Racing Ass'n of Central Iowa v. Fitzgerald

TERNUS, Justice.

When this case was initially before our court, we held that a statute taxing gross gambling receipts generated at racetracks at a rate nearly twice the rate imposed on gross gambling receipts generated on riverboats violated the United States Constitution and the Iowa Constitution. See Racing Ass’n v. Fitzgerald, 648 N.W.2d 555, 562 (Iowa 2002) (reversing district court’s summary judgment for the State) [hereinafter “RACI”]. On certiorari to the United States Supreme Court, that part of our decision holding the statute violated the Equal Protection Clause of the United States Constitution was reversed. See Fitzgerald v. Racing Ass’n, 539 U.S. 103, -, 123 S.Ct. 2156, 2161, 156 L.Ed.2d 97, 105 (2003). The Supreme Court then remanded the case “for further proceedings not inconsistent with [its] opinion.” Id. Although this court’s ruling that the statute also violated the equality provision contained in the Iowa Constitution was not reviewed by the Supreme Court, id. at -, 123 S.Ct. at 2159, 156 L.Ed.2d at 102, we take the opportunity on remand to reconsider our prior decision on the state constitution claim in light of the Court’s ruling on the federal constitution issue.

After giving due consideration to the Court’s analysis and decision, we find no basis to change our earlier opinion that the differential tax violates article I, section 6 of the Iowa Constitution. Therefore, we reverse the trial court’s contrary ruling and remand this case for a determination of the appropriate relief.

I. Review of Pertinent Background Facts and Proceedings.

This action was commenced by the appellant, Racing Association of Central Iowa (RACI), to enjoin the collection of that portion of taxes it was required to pay on adjusted gross receipts from gambling in excess of the tax charged to “excursion boats” on such receipts. See generally 1989 Iowa Acts ch. 67 (authorizing gambling on “excursion boats”). RACI claimed the tax was unconstitutional under the Equal Protection Clauses of the United States and Iowa Constitutions.

RACI operates a pari-mutuel horse racetrack and casino known as Prairie Meadows Racetrack and Casino in Altoo-na, Iowa. Appellant, Dubuque Racing Association, Ltd., which intervened in RACI’s *4lawsuit, operates a pari-mutuel dog racetrack and casino known as Dubuque Greyhound Park and Casino in Dubuque, Iowa. Another intervenor, appellant Iowa West Racing Association, holds the gaming license and owns the slot machines for Bluffs Run Racetrack and Casino in Council Bluffs, Iowa. The fourth appellant, Iowa Greyhound Association, intervened to protect the interests of its members, greyhound owners who race at the Dubuque and Council Bluffs dog tracks.

The tax statute challenged by these parties is Iowa Code section 99F.11 (1999), which imposes a tax “on the adjusted gross receipts received annually from gambling games.” The maximum rate is twenty percent. See Iowa Code § 99F.11. The statute has an exception, however, for the “adjusted gross receipts ... from gambling games at racetrack enclosures.” Id. The tax rate on racetrack gambling receipts began at twenty-two percent in 1997, and has automatically increased by two percent each year to a maximum rate of thirty-six percent in 2004. See id.

In our first consideration of this case, we held this differential tax violated the Equal Protection Clause of the United States Constitution and article I, section 6 of the Iowa Constitution. See RACI, 648 N.W.2d at 562.1 As already mentioned, the United States Supreme Court reversed our decision to the extent it rested on federal constitutional grounds. See Fitzgerald, 539 U.S. at -, 123 S.Ct. at 2161, 156 L.Ed.2d at 105. It did not, however, consider the legality of the differential tax rates under the Iowa Constitution. Thus, the case was remanded “for further proceedings not inconsistent with [the Court’s] opinion.” Id.

Notwithstanding the fact the Supreme Court did not discuss the validity of the statute under the Iowa Constitution, we find it appropriate to reconsider our ruling on the state constitution claim since our court applied the federal rational basis test in determining whether the tax violated the Iowa Constitution. See RACI, 648 N.W.2d at 558. Thus, we again address, in light of the Court’s certiorari ruling on the federal claim, whether section 99F.11 violates the Iowa equality provision. See generally Chicago & N.W. Ry. v. Fachman, 255 Iowa 989, 996, 125 N.W.2d 210, 214 (1963) (labeling article I, section 6 of the Iowa Constitution the “ ‘equality’ provision”); Sperry & Hutchinson Co. v. Hoegh, 246 Iowa 9, 19, 65 N.W.2d 410, 416 (1954) (same). Before doing so, however, we consider the effect of the Court’s decision on our analysis.

II. Import of Supreme Court’s Decision that Statute Did Not Violate the Equal Protection Clause of the United States Constitution.

It is this court’s constitutional obligation as the highest court of this sovereign state to determine whether the challenged classification violates Iowa’s constitutional equality provision. Callender v. Skiles, 591 N.W.2d 182, 187 (Iowa 1999) (noting that while “we have deemed the federal and state ... equal protection clauses to be identical in scope, import, and purpose[,] ... it is the exclusive prerogative of our court to determine the constitutionality of Iowa statutes challenged under our own constitution”); *5Bierkamp v. Rogers, 293 N.W.2d 577, 581 (Iowa 1980) (noting that notwithstanding Supreme Court decision on issue, “[i]t is our constitutional obligation to determine whether the classifications drawn ... are violative of Article I, section 6, of our Constitution”); see William H. Rehnquist, The Supreme Court: How It was, How It Is 172 (1987) (stating “the question of the meaning of the Iowa Constitution is preeminently a question to be decided by the Supreme Court of Iowa, and not by some other court”); Robert F. Williams, Equality Guarantees in State Constitutional Law, 63 Tex. L.Rev. 1195, 1197 (1985) (“When faced with state constitutional equality claims, state courts should recognize their obligation to take these provisions seriously.”) [hereinafter “State Equality Guarantees ”]. While the Supreme Court’s judgment on the constitutionality of Iowa’s disparate tax rates under the federal Equal Protection Clause is persuasive, it is not binding on this court as we evaluate this law under the Iowa Constitution. See Callender, 591 N.W.2d at 187; Bierkamp, 293 N.W.2d at 579.

