I have not had time to thoroughly review the Supreme Court's decision in Wisconsin Department of Revenue v. Menasha Corporation. The case involved the interpretation of statutory language that subjects computer programs to sales tax unless they are custom programs. Menasha bought a program which apparently could be used without customization, but not by it. The DOR had decided that it was not a custom program and Menasha appealed to the Tax Appeals Commission. The Commission ruled in favor of Menasha, concluding that the program was custom. The DOR appealed to the Circuit Court which reversed. The Court of Appeals reversed the Circuit Court (finding for Menasha) and the Supreme Court affirmed that ruling. Menasha wins and does not have to pay sales tax on the program (which cost a bit north of $5 million).
My old Backstory colleague Jim Rowen is upset because the decision potentially blows a "$265 million dollar hole" in the state budget because there are a lot of software programs sold which, while they might stand alone, actually require substantial modification.
My good friends at One Wisconsin Now weigh in and Paul Soglin does too. But here's the thing: None of them criticize the Court's reasoning or, for that matter, say much about what the issue. OWN does accuse the author of the majority opinion, Justice Annette Kingsland Ziegler, of giving WMC and the business community (who supported her campaign) "what it paid for" and Jim calls her WMC's
servant" and the Court "its subsidiary." He asks us to imagine the "WMC-serving" justices as sycophantic flight attendants in first class waiting on someone (presumably rich people) while the rest of us swelter in steerage. Soglin limits himself to juxtaposing the ruling with WMC support of Justice Ziegler.
Here's an irony. All of our interlocutors have roundly criticized WMC and others who opposed their preferred candidates for the Court of "oversimplifying" complex legal questions and, in railing against decisions that favor criminal defendants, appealing to popular prejudice. At the time, I sometimes agreed with those criticisms and sometimes disagreed, generally believing that they were not evenly applied.
And so they are still not. If the decision is wrong, it is certainly not because WMC supported it or because it will prevent the DOR from imposing $ 265 million in sales tax. If the law does not call for a sales tax, then a sales tax ought not to be collected. Contrary to what Paul Soglin says, that decision would be in the interest of taxpayers.
All of our critics argue that Justice Ziegler should have recused herself but that is an astonishing claim. WMC was not a party to the Menasha case. It filed an amicus
brief in support of Menasha's position. In the last election cycle, a variety of interests - WEAC, other public employee unions, the plaintiff's bar, the criminal defense bar, the casinos - undoubtedly spent in support of the incumbent and, if there is a contested race next year, will do so again. With the exception of the casinos, all of these are logical sources of amici briefs in pertinent cases - all of which will, we hope, provide a useful perspective to the issues before the Court. If justices are to recuse themselves because the interests associated with amici supported their candidacies, then judicial elections will be rendered completely unworkable in cases in which there is broad public interest.
Was the decision in Menasha Corporation correct? I'm not prepared to say. The majority was concerned not only with construction of the statutes and rules in the first instance, but also with the extent of deference to the Tax Appeals Commission. That the court was split on the matter and two of the three entities that had reviewed the matter concluded that there should be no sales tax suggests that it is an issue on which reasonable jurists may differ. I have been asked to write on the case for State Court Docket Watch this fall. That won't involved editorializing on the outcome, but I may have more to say later.
Nevertheless, questioning the integrity - as opposed to the the merits of the matter - of the Court is unwarranted.
7 comments:
The issue is simple.
Does the STATE have the right, UNDER WISCONSIN'S CONSTITUTION, to TAX such properties/entities.
The answer: NO.
Rick, liberals do not care about the legality, the constitutional prerequisites nor the truth.
The LEFT believes.....to each according to his need, from each...............
Liberals do not respect anything, but their own wishes. But the expect YOU to.
Apparently The Red didn't read your column.
Irony always cuts both ways. While WMC is happy to dumb down decisions when the time requires (i.e., election time and "that Justice is 'bad-for-business'" and "look at a Justice's affinity for criminality!"), it is more than happy to overlook the big picture when they obtain a decisive win.
It seems to me that paragraphs 141 and 142 of the Chief Justice's dissent are a pretty strong assertion of judicial power over administrative agencies. She seems to be saying that the courts should interpret the statute every time, de novo, rather than asking whether the agency's interpretation was reasonable. That would be a pretty big tug of power away from the quasi-independent administrative agencies and into the Court.
"I have not had time to thoroughly review the Supreme Court's decision in Wisconsin Department of Revenue v. Menasha Corporation."
Mr. Foley suggested "a very useful one-stop shopping repository of Wisconsin State court opinions complete with links to relevant commentary and so forth."
It seems to me that paragraphs 141 and 142 of the Chief Justice's dissent are a pretty strong assertion of judicial power over administrative agencies.
Not power over, but rather deference to.
See Racine Harley-Davidson, Inc. v. State of Wisconsin Div. of Hearings and Appeals, 2006 WI 86.
That portion of the C.J.'s dissent in Menasha relies on her own discussion of the court's standards of deference to administrative interpretations.
Note especially the concurring opinions in Racine H-D. The first, by Justice Prosser, consists almost entirely of congratulations for the C.J.'s "valuable analysis."
The second, by Justice Roggensack, argues in favor of zero deference to the administrative agency under the circumstances, a "strong assertion" by any standard.
And, Justice Roggensack's concurring opinion in Racine H-D is joined by Justices Wilcox and Butler. How's that for some strange bedfellows, eh?
At his post, Soglin says in the comments "the decision may not be all that bad but it still highlights two critical points: the state sales tax regulations are a mess and poorly organized and defined and the decision has a shadow -- the purchase of Ziegler's seat on the Supreme Court by WMC and her participating in and writing the majority opinion."
Also in the comments there, I explain the inane divisions of what's taxed and what's not when it comes to computer work. I'm no tax attorney, but I'll be glad to rant about why their categories make little sense. Tax or don't tax, and don't carve out exceptions that only favor the big guys.
Lemme see if I get this straight: if a corporation buys a computer program off the shelf, they have to pay tax on it, but as soon as they customize it in any way, they're entitled to a tax rebate with interest?
If only it worked that way with my house and my car!
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