Supreme Court Opinion Racing(Slip OpLnion)
OCTOBER TERM, 2002
Syllabus
NOTE: Where it is fe~mlble, a syllabus [headnote) will he released, as is
SUPREME COURT OF THE UNITED STATES
Sy~abus
FITZGERALD, TREASURER OF IOWA v. RACING
ASSOC/ATION OF CENTRAL IOWA ETAL.
CERTIORARI TO THE SUPREME COURT OF IOWA
No. 02-695. Argued April 29, 2003--Decided June 9, 2003
An Iowa law that, among other things, authorized racetracks to operate
slot machines and imposed a graduated tax upon racetrack slot ma-
chine adjusted revenues, with a top rate that started at 20 percent
and would automatically rise over time to 36 percent, left a 20 per-
cent tax rate on riverboat slot machine adjusted revenues in place.
Respondents, racetracks and a dog owners' association, fried a state-
court suit challenging the law on the ground that the 20 percentJ36
percent tax rate difference violated the Equal Protection Clause,
U. S. Const., Amdt. 14, §1. The District Court upheld the statute, but
the Iowa Supreme Court reversed.
Held:
1. This Cour~ has jurisdiction to review the state court's judgment,
which does not rest independently upon state ]aw. The state couP's
opinion says that Iowa courts should apply the same anslysis in con-
sidering either state or federal equal protection claims. In such cir-
cumstances, this Court considers a state-co~:rt decision as resting
upon federal grounds sufficient to support jurisdiction. Pp. 2-3.
2. Iowa's differential tex rate does not violate the Federal Equal
Protection Clause. A law, such as Iowa's, that dist'mguishes for tax
purposes among revenues obtained within a State by two enterprises
conducting business in the State, is subject to rational-basis review.
See Nordlinger v. Hahn, 505 U. S. 1, 11-12. The Iowa law, like most
laws, nx~ght predomlnateIy serve one general objective, e.g., rescuing
racetracks from economic distress, while contusing subsidiary provi-
sions that seek to achieve other desirable (perhaps even contrary) ends
as we~ thereby producing a law that balances objectives but sUx]l serves
the general objective when seen as a whole. And this law, seen as a
whole, does what the state court says it seeks to do, namely, advance
2 FITZGERALD v. RACING ASSN. OF CENTRAL IOWA
Syl]a}~us
the racetracks' economic interests. A rational legislator might believe
that the Iaw's grant to the racetracks of authority to operate slot ma-
chines should help the racetracks economiceJ]y---even if its simaltane-
ous imposition o£ a tax on revenue means less help than respondents
might like--and the Constitution grants legislators, not courts, broad
authority (within the bounds of rationa~dty) to decide whom they wish to
help with their teux laws and how much help those laws should provide.
Once one reaIizes that not every provision in a single law must share a
single objective, one has no difficulty finding the necessary rational
support for the difference in teux rates here. Though harmful to the
racetracks, it is helpful to the riverboats, which were also facing finan-
cial peril. This is not a case where the facts preclude any plausible in-
ference that the reason for the different tax rates is to help the riverboat
industry. CE Nordlinger, supra, at 16. Allegheny Pittsburgh Coal Co. v.
Commission of Webster Cry., 488 U. S. 336, distinguished. Pp. 3-7.
648 N. W. 2d 555, reversed and remanded.
BR~R, J., delivered the opinion for a unanimous Court.
Cite as: 539 U.S. (2003) i
Opinion of the Court
NOTICE: This opinion is subject to form~ revision before publication in the
SUPREME COURT OF THE UNITED STATES
No. 02-695
MICHAEL FITZGERALD, TREASURER OF IOWA,
PETITIONER v. RACING ASSOCIATION OF
CENTRAL IOWA ET AL.
ON WRIT OF CERTIORARI TO THE SUPREME COURT OF IOWA
[June 9, 2003]
JUSTICE BREYER delivered the opinion of the Court.
Iowa taxes adjusted revenues from slot machines on
excursion riverboats at a maximum rate of 20 percent.
Iowa Code §99F. 11 (2003). Iowa law provides for a maxi-
mum tax rate of 36 percent on adjusted revenues from slot
machines at racetracks. §§99F.4A(6), 99F.11. The Iowa
Supreme Court held that this 20 percent/36 percent differ-
ence in tax rates violates the Federal Constitution's Equal
Protection Clause, Amdt. 14, §1. 648 N. W. 2d 555 (2002).
We disagree and reverse the Iowa Supreme Court's
determination.
I
Before 1989, Iowa permitted only one form of gam-
bling--parimutuel betting at racetracks--the proceeds of
which it taxed at a six percent rate. Iowa Code §99D.15
(1984). In 1989, it authorized other forms of gambling,
including slot machines and other gambling games on
riverboats, though it limited bets to $5 and losses to $200
per excursion. 1989 Iowa Acts ch. 67, §§3, 9(2); Iowa Code
§99F.3 (1996). Iowa taxed adjusted revenues from slot
machine gambling at graduated rates, with a top rate of
2 FITZGERALD v. RACING ASSN. OF CENTRAL IOWA
Opinion of the Court
20 percent. 1989 Iowa Acts ch. 67, §11; Iowa Code §99F.11
(1996).