Two methodologies have been identified for an independent analysis of state equal protection claims: “Under the first, the state court adopts the federal frame of analysis but applies those constructs independently. Under the second, courts reject the federal constructs and apply their own analytical frameworks.” State Equality Guarantees, 63 Tex. L.Rev. at 1219 (footnote omitted). In determining the proper analysis here, it is appropriate to consider both methodologies.

A. Independent analysis. We begin with the second approach — applying an independently crafted analysis. Notwithstanding the broad statement made by this court in its initial opinion that we will apply the same analysis under the state equal protection provision as is applied under the federal Equal Protection Clause, this court has always reserved to itself the ability to employ a different analytical framework under state constitutional provisions. See, e.g., Bowers v. Polk County Bd. of Supervisors, 638 N.W.2d 682, 689 (Iowa 2002) (“We usually deem the federal and state equal protection clauses to be identical in scope, import, and purpose.” (Emphasis added.)); In re Interest of C.P., 569 N.W.2d 810, 811 (Iowa 1997) (“Typically, we deem the federal and state due process and equal protection clauses to be identical in scope, import, and purpose.” (Emphasis added.)); Krull v. Thermogas Co., 522 N.W.2d 607, 614 (Iowa 1994) (“In equal protection challenges based on the federal and Iowa Constitutions, we usually interpret both federal and state equal protection provisions the same.” (Emphasis added.)); Exira Cmty. Sch. Dist. v. State, 512 N.W.2d 787, 792-93 (Iowa 1994) (‘We usually deem the federal and state due process and equal protection clauses to be identical in scope, import, and purpose.” (Emphasis added.)). The implication of these cases is that while we will generally apply the same analysis to federal and state equal protection claims, this court has not foreclosed the possibility that there may be situations where differences in the scope, import, or purpose of the two provisions warrant divergent analyses. See generally State Equality Provisions, 63 Tex. L.Rev. at 1207-08 (noting the distinction between federal equal protection and “Jacksonian [ejquality [provisions”).2

*6Despite this court’s right to fashion its own test for examining claims brought under our state constitution, we do not think this case is the proper forum to consider an analysis that might be more compatible with Iowa’s constitutional language. We decline to do so here because the racetracks did not propose in their initial briefing that the test to be applied to their claim under the Iowa Constitution was any different than that applied under the federal Equal Protection Clause. Therefore, it is prudent to delay any consideration of whether a different analysis is appropriate to a case in which this issue was thoroughly briefed and explored. See In re Detention of Garren, 620 N.W.2d 275, 280 n. 1 (Iowa 2000) (refusing to deviate from federal analysis in considering state constitutional claim because appellant “ha[d] suggested no legal deficiency in the federal principles ..., nor ha[d] he offered an alternative test or guidelines”).

B. Independent application of federal test. That brings us to the alternative manner in which this court might exercise its obligation to rule upon the state constitutional claim: by applying federal principles independently. This approach is nothing new. As noted above, this court ruled many years ago that federal decisions are persuasive, but not binding, on this court in its consideration of claims based on the Iowa Constitution. See Bierkamp, 293 N.W.2d at 579; accord State v. Cline, 617 N.W.2d 277, 283 (Iowa 2000) (refusing to adopt federal good faith exception to exclusionary rule for searches that violate Iowa constitution), overruled in part on other grounds by State v. Turner, 630 N.W.2d 601, 606 n. 2 (Iowa 2001). It follows, then, that this court’s independent application of the rational basis test might result in a dissimilar outcome from that reached by the Supreme Court in considering the federal constitutional claim. See State Equality Guarantees, 63 Tex. L.Rev. at 1219 (“Courts that apply the federal constructs independently ... often reach results that directly conflict with those reached by the federal courts.”); William J. Brennan, Jr., State Constitutions and the Protection of Individual Rights, 90 Harv. L.Rev. 489, 500 (1977) (“[E]xamples abound where state courts have independently considered the merits of constitutional arguments and declined to follow opinions of the United States Supreme Court they find unconvincing, even where the state and federal constitutions are similarly or identically phrased.”) [hereinafter “Brennan”]. This result is particularly possible in view of “the ill-defined parameters of the equal protection clause.” Miller v. Boone County Hosp., 394 N.W.2d 776, 781 (Iowa 1986); see also Chicago & N.W. Ry., 255 Iowa at 996, 125 N.W.2d at 214 (noting, in considering state and federal equal protection claims, “[w]hile the general rules applicable in such cases seem pretty well settled, as is so often the case the difficulty arises in their application”).

