual improper purpose for it. The


majority's scant treatment of the evidence presented seems to


eliminate any possibility of future litigants demonstrating an


improper purpose for a challenged classification.               It reduces

the   test     for    evaluating      the    constitutionality      of    a

classification to no more than abstract judicial imaginings


with little or no apparent basis in fact.                 Moreover, it

elevates a plaintiff's burden of proof to insurmountable

heights.     Such reasoning is contrary to the United States


Supreme    Court     precedent   of   Western    &   Southern    Life    and

Metropolitan Life.





                                      4