In 1994, Iowa enacted a law that, among other things,
removed the riverboat gambling $5/$200 bet/loss limits,
1994 Iowa Acts ch. 1021, §19, authorized racetracks to
operate slot machines, §13; Iowa Code §§99F.1(9), 99F.4A
(1996), and imposed a graduated tax upon racetrack slot
machine adjusted revenues with a top rate that started at
20 percent and would automatical]y rise over time to 36
percent, 1994 Iowa Acts ch. 1021, §25; Iowa Code §99F.11
(1996). The Act did not alter the tax rate on riverboat slot
machine adjusted revenues, thereby leaving the existing
20 percent rate in place. Ibid.
Respondents, a group of racetracks and an association of
dog owners, brought this lawsuit in state court challenging
the 1994 legislation on the ground that the 20 percent/36
percent tax rate difference that it created violated the
Federal Constitution's Equal Protection Clause, A_mdt. 14,
§1. The State District Court upheld the statute. The Iowa
Supreme Court disagreed and, by a 4-to-3 vote, reversed
the District Court. The majority wrote that the "differen-
tial tax completely defeats the alleged purpose" of the
statute, namely, "to help the racetracks recover from
economic distress," that there could '%e no rational rea-
son for this differential tax," and that the Equal Pro-
tection Clause consequently forbids its imposition. 648
N. W. 2d, at 560-562. We granted certiorari to review this
determination.
II
Respondents initially claim that the Iowa Supreme
Court's decision rests independently upon state law. And
they argue that this state-law holding bars review of the
federal issue. We disagree. The Iowa Supreme Court's
opinion, after setting forth the language of both State and
Federal Equal Protection Clauses, says that "Iowa courts
Cite as: 539 U.S. (2003) 3
Opi~on of the Court
are to 'apply the same analysis in considering the state
equal protection claims as ... in considering the federal
equal protection claim.'" Id., at 558. We have previously
held that, in such circumstances, we shall consider a state-
court decision as resting upon federal grounds sufficient to
support this Court's jurisdiction. See Pennsylvania v.
Muniz, 496 U.S. 582, 588, n. 4 (1990) (no adequate and
independent state ground where the court says that state
and federal constitutional protections are "~dentical'"). Cf.
Michigan v. Long, 463 U. S. 1032, 1041-1042 (1983) (ju-
risdiction exists where federal cases are not "being used
only for the purpose of guidance" and instead are "com-
pel[ling] the result"). We therefore £md that this Court
has jurisdiction to review the Iowa Supreme Court's
determination.
III
We here consider whether a difference in state tax rates
violates the Fourteenth Amendment's mandate that "[n]o
State shall.., deny to any person.., the equal protection
of the laws," §1. The law in question does not distinguish
on the basis of, for example, race or gender. See, e.g.,
Loving v. Virginia, 388 U.S. I (1967); United States v.
Virginia, 518 U.S. 515 (1996). It does not distinguish
between in-state and out-of-state businesses. See, e.g.,
Metropolitan Life Ins. Co. v. Ward, 470 U.S. 869 (1985).
Neither does it favor a State's long-time residents at the
expense of residents who have more recently arrived from
other States. Cf. Hooper v. Bernalillo County Assessor, 472
U.S. 612 (1985). Rather, the law distinguishes for tax
purposes among revenues obtained within the State of
Iowa by two enterprises, each of which does business in
the State. Where that is so, the law is subject to rational-
basis review:
"IT]he Equal Protection Clause is satisfied so long as
there is a plausible policy reason for the classification,
4 FITZGERALD v. RACING ASSN. OF CENTRAL IOWA
Opinion of the Court
the legislative facts on which the classification is ap-
parently 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 ir-
rational." Nordlinger v. Hahn, 505 U. S., 11-12 (1992)
(citations omitted).
See also id., at 11 (rational-basis review "is especially
deferential in the context of classifications made by com-
plex tax laws'd; Allied Stores of Ohio, Inc. v. Bowers, 358
U. S. 522, 527 (1959) (the Equal Protection Clause requires
States, when enacting tax laws, to "proceed upon a ra-
tional basis" and not to '¥esort to a classification that is
palpably arbitrary').
The Iowa Supreme Court found that the 20 percent/36
percent tax rate differential failed to meet this standard
because, in its view, that difference "frustrated" what it
saw as the law's basic objective, namely, rescuing the
racetracks from economic distress. 648 N. W. 2d, at 561.
And no rational person, it bel/eved, could claim the con-
trary. Id., at 561-562.