Our court’s decision in Bierkamp illustrates this proposition. In Bierkamp, we acknowledged Iowa’s g-uest statute did not violate the Equal Protection Clause of the Fourteenth Amendment in view of a United States Supreme Court decision upholding a similar statute against an equal protection challenge and the Court’s more recent dismissal of a series of appeals on the same issue for want of a substantial federal question. 293 N.W.2d at 579. Notwithstanding the validity of the statute under the federal constitution, our court, *7applying the same analysis as that used by the Supreme Court, held the guest statute violated article I, section 6 of the Iowa Constitution. Id. at 582.

Based on our prior precedents and the sovereign nature of our state and its constitution, our court has an obligation to evaluate independently the validity — under the Iowa Constitution — of the differential tax rates imposed on excursion boats and racetracks. See Brennan, 90 Harv. L.Rev. at 502 (“[T]he decisions of the Court are not, and should not be, dispositive of questions regarding rights guaranteed by counterpart provisions of state law.”). When we independently consider this issue, we arrive at a conclusion different from that reached by the Supreme Court under the federal constitution.

III. Governing Legal Principles.

We start our review of the challenged legislation with a statement of the governing principles of law. The Supreme Court has stated that the Equal Protection Clause “is essentially a direction that all persons similarly situated should be treated alike.” City of Cleburne v. Cleburne Living Ctr., 473 U.S. 432, 439, 105 S.Ct. 3249, 3254, 87 L.Ed.2d 313, 320 (1985); accord Chicago & N.W. Ry., 255 Iowa at 1002, 125 N.W.2d at 217 (“All persons in like situations should stand equal before the law. No favoritism should be tolerated.”). Whether this ideal has been met in the context of economic legislation is determined through application of the rational basis test. See Fitzgerald, 539 U.S. at -, 123 S.Ct. at 2159, 156 L.Ed.2d at 103. In its consideration of the case at hand, the Court described the rational basis test as follows:

“[T]he Equal Protection Clause is satisfied so long as there is a plausible policy reason for the classification, the legislative facts on which the classification is apparently based rationally may have been considered to be true by the governmental decisionmaker, and the relationship of the classification to its goal is not so attenuated as to render the distinction arbitrary or irrational.”

Id. (quoting Nordlinger v. Hahn, 505 U.S. 1, 11, 112 S.Ct. 2326, 2332, 120 L.Ed.2d 1, 13 (1992)). The Court has in the past more succinctly stated this standard as “whether the classifications drawn in a statute are reasonable in light of its purpose.” McLaughlin v. Florida, 379 U.S. 184, 191, 85 S.Ct. 283, 288, 13 L.Ed.2d 222, 228 (1964); accord College Area Renters & Landlord Ass’n v. City of San Diego, 50 Cal.Rptr.2d 515, 520 (Ct.App.1996) (“Although equal protection does not demand that a statute apply equally to all persons, it does require that persons similarly situated with respect to the legitimate purpose of the law receive like treatment.” (Original emphases omitted and emphasis added.)). It was this enunciation of the rational basis test that our court said in Bierkamp was appropriate for analyzing a claim based on the Iowa equality provision found in article I, section 6 of the Iowa Constitution. 293 N.W.2d at 580.

Based on these principles, this court must first determine whether the Iowa legislature had a valid reason to treat racetracks differently from riverboats when taxing the gambling revenue of these businesses. See Fitzgerald, 539 U.S. at -, 123 S.Ct. at 2159, 156 L.Ed.2d at 103 (requiring “ ‘a plausible policy reason for the classification’ ” (citation omitted)). In this regard, “the statute must serve a legitimate governmental interest.” Glowacki v. State Bd. of Med. Exam’rs, 501 N.W.2d 539, 541 (Iowa 1993). Moreover, the claimed state interest must be “realistically conceivable.” Miller, 394 N.W.2d at 779 (emphasis added).3 Our court must *8then decide whether this reason has a basis in fact.4 See Fitzgerald, 539 U.S. at -, 123 S.Ct. at 2159, 156 L.Ed.2d at 103 (requiring that legislature could rationally believe facts upon which classification was based are true). Finally, we must consider whether the relationship between the classification, i.e., the differences between racetracks and excursion boats, and the purpose of the classification is so weak that the classification must be viewed as arbitrary. See id. (requiring that “ ‘the relationship of the classification to its goal [not be] so attenuated as to render the distinction arbitrary or irrational’ ” (citation omitted)); accord Chicago Title Ins. Co. v. Huff, 256 N.W.2d 17, 29 (Iowa 1977) (requiring rational relationship between classification and a legitimate state purpose or governmental interest). This approach was followed by our court in Federal Land Bank v. Arnold, 426 N.W.2d 153 (Iowa 1988), where we said: “First we must examine the legitimacy of the end to be achieved; we then scrutinize the means used to achieve that end.” 426 N.W.2d at 156.

Our examination of this statute must also be guided by the general legal principles that control a court’s review of the constitutionality of a legislative enactment. These tenets are well established. “Statutes are cloaked with a strong presumption of constitutionality.” In re Detention of Morrow, 616 N.W.2d 544, 547 (Iowa 2000); accord Home Builders Ass’n v. City of West Des Moines, 644 N.W.2d 339, 352 (Iowa 2002) (“Taxing statutes are presumed to be constitutional.”). Therefore, a person challenging a statute shoulders a heavy burden of rebutting this presumption. In re Detention of Morrow, 616 N.W.2d at 547; Glowacki, 501 N.W.2d at 541. This burden includes the task of negating every reasonable basis that might support the disparate treatment. Home Builders Ass’n, 644 N.W.2d at 352. In summary, “ ‘[a] statute must clearly, palpably, and without doubt infringe upon the constitution before we will declare it unconstitutional’” Glowacki, 501 N.W.2d at 541 (citation omitted).

