State Constitutional Limits on New Hampshire ‘ s Taxing Power : Historical Development and Modern State

Excerpt] "The New Hampshire Constitution is, in most of its fundamental parts, very old. It is long (nearly 200 articles) and wordy, even by the standards of the eighteenth century. It expresses essential principles in more than one place, in more than one way, and in language that to modern eyes is more suited to political philosophy than to positive law. Most of it was copied from the original Massachusetts Constitution, itself based on a draft by John Adams. However, there is no other state in the union with a structure of taxing powers and limits comparable to New Hampshire‘s."


I. INTRODUCTION
The New Hampshire Constitution is, in most of its fundamental parts, very old. 1 It is long (nearly 200 articles) and wordy, even by the standards of the eighteenth century. It expresses essential principles in more than one place, in more than one way, and in language that to modern eyes is more suited to political philosophy than to positive law. Most of it was copied from the original Massachusetts Constitution, 2 itself based on a draft by John Adams. 3 However, there is no other state in the union with a structure of taxing powers and limits comparable to New Hampshire's.
Part I of the New Hampshire Constitution is the Bill of Rights. Its first article declares -[a]ll men . . . equally free and independent,‖ and -all government . . . instituted for the general good.‖ 4 Article 10 reiterates that government is -instituted for the common benefit, protection, and security, of the whole community, and not for the private interest or emolument of any one man, family, or class of men.‖ 5 Article 12 entitles -[e]very member of the community,‖ to protection -in the enjoyment of his life, liberty, and property,‖ subject to the obligation -to contribute his share in the expense of such protection . . . .‖ 6 These provisions, combined with part II, article 5's requirement that legislation be -wholesome and reasonable,‖ and -for the benefit and welfare of this state,‖ 7 comprehend concepts later expressed in the federal Constitution as Substantive Due Process and Equal Protection. Retrospective laws are prohibited. 8 The New Hampshire founders had distinct views on the proper ways of funding government. Part II, article 5 requires that -assessments, rates, and taxes,‖ be -proportional and reasonable . . . .‖ 9 They gave this principle particular content by rejecting the clause of their Massachusetts mod- el authorizing excise taxes. 10 Taxation was permitted only on polls and -estates‖ (meaning property owned, possessed, or enjoyed). 11 This was reiterated in the original language of part II, article 6 governing modes and frequency of assessment. 12 They also omitted language authorizing the colonial practice of taxing -faculty,‖ the capacity to earn income. 13 For over a century, the property tax for each unit of government was just thatthe property tax-a single, broad levy at one uniform rate on specified real and personal property. Despite one significant constitutional amendment 14 and considerable evolution in judicial interpretation, it is still the case that true taxes must be on polls or property. New Hampshire remains unique among the states in denying the legislature the power to levy excise taxes as such. 15 Consequently, while occasionally used, persuasive authority from other states and general treatises are often irrelevant, misleading, or double-edged. 16 Modern -taxes‖ not levied ad valorem on some class of property must be justified under some other power (as, for example, fees to recover costs,  357, 358 (1925). 12. -And, while the public charges of government or any part thereof shall be assessed on polls and estates in the manner that has heretofore been practiced, in order that such assessments may be made with equality there shall be a valuation of the estates within the state taken anew once in every five years, at least, and as much oftener as the general court shall order.‖ N.H. CONST. pt. II