In January, the nation's highest court granted Miller's petition for certiorari challenging the
Iowa Supreme Court ruling last June that Iowa law providing different tax rates for riverboat casinos
and land-based racetracks is unconstitutional under the Equal Protection Clause.
Miller will argue the case before the Court in Washington Tuesday morning, April 29.
The State's brief filed today called the Iowa Supreme Court's ruling a "startling application
of the Equal Protection Clause."
"We argue that the Iowa Supreme Court wrongly substituted its own judgment for the
judgment of the Iowa Legislature," Miller said. "In taxation, even more than in most other fields,
legislatures have the greatest freedom in establishing different classifications. We argue that the
Iowa court had no authority to substitute its own judgment for the Legislature's policy decision to
structure tax rates differently for riverboats and racetracks."
Miller noted that the Solicitor General of the United States Department of Justice has filed
an amicus or friend-of-the-court brief supporting the State's position in the case. "The Solicitor
General is so well respected by the Supreme Court that he sometimes is called 'the Tenth Justice,'"
Miller said. "I think it shows how important this issue is to all states and the U.S. government."
Miller said today that he will yield ten minutes of the State's thirty-minute period for oral
argument to the U.S. Solicitor General.
The State's brief notes that enormous consequences are at stake. "For one, Iowa could be
forced to refund over $100 million to the racetracks," Miller said. "Just as important, unless the
decision is reversed, we argue it could spark a flood of litigation over both state and federal tax
statutes. Any legislative policy that establishes tax preferences could be vulnerable to attack."
Amicus briefs supporting the State of Iowa's position also have been filed by Missouri and
other states, and by a coalition of seven Iowa cities.
The State of Iowa Argument
Miller's brief argues that the Iowa Supreme Court's construction of the Equal Protection
Clause is an unwise intrusion into legislative tax policy and "is unsupported by legal precedent."
The brief argues that under longstanding Supreme Court decisions "the Equal Protection
Clause allows state legislatures to draw distinctions in tax classifications" that "need only further a
legitimate state interest." Furthermore, the legislature need not articulate or enumerate the purposes
or rationale. Differing tax classifications must be upheld against equal protection challenge if there
is any "reasonable conceivable set of facts" that could provide a rational basis for classification, the
brief said, quoting earlier U.S. Supreme Court decisions.
The brief noted that there are many cultural, recreational, economic, and legal differences
between racetracks and riverboats -- and that it is easy to speculate on numerous "plausible policy
reasons" for the Legislature to establish different tax classifications for the two industries. For
example, riverboats might be taxed at a lower rate to promote development of river communities,
promote riverboat history, promote riverboat casinos as a useful industry, prevent riverboats from
leaving Iowa, attract new riverboats, and compensate riverboats for high operating expenses not
incurred by land-based operations.
"Any of these reasons is sufficient to satisfy the equal protection test," the brief argued.
Instead, it said, the Iowa Supreme Court "improperly engaged in its own fact finding" to decide the
"The bottom line in our argument is this: Drawing tax classifications is clearly a legislative
judgment," Miller said. "That's why we are asking the U.S. Supreme Court to reverse this decision."
Click here for link to the Supreme
Court's docket for the RACI case.
Click here for a PDF copy of Iowa's
RACI brief filed March 3, 2003.
Click here for a PDF copy of Iowa's
Reply brief in RACI case filed April 21, 2003.
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