These rigorous standards have not, however, prevented this court from finding economic and social legislation in violation *9of equal protection provisions. See, e.g., Glowacki, 501 N.W.2d at 541-42 (statute limiting stays of disciplinary orders issued by board of medical examiners); Federal Land Bank, 426 N.W.2d at 157-58 (redemption periods for property sold at foreclosure sale); Miller, 394 N.W.2d at 781 (notice requirement for claims against local government); Bierkamp, 293 N.W.2d at 585 (guest statute); Gleason v. City of Davenport, 275 N.W.2d 431, 435 (Iowa 1979) (notice requirement for claims against municipalities); Chicago & N.W. Ry., 255 Iowa at 1004-05, 125 N.W.2d at 218-19 (wage payment statute); Sperry & Hutchinson Co., 246 Iowa at 24-25, 65 N.W.2d at 419 (issuance of trading stamps by certain retailers). Our prior cases illustrate that, although the rational basis standard of review is admittedly deferential to legislative judgment, “ ‘it is not a toothless one’ ” in Iowa. Mathews v. de Castro, 429 U.S. 181, 185, 97 S.Ct. 431, 434, 50 L.Ed.2d 389, 394 (1976) (citation omitted); accord Fed. Land Bank, 426 N.W.2d at 156 (recognizing the “deferential scrutiny” accorded the state “in the realm of economic policy and regulation,” but stating that “even in the economic sphere, a citizen’s guarantee of equal protection is violated if desirable legislative goals are achieved by the state through wholly arbitrary classifications or otherwise invidious discrimination”); Bierkamp, 293 N.W.2d at 581 (noting court’s “considerable deference to the judgment of the legislature ... is not, in and of itself, necessarily dispositive”). Indeed, this court’s meaningful review of social and economic legislation is mandated by our constitutional obligation to safeguard constitutional values by ensuring all legislation complies with those values. See Luse v. Wray, 254 N.W.2d 324, 327 (Iowa 1977) (holding it is for the judicial branch to determine whether another branch of government has exceeded its constitutional limitations); Davenport Water Co. v. Iowa State Commerce Co., 190 N.W.2d 583, 592 (Iowa 1971) (“[Questions relative to constitutionality of legislation ... stand as law issues determinable by the judiciary alone.”).

We turn now to a consideration of the Iowa taxing scheme in light of these principles.

IV. Discussion.

Although the State has advanced several reasons for the legislative classification challenged in this case, we focus our discussion primarily on those found satisfactory by the Supreme Court, as that is the reason for our reconsideration of the state constitutional claim. The Supreme Court viewed the issue as whether there was “rational support for the 20 percent/36 percent differential.” Fitzgerald, 539 U.S. at -, 123 S.Ct. at 2160, 156 L.Ed.2d at 104. It then concluded “[t]hat difference” was helpful to the riverboats because it (1) “encourage[d] the economic development of river communities [and] promote[d] riverboat history”; (2) “proteet[ed] the reliance interests of riverboat operators” who were accustomed to a twenty percent tax rate; and (3) “aid[ed] the financial position of the riverboats.” Id. We will address each suggested purpose separately.

A. Economic development of river communities and promotion of riverboat history. Our court does not accept the economic development of river communities and the promotion of riverboat history as a rational basis for the legislature’s distinction between excursion boats and racetracks. Although these are laudable legislative goals, “the legislative facts on which the classification is apparently based [cannot] rationally [be] considered to be true by the governmental decisionmaker,” as required by the Court’s articulation of the rational basis test. See id. at-, 123 *10S.Ct. at 2159, 156 L.Ed.2d at 103. We note initially that excursion boat gambling was never anticipated as solely a “river” activity so as to promote “river communities.” When the legislature authorized gambling on “excursion boats” in 1989, it was envisioned that these boats would be located on inland waters, such as lakes and reservoirs, as well as on the Mississippi River and Missouri River, the historical location of riverboats. See 1989 Iowa Acts ch. 67, § 7(1) (“The commission shall decide the number, location and type of excursion gambling boats licensed under this chapter for operation on the rivers, lakes, and reservoirs of this state.” (Emphasis added.)) (codified at Iowa Code § 99F.7(1) (1991)); id. § 7(13) (“An excursion gambling boat operated on inland waters of this state shall meet all the requirements of chapter 106.... ” (Emphasis added.)) (codified at Iowa Code § 99F.7(13) (1991)). Moreover, there is nothing peculiar about racetracks that prevents their location in river cities. In fact, two of the three communities in which racetracks are located — Dubuque and Council Bluffs — are river communities. See generally Miller, 394 N.W.2d at 779 (“ ‘For the purpose of ascertaining whether or not the classification is arbitrary and unreasonable, we must take into consideration matters of common knowledge and common report and the history of the times.’ ” (Citation omitted.)). The Dubuque racetrack is actually on an island in the Mississippi River. On the other hand, the excursion boat docked near Osceola, Iowa, is moored on a lake, not a river, and is certainly not located in a river community. In addition, one river community — Council Bluffs — has both a racetrack and an excursion boat, only blocks apart. So, to justify the differential tax treatment of these enterprises on the supposed connection of excursion boats to river communities and riverboat history and the absence of such a connection by racetracks is illogical.

