City of Pittsburgh v. Alco Parking Corp.
417 U.S. 369 (1974)

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U.S. Supreme Court

City of Pittsburgh v. Alco Parking Corp., 417 U.S. 369 (1974)

City of Pittsburgh v. Alco Parking Corp.

No. 73-582

Argued April 15, 1974

Decided June 10, 1974

417 U.S. 369



Respondent operators of offstreet parking facilities in Pittsburgh, Pa. sued to enjoin the enforcement of a city ordinance imposing an increased 20% tax on the gross receipts from parking or storing automobiles at nonresidential parking places, alleging, inter alia, that the ordinance was invalid under the Due Process Clause of the Fourteenth Amendment. The lower courts sustained the ordinance, but the Pennsylvania Supreme Court invalidated it on the ground that the tax was so unreasonably high and burdensome that, in the context of competition from public lots operated by the city parking authority, which enjoyed certain tax exemptions and other advantages, the ordinance had the "effect" of an uncompensated taking of property contrary to the Due Process Clause.

Held: The ordinance is not unconstitutional, and the city was constitutionally entitled to put the automobile parker to the choice of using other transportation or paying the increased tax. Pp. 373-379

(a) The fact that a tax is so excessive as to render a business unprofitable or even threaten its existence furnishes no ground for holding the tax unconstitutional, Manano Co. v. Hamilton,292 U. S. 40; Alaska Fish Co. v. Smith,255 U. S. 44, and the judiciary should not infer from such fact, alone, a legislative attempt to exercise a forbidden power in the form of a seeming tax. Pp. 417 U. S. 373-376.

(b) The ordinance does not lose its character as a tax or revenue-raising measure, and may not be invalidated as too burdensome under the Due Process Clause, merely because the taxing authority, directly or through an instrumentality enjoying various forms of tax exemption, competes with the taxpayer in a manner that the judiciary thinks is unfair, since the Due Process Clause does not demand of or permit the judiciary to undertake to separate burdensome and nonburdensome taxes or to oversee the terms and circumstances under which the government or its tax-exempt instrumentalities may compete with the private sector. Pp. 417 U. S. 376-377.

453 Pa. 245, 307 A.2d 851, reversed.

Page 417 U. S. 370

WHITE, J., delivered the opinion for a unanimous Court. POWELL, J., filed a concurring opinion, post, p. 417 U. S. 379.

MR. JUSTICE WHITE delivered the opinion of the Court.

The issue in this case is the validity under the Federal Constitution of Ordinance No. 704, which was enacted by the Pittsburgh, Pennsylvania, City Council in December, 1969, and which placed a 20% tax on the gross receipt obtained from all transactions involving the parking or storing of a motor vehicle at a nonresidential parking place in return for a consideration. [Footnote 1] The ordinance

Page 417 U. S. 371

superseded a 1968 ordinance imposing an identical tax, but at the rate of 15%, which in turn followed a tax at the rate of 10% imposed by the city in 1962. Soon after its enactment, 12 operators of offstreet parking facilities located in the city sued to enjoin enforcement of the ordinance, alleging that it was invalid under the Equal Protection and Due Process Clauses of the Fourteenth Amendment, as well as Art. VIII, § 1, of the Pennsylvania Constitution, which requires that taxes shall be uniform upon the same class of subjects. It appears from the findings and the opinions in the state courts that, at the time of suit, there were approximately 24,300 parking spaces in the downtown area of the city, approximately 17,000 of which the respondents operated. Another 1,000 were in the hands of private operators not party to the suit. The balance of approximately 6,100 was owned by the Parking Authority of the city of Pittsburgh, an agency created pursuant to the Parking Authority Law of June 5, 1947, Pa.Stat.Ann., Tit. 53, § 341 et seq. (1974). The trial court also found that there was then a deficiency of 4,100 spaces in the downtown area.

The Court of Common Pleas sustained the ordinance. Its judgment was affirmed by the Commonwealth Court by a four-to-three vote, 6 Pa.Commw. 433, 291 A.2d 556 (1972), on rehearing, 6 Pa.Commw. 453, 295 A.2d 349 (1972); but the Pennsylvania Supreme Court reversed also four to three. 453 Pa. 245, 307 A.2d 851 (1973). That court rejected challenges to the ordinance under the Pennsylvania Constitution and the Equal Protection Clause, but invalidated the ordinance as an uncompensated taking of property contrary to the Due Process Clause of the Fourteenth Amendment. Because the decision appeared to be in

Page 417 U. S. 372

conflict with the applicable decisions of this Court, we granted certiorari, 414 U.S. 1127 (1974), and we now reverse the judgment. [Footnote 2]

In the opinion of the Supreme Court of Pennsylvania, two aspects of the Pittsburgh ordinance combined to deprive the respondents of due process of law. First, the court thought the tax was "unreasonably high," and was responsible for the inability of nine of 14 different private parking lot operators to conduct their business at a profit and of the remainder to show more than marginal earnings. 453 Pa. at 259-260, 307 A.2d at 859-860. Second, private operators of parking lots faced competition from the Parking Authority, a public agency enjoying tax exemption (although not necessarily from this tax) [Footnote 3]

Page 417 U. S. 373

and other advantages which enabled it to offer offstreet parking at lower rates than those charged by private operators. The average all-day rate for the public lots was $2, as compared with a $3 all-day rate for the private lots. Ibid. The court's conclusion was that

"[w]here such an unfair competitive advantage accrues, generated by the use of public funds, to a local government at the expense of private property owners, without just compensation, a clear constitutional violation has occurred. . . . [T]he unreasonably burdensome 20 percent gross receipts tax, causing the majority of private parking lot operators to operate their businesses at a loss, in the special competitive circumstances of this case, constitutes an unconstitutional taking of private property without due process of law in violation of the Fourteenth Amendment of the United States Constitution."

Id. at 267, 269-270, 307 A.2d at 863, 864.

We cannot agree that these two considerations, either alone or together, are sufficient to invalidate the parking tax ordinance involved in this case. The claim that a particular tax is so unreasonably high and unduly burdensome as to deny due process is both familiar and recurring, but the Court has consistently refused either to undertake the task of passing on the "reasonableness" of a tax that otherwise is within the power of Congress or of state legislative authorities or to hold that a tax is unconstitutional because it renders a business unprofitable.

In Magnano Co. v. Hamilton,292 U. S. 40 (1934), the Court sustained against due process attack a state excise tax of 1

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