The Iowa Supreme Court could not deny, however, that
the Iowa law, like most laws, might predominately serve
one general objective, say, helping the racetracks, while
containing subsidiary provisions that seek to achieve other
desirable (perhaps even contrary) ends as well, thereby
producing a law that balances objectives but still serves
the general objective when seen as a whole. See Railroad
Retirement Bd. v. Fritz, 449 U. S. 166, 181 (1980) (STEVENS,
J., concurring in judgment) 0egislation is often the "prod-
uct of multiple and somewhat inconsistent purposes that led
to certain compromises'9. After all, ff every subsidiary
provision in a law designed to help racetracks had to help
those racetracks and nothing more, then (since any tax rate
hurts the racetracks when compared with a lower rate)
Cite as: 539 U.S. (2003) 5
Opinion of the Court
there could be no taxation of the racetracks at all.
Neither could the Iowa Supreme Court deny that the
1994 legislation, seen as a whole, can rationally be under-
stood to do what that court says it seeks to do, namely,
advance the racetracks' economic interests. Its grant to
the racetracks of authority to operate slot machines should
help the racetracks economically to some degree even if
its simultaneous imposition of a tax on slot machine ad-
justed revenue means that the law provides less help than
respondents might like. At least a rational legislator
might so believe. And the Constitution grants legislators,
not courts, broad authority (within the bounds of rational-
ity) to decide whom they wish to help with their tax laws
and how much help those laws ought to provide. '~l'he
task of classifying persons for ... benefits ... inevitably
requires that some persons who have an almost equally
strong claim to favored treatment be placed on different
sides of the line,' and the fact the line might have been
drawn differently at some points is a matter for legislative,
rather than judicial, consideration." Id., at 179 (citation
omitted). See also ibid. (judicial review is "at an end" once
the court identifies a plausible basis on which the legisla-
ture may have relied); Nordlinger, supra, at 17-18.
Once one realizes that not every provision in a taw must
share a single objective, one has no difficulty finding the
necessary rational support for the 20 percent/36 percent
differential here at issue. That difference, harmful to the
racetracks, is helpful to the riverboats, which, as respon-
dents concede, were also facing financial peril, Brief for
Respondents 8. See also 648 N. W. 2d, at 557. These two
characterizations are but opposite sides of the same coin.
Each reflects a rational way for a legislator to view the
matter. And aside from simply aiding the financial posi-
tion of the riverboats, the legislators may have wanted to
encourage the economic development of river communities
or to promote riverboat history, say, by providing incen-
6 FITZGERALD v. RACING ASSN. OF CENTRAL IOWA
Opir~on of the Court
tires for riverboats to remain in the State, rather than
relocate to other States. See Gaming Study Committee
Report (Sept. 3, 1993), reprinted in App. 76-84, 86. Alter-
natively, they may have wanted to protect the reliance
interests of riverboat operators, whose adjusted slot ma-
chine revenue had previously been taxed at the 20 percent
rate. All these objectives are rational ones, which lower
riverboat tax rates could further and which suffice to
uphold the different tax rates. See Allied Stores, supra, at
528; Nardlinger, supra, at 12. See also Madden v. Ken-
tucky, 309 U. S. 83, 88 (1940) (imposing burden on respon-
dents to "negative every conceivable basis" that might
support different treatment).
Respondents argue that Allegheny Pittsburgh Coal Co. v.
Commission of Webster Cry., 488 U. S. 336 (1989), holds to
the contrary. Brief for Respondents 21. In that case, the
Court held that substantial differences in the level of
property tax assessments that West Virginia imposed
upon similar properties violated the Federal Equal Protec-
tion Clause. But the Court later stated, when it upheld in
Nordlinger a California statute creating similar differ-
ences in property taxes, that "an obvious and critical
factual difference between this case and Allegheny Pitts-
burgh is the absence of any indication in Allegheny Pitts-
burgh that the policies underlying an acquisition-value
taxation scheme could conceivably have been the purpose
for the.., unequal assessment." 505 U. S., at 14-15. The
Court in Nordlinger added that "Allegheny Pittsburgh was
the rare case where the facts precluded any plausible
inference that the reason for the unequal assessment
practice was to achieve the benefits of an acquisition-vahie
tax scheme." Id., at 16-17, and n. 7. Here, "the facts" do
not "prechid[e]" an inference that the reason for the differ-
ent tax rates was to help the riverboat industry or the
river communities. Id., at 16.
Cite as: 539 U.S. (2003) 7
Opinion of the Court
We conc]ude that there is "a plausible policy reason for
the classification," that the legislature "rationa]ly may
have . .. considered ... true" the related justifying "legis-
lative facts," and that the "relationship of the classification
to its goal is not so attenuated as to render the distinction
arbitrary or irrational." Id., at 11. Consequently the
State's differential tax rate does not violate the Federal
Equal Protection Clause. The Iowa Supreme Court's
judgment to the contrary is reversed, and the case is re-
manded for further proceedings not inconsistent with this
opinion.
So ordered.