We acknowledge “the overinclu-sive-underinclusive dichotomy is usually applied only as part of a strict scrutiny analysis.” Bierkamp, 293 N.W.2d at 584. But our court has stated, in holding legislation violative of the state constitution under the rational basis test, “that as a classification involves extreme degrees of overinclusion and underinclusion in relation to any particular goal, it cannot be said to reasonably further that goal.” Id. That is precisely the case here insofar as the differential tax is based on the promotion of river communities and riverboat history. Thus, this legislative purpose cannot withstand review under the rational basis standard. See Fed. Land Bank, 426 N.W.2d at 157-58 (holding discrimination in redemption periods was equal protection violation where class membership did not correlate with purported class distinctions drawn by legislature); Chicago & N.W. Ry., 255 Iowa at 997, 125 N.W.2d at 214 (“It is often said a reasonable classification is one which includes all who are similarly situated, and none who are not.”); Dunahoo v. Huber, 185 Iowa 753, 756, 171 N.W. 123, 124 (1919) (finding statute violated state constitution because classification made by legislature was unwarranted “where the evil to be remedied relates to members of one class quite as well as to another”); see also Ill. Sporting Goods Ass’n v. County of Cook, 845 F.Supp. 582, 591 (N.D.Ill.1994) (holding ordinance that prohibited location of gun shop within .5 miles of a school or public park was “under-inclusive in violation of the equal protection clause” because the ordinance contained exceptions to the ban that permitted certain businesses to continue to sell guns within the restricted geographical area); Callaway v. City of Edmond, 791 P.2d 104, 107-08 (Okla.Crim. *11App.1990) (finding state equal protection violation because ordinance prohibiting persons under eighteen years of age from entering any pool hall or similar establishment “sweeps too broadly” and “is not rationally related to the ultimate objective of regulating gambling”: “Singling out poolhalls or other similar businesses from all other amusement establishments is an act of discrimination, not policy.”); State ex rel. Boan v. Richardson, 198 W.Va. 545, 482 S.E.2d 162, 168 (W.Va.1996) (rejecting as legitimate basis for challenged classification that statute reducing workers’ compensation benefits upon receipt of old age insurance benefits under Social Security Act avoided duplication of benefits because the statute did not “in fact avoid[ ] ‘duplication of benefits’ ”).

Even if this court were to take a more expansive view of potential legislative purposes and assume the general assembly sought to promote economic development in general, the taxing scheme still suffers from an irrational classification. There is nothing in the record, nor is it a matter of common knowledge, that excursion boats are a superior economic development tool as compared to racetracks. To the contrary, it appears that both types of gambling enterprises have the potential to enhance the economic climate of the communities in which they are located. If we presume the legislature thought the promotion of gambling was in the economic interests of the general public, then we find no rational basis for distinguishing between gambling that takes place on a floating casino and gambling that occurs at a land-based casino. Regardless of the relative number of such establishments or the size of the city in which they are to be found, excursion boats and racetracks contribute in the same manner to the economy of the local area: they are both gambling enterprises generating gambling receipts that are indistinguishable in terms of the economic benefits to the local community. See Arneson v. State, 262 Mont. 269, 864 P.2d 1245, 1248-49 (Mont.1993) (holding statute violated equal protection clause of state constitution because the statutory classifications lacked a rational relationship to the asserted purpose of the legislation, noting “a classification must distinguish one class from another taking into consideration the purpose of the statute”).

B. Reliance interests of riverboat operators. We also find insufficient the suggestion that excursion boat operators had a reliance interest on a lower tax rate so as to justify their different treatment. The taxation fines are not drawn on the basis of when the affected gambling establishments first invested in slot machines or in their business. Rather, the taxation fines are drawn on the basis of where the slot machines are located, regardless of the time of investment.

We found a similar flaw in the statute challenged in our Federal Land Bank decision. In that case, a statute established different redemption periods after foreclosure based on the identity of the purchaser at the foreclosure sale. Fed. Land Bank, 426 N.W.2d at 155. If the property was purchased by a “member institution” (a lending institution belonging to the federal deposit insurance corporation, the federal savings and loan insurance corporation, or the national credit union administration), the redemption period was one year; in all other cases, the property could be redeemed within two years of the sale. Id. One asserted basis for this distinction was that non-member lenders did not have a stake in the community and would not have the incentive to make arrangements with the landowner to enable the owner to retain the homestead; a longer redemption period presumably supplied this incentive. Id. at 157. We rejected the concerns of *12mortgage lenders as a legitimate rationale for setting different redemption periods in the statute, however, noting “the distinc1 tion in redemption periods is triggered by the identity of the sheriffs sale purchaser; not the status of the institution or individual extending credit in the first instance.” Id. (emphasis added).

