Delta Airlines, Inc. v. Department of Revenue

A legislative tax classification is constitutional if it is rationally related to a legitimate legislative purpose

The Oregon Supreme Court consolidated two tax court cases concerning Delta Airlines and PacifiCorps, who had both challenged the Oregon Department of Revenue’s ability to tax their intangible and tangible property because they are centrally assessed businesses, when locally assessed businesses are not taxed on their intangible property. Delta Airlines and PacifiCorp both argued that taxing intangible property only for centrally assessed businesses violated Article I, section 32, and Article XI, section 1, of the Oregon Constitution, the Equal Privileges and Immunities Clause of the Oregon Constitution (Article I, section 20), and the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution. The Tax Court found for Delta Airlines and held that taxing intangible property for centrally assessed businesses and not taxing intangible property for locally assessed businesses violated the Oregon Constitution’s Uniformity and Privileges and Immunities clauses and the U.S. Constitution’s Equal Protection clause, reasoning that there were no “genuine differences” between intangible property belonging to Delta Airlines and intangible property belonging to other similar businesses that were locally assessed. The Tax court found that there were “genuine differences” for PacifiCorp, making the difference in taxing permissible.
The Oregon Supreme Court disagreed and found that when determining whether a business is classified as requiring a central or local assessment, the type of business it is matters more than the nature and usage of the property. They used rational basis review to determine that the Oregon legislature is permitted to treat different groups differently for tax purposes should there be a rational reason for doing so. The Oregon Supreme Court reversed the Tax court’s decision and held for the Oregon Department of Revenue.