Download Tax Foundation Amicus Brief: Estuardo Ardon vs. City of Los Angeles
Summary of Argument
In passing Proposition 13 and Proposition 218, voters effectuated their intent to constrain and reduce local government revenue powers even though public services would be affected. These express constitutional limitations indicate that public policy since 1978 is to favor the taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. payers’ interest in limiting local government’s power to tax and its retention of illegally collected taxes.
The court below erroneously concluded that under article XIII section 32, Respondent City’s interest in revenue collection trumps taxpayers’ interest in a class claim remedy. This Court has never given article XIII, section 32 such a broad reading as to preclude taxpayer refund remedies for the benefit of protecting local government’s retention of illegally collected revenues. Rather, this Court has interpreted Government Code section 910 as authorizing class action lawsuits, thereby furthering the Constitution’s protections for taxpayers.
The class claim mechanism facilitates efficient claim resolution for administrative and judicial entities. Class action procedure under Government Code section 910 provides the government with ample information to settle claims, proper notice to calculate its potential liability, and limits or precludes further individual claims on the same issue. Respondent City’s contentions that class refunds in claims proceedings are “new” and possibility “devastating” are unfounded — as long as the City refrains from abusing its power to tax.
Additionally, due process requires that taxpayers be allowed to prosecute tax refundA tax refund is a reimbursement to taxpayers who have overpaid their taxes, often due to having employers withhold too much from paychecks. The U.S. Treasury estimates that nearly three-fourths of taxpayers are over-withheld, resulting in a tax refund for millions. Overpaying taxes can be viewed as an interest-free loan to the government. On the other hand, approximately one-fifth of taxpayers underwithhold; this can occur if a person works multiple jobs and does not appropriately adjust their W-4 to account for additional income, or if spousal income is not appropriately accounted for on W-4s. cases as a class, because it is often the only available meaningful remedy. In this case, through its enactment of Public Utility Code section 799, the Legislature has already denied taxpayers the opportunity to contest collection of the illegal tax through their telephone service providers, and the legal hurdles and transaction costs associated with individual refund claims will have the practical effect of permitting the government to retain illegally collected revenues.
Holding that class refund claims are permitted under Government Code section 910 is consistent with the Constitution, this Court’s previous rulings, and voters’ public policy goals of limiting local government revenue and enhancing taxpayer consent. Finally, such a result properly deters local government from continuing to collect illegal taxes and enhances fairness to taxpayers.
Share