Similarly, here, the statute cannot be sustained on the basis of concerns that established businesses relied on the lower tax rates, because the differential tax is triggered not by whether the business engaged in gambling prior to the implementation of the new tax rates, but on whether the gambling takes place on a floating casino. Thus, this legislative purpose fails the rational basis test bécause the relationship of the classification to its goal is so attenuated as to render the distinction irrational. See id.; see also Coalition Advocating Legal Hous. Options v. City of Santa Monica, 88 Cal.App.4th 451, 105 Cal.Rptr.2d 802, 809 (Ct.App.2001) (holding restriction on occupancy of second residential unit to relatives or caretakers of residents of primary unit did not bear a rational relationship to legitimate legislative goal of minimizing population and traffic in residential districts); Ocala Breeders’ Sales Co. v. Fla. Gaming Ctrs., Inc., 731 So.2d 21, 27 (Fla.Dist.Ct.App.1999) (finding equal protection violation where statute required prospective licensee for pari-mutuel betting to hold a permit to race quarter horses, holding there was no rational relationship between this requirement and “ ‘the public purpose of benefiting thoroughbred horse breeding sales and related economic activities’ ”); DeCoste v. City of Wahoo, 255 Neb. 266, 583 N.W.2d 595, 602 (1998) (striking down ordinance imposing landfill management fees only on residences or businesses with an individual electric meter because this classification did “not bear any relationship to the city’s objective of raising revenue for closing the city landfill in compliance with federal and state guidelines”); State v. LaPorte, 134 N.H. 73, 587 A.2d 1237, 1239 (1991) (holding statute barring depositions of witnesses who were under the age of sixteen at the time of alleged sexual offense had no rational relationship to goal of protecting children under the age of sixteen from the trauma of being questioned because it denied defendant the opportunity to depose witness who was over the age of sixteen at time of deposition); cf. Nordlinger, 505 U.S. at 13-14, 112 S.Ct. at 2333, 120 L.Ed.2d at 14-15 (upholding California property tax system that limited annual increases in assessed valuation' unless there was new construction or a change of ownership as legitimately protecting the reliance interests of existing owners).

C. Assisting financial position of riverboats. That brings us to the last reason upon which the Court relied to sustain the challenged legislation: the legislature wanted to aid “the financial position of the riverboats.” Fitzgerald, 539 U.S. at -, 123 S.Ct. at 2160, 156 L.Ed.2d at 104. While one can hardly dispute that being taxed at twenty percent puts a business in a better financial position than if it were taxed at thirty-six percent, one must still consider whether there is a relationship between this purpose and the classification that makes it reasonable to distinguish between excursion boats and racetracks. See id. at -, 123 S.Ct. at 2159, 156 L.Ed.2d at 103 (requiring, in addition to a credible legislative objective, that “the relationship of the classification to its goal is not so attenuated as to render the distinction arbitrary or irrational”); accord Fed. Land Bank, 426 N.W.2d at 156-57 (“The question is whether these legitimate goals are rationally served by [the] legislative scheme.... ”); *13Chicago & N.W. Ry., 255 Iowa at 1002, 125 N.W.2d at 217 (“There must be some substantial distinction having reference to the subject matter of the proposed, legislation, between the objects or places embraced in such legislation and the objects and places excluded.” (Emphasis added.)); Dunahoo, 185 Iowa at 756, 171 N.W. at 123 (stating “the distinction in dividing must not be arbitrary, and must be based on differences which are apparent and reasonable”). If this were not so, then any differential tax would be constitutional because a lower tax always benefits the financial situation of the taxpayer subject to the lower rate.5 Obviously more is required: there must be some reasonable distinction between excursion boats and racetracks that justifies taxing gambling revenue earned at such establishments differently.6 See Fitzgerald, 539 U.S. at ——, 123 S.Ct. at 2161, 156 L.Ed.2d at 105 (requiring rational relationship between classification and legislative goal).

In determining whether an adequate relationship exists between the classification and the legislative goal, we examine “the rationale advanced ... to justify th[e] class distinction.” Fed. Land Bank, 426 N.W.2d at 157. The rationale here has always been that riverboats are different from racetracks and therefore gambling receipts earned on a riverboat can constitutionally be taxed differently than gambling receipts earned at a racetrack. But how are these enterprises different? “[Sjomething more tangible than a mere name, business, or purpose of a corporation is exacted by the courts as a basis of classification.” Chicago & N.W. Ry., 255 *14Iowa at 999, 125 N.W.2d at 216; cf. Gleason, 275 N.W.2d at 435 (“In the absence of a rational basis for distinction, all municipalities in Iowa constitute a class upon which the law should operate in a uniform manner regarding civil liability.”)- Certainly the financial needs of excursion boats cannot be a basis for distinction because both industries “were losing significant revenue” when the challenged legislation was enacted. RACI, 648 N.W.2d at 557; see Chicago & N.W. Ry., 255 Iowa at 998, 125 N.W.2d at 215 (“Where ... the economic benefits to be realized ... relates to members of one class quite as well as to another, such a classification would be unwarranted.”).

Nor do we find it plausible that the legislature had a realistic expectation in 1994 that racetracks would be financially able to pay radically higher taxes based on the same amount of revenue than excursion boats would be able to pay. As noted, both types of establishments were losing money prior to the legislative action taken in 1994. Accordingly, the legislature addressed this problem by significantly expanding gambling at both enterprises. The addition of slot machines at racetracks in 1994 was clearly intended to enhance the profitability of the tracks, but favorable concessions were made in the same legislation for excursion boats. The 1994 act removed prior limitations on wagering, eliminating the five dollar maximum wager per hand or play, as well as the two hundred dollar maximum loss per person during each “gambling excursion.” See 1994 Iowa Acts ch. 1201, §§ 11, 19. In addition this legislation repealed the restriction that no more than thirty percent of an excursion boat could be used for gambling activity. Id. § 16. These changes suggest that the gambling receipts of racetracks and riverboats would likely increase significantly.

More importantly, we find nothing in the record or in our common knowledge supporting a conclusion that the legislature could have rationally believed that racetracks would be significantly more profitable than excursion boats. See Fitzgerald, 539 U.S. at -, 123 S.Ct. at 2159, 156 L.Ed.2d at 103 (requiring “ ‘the legislative facts on which the classification is apparently based rationally may have been considered to be true by the governmental decisionmaker’ ” (citation omitted)). In fact, the legislative history indicates otherwise. The legislative study committee that recommended the statutory changes enacted by the general assembly in 1994 suggested that “[b]ecause the land-based casinos could function with a lower operating cost, the state should receive ... 2k % of adjusted gross revenues over three million.” (Emphasis added.) The recommendation of a four percent tax differential does not support the sixteen percent differential that was adopted, a four-fold increase. The plaintiffs clearly met their burden to show there was no credible factual basis for the legislature to believe that the racetracks would be able to pay nearly twice the amount of taxes as the excursion boats on the same amount of revenue.

We return, then, to the requirement that the classification must relate “to the purpose of the law, which may be either the elimination of a public ‘mischief or the achievement of some positive public good.” Chicago & N.W. Ry., 255 Iowa at 997, 125 N.W.2d at 215; accord Glowacki 501 N.W.2d at 541 (stating rational basis test requires “a legitimate governmental interest”); see also Chicago Title Ins. Co., 256 N.W.2d at 29 (upholding statute because it prevented “invidious practices ... deemed inimical to the public interest”). The only public interest identified by the Court to justify treating excursion boats more favorably is the statement that riverboats promote river communities and riverboat *15history and racetracks do not. But as we have already discussed, this assertion has no basis in fact.

A similar flaw exists in the public interest asserted by the State on appeal: maintaining riverboats in Iowa. While the State has argued the differential tax was designed as an incentive to keep the excursion boats located on the border rivers from moving to another state with a more favorable regulatory climate, the legislative history belies that argument. The legislative study committee, recognizing the adverse effect on excursion boats due to competition from other states, recommended that the legislature eliminate the betting limits on excursion boat gambling, remove the restriction on the amount of space on the boat that could be used for gambling, and modify the cruising requirements.7 It did not recommend lowering the taxes imposed on the riverboats to make them more profitable. Moreover, the legislature could not reasonably have believed that taxing racetracks at thirty-six percent rather than at the twenty-four percent rate recommended by the committee would have any impact on the competitive position of the excursion boats vis-a-vis their out-of-state counterparts. There is simply no rational connection between this conceivable legislative purpose and the discriminatory tax rate imposed on the racetracks.

In the end, we return to the fact that the item taxed — gambling revenue — is identical. The higher tax rate is triggered by the location where such revenues are earned. Yet there is no legitimate purpose supported by fact that justifies treating one gambling enterprise differently than another based on where the gambling takes place, other than an arbitrary decision to favor excursion boats. See Ill. Sporting Goods Ass’n, 845 F.Supp. at 591 (“There is no rational reason to distinguish between a gun sold within .5 miles of a school or park by a person who owns the premises on which the gun shop is operated and a gun sold by a person who leases the premises on which a gun shop is operated. In both instances, guns will be sold near areas where children congregate and play.”); Indus. Claim Appeals Office v. Romero, 912 P.2d 62, 69 (Colo.1996) (holding statute terminating workers’ compensation benefits for permanently totally disabled claimants upon age sixty-five, but not for partially disabled workers, violated state and federal equal protection on basis that classification was irrational in relation to asserted purposes of legislation); Thompson v. KFB Ins. Co., 252 Kan. 1010, 850 P.2d 773, 782 (1993) (finding statute allowing evidence of collateral source payments only when damages in excess of $150,000 are claimed in violation of state equal protection: “[WJhere, as here, the only basis for the classification is to deny a benefit to one group for no purpose other than to discriminate against that group, the statutory classification is not only mathematically imprecise, it is without a rational basis and arbitrary.”); Flagship Ctr., Inc. v. City of New Orleans, 587 So.2d 154, 157 (La.Ct.App.1991) (striking down city ordinance treating cable television bingo operators more favorably than bingo hall operators with respect to the frequency of bingo games, stating the city’s favoring of cable facilities over hall facilities “does not rationally relate to achieving the [city’s stated] interest”); Nankin v. Village of Shorewood, 245 Wis.2d 86, 630 N.W.2d 141, 154 (2001) (holding statute providing different proce*16dures to challenge property tax assessments depending on whether property was located in populous county unconstitutional: “We are unable to identify any difference in situation or circumstance between properties located in populous counties and properties located in other counties in the state that would necessitate different legislation for the classes in challenging their property assessment.”)- As one commentator has stated, “[e]ven under the rationality test, the legislature is not entitled to pick out a group it disfavors, declare that group to be different, and then impose a special tax burden on the disfavored group.” 3 Ronald D. Rotunda and John E. Nowak, Treatise on Constitutional Law § 18.3(e), at 244 (3d ed.1999).

V. Conclusion and Disposition.

Our decision today is a difficult one because we have great respect for the legislature. Notwithstanding our preference to defer to its judgment, we declare the differential tax at issue here invalid under the Iowa Constitution because we are convinced the classifications made in section 99F.11 lack a rational basis in the constitutional sense. Because we are keenly aware of the legislature’s constitutional role to make decisions of a policy and political nature, we have not lightly undertaken today’s decision. Nonetheless, “[o]ur obligation not to interfere with the legislature’s right to pass laws is no higher than our obligation to protect the citizens from discriminatory class legislation viola-tive of the constitutional guaranty of equality of all before the law.” Sperry & Hutchinson Co., 246 Iowa at 24, 65 N.W.2d at 419. Consequently, we decline the opportunity to alter our prior decision that the statutory exception to the twenty percent tax rate on gambling receipts violates article I, section 6 of the Iowa Constitution. We reverse the decision of the district court upholding the higher tax rate on racetracks under the Iowa Constitution and remand for further proceedings.

REVERSED AND REMANDED.

All justices concur except CARTER, J., who dissents and CADY, J., who dissents separately.

. The United States Constitution provides that no state shall "deny to any person within its jurisdiction the equal protection of the laws.” U.S. Const, amend. 14. In contrast, article I, section 6 of the Iowa Constitution states: "All laws of a general nature shall have a uniform operation; the general assembly shall not grant to any citizen, or class of citizens, privileges or immunities, which, upon the same terms shall not equally belong to all citizens.”

. This author suggests there are "significant differences” between federal equal protection and Jacksonian equality provisions "in text, origin and focus.” State Equality Provisions, 63 Tex. L.Rev. at 1207-08. He notes that equality provisions were included in state constitutions "after a series of abuses by the relatively unfettered state legislatures re*6sponding to powerful economic interests.” Id. at 1207. According to this writer, "[tjhey reflect the Jacksonian opposition to favoritism and special treatment for the powerful.” Id. He concludes an equality provision "does not seek equal protection of the laws at all. Instead, it prohibits legislative discrimination in favor of a minority.” Id. at 1208.

. The requirement of " 'a plausible policy reason for the classification’ " may be the aspect *8of equal protection analysis most susceptible to differing conclusions in application. See generally Fitzgerald, 539 U.S. at -, 123 S.Ct. at 2159, 156 L.Ed.2d at 103 (emphasis added) (citation omitted) (stating requirements of Equal Protection Clause). The dictionary gives two synonyms for the word "plausible”: "specious” and "credible.” Webster’s Third New International Dictionary 1736 (unabr. ed.2002). Certainly a “specious” reason should not pass constitutional muster. See generally id. at 2187 (defining "specious” in relevant part as "apparently right or proper: superficial^ fair, just or correct but not so in reality: appearing well at first view: PLAUSIBLE”). Rather, the policy reason justifying a particular classification should be "credible.” See generally id. at 532 (defining "credible” as "capable of being credited or believed: worthy of belief ...: entitled to confidence: TRUSTWORTHY”). Our court’s statement in Miller that the reason offered in support of a classification must be "realistically conceivable” reflects the latter understanding of a "plausible” reason. 394 N.W.2d at 779 (emphasis added). It implicitly rejects a purely superficial analysis and implies that the court is permitted "to probe to determine if the constitutional requirement of some rationality in the nature of the class singled out has been met.” Greenwalt v. Ram Restaurant Corp., 71 P.3d 717, 730-31 (Wyo.2003) (considering validity of statutory classification under the equal protection guarantees of the United States and Wyoming constitutions).

. Although this element of equal protection analysis does not require "proof” in the traditional sense, it does indicate that the court will undertake some examination of the credibility of the asserted factual basis for the challenged classification rather than simply accepting it at face value.

. The Supreme Court’s reliance on this rationale to uphold the differential tax statute appears consistent with the observation made by one commentator who suggested the Court's decision in this case “serves as a useful reminder that federal equal protection challenges to state tax statutes are likely to fail unless the tax classification involves a protected class or discrimination against out-of-state taxpayers.” U.S. Supreme Court Update, 13 J. Multistate Tax'n & Incentives (RIA) 42 (September 2003) (commenting on Court's decision in Fitzgerald); see also 3 Ronald D. Rotunda and John E. Nowak, Treatise on Constitutional Law § 18.3, at 222-23 (3d ed.1999) (stating Supreme Court uses rational basis test “when it finds no basis for giving truly independent examination to a governmental classification”). Another writer has observed that equal protection challenges to state taxation laws and business regulations are "dismissed out of hand” by federal courts, in part due to federal restraint with respect to state matters. Lawrence Gene Sager, Fair Measure: The Legal Status of Underenforced Constitutional Norms, 91 Harv. L.Rev. 1212, 1216 (1978). This author writes:

Institutional rather than analytical reasons appear to have prompted the broad exclusion of state tax and regulatory measures from the reach of the equal protection construct fashioned by the federal judiciary. This is what creates the disparity between this construct and a true conception of equal protection, and thus substantiates the claim that equal protection is an underen-forced constitutional norm.

Id. at 1218; see also Brennan, 90 Harv. L.Rev. at 503 ("With federal scrutiny diminished, state courts must respond by increasing their own.”).

. We find little guidance from the Court on this aspect of the rational basis analysis, "the relationship of the classification to its goal,” as the Court simply concluded without elaboration that such a " 'relationship ... is not so attenuated as to render the distinction arbitrary or irrational.’ ” See Fitzgerald, 539 U.S. at -, 123 S.Ct. at 2161, 156 L.Ed.2d at 105 (citation omitted). Having no explanation of or justification for this conclusion, we give it little weight in considering compliance with the Iowa Constitution. See Brennan, 90 Harv. L.Rev. at 502 (stating "state court judges ... do well to scrutinize constitutional decisions by federal courts, for only if they are found to be logically persuasive and well-reasoned, paying due regard to precedent and the policies underlying specific constitutional guarantees, may they properly claim persuasive weight as guideposts when interpreting counterpart state guarantees”).

. The committee reported that the bet limits and loss limits were causing gamblers to frequent Illinois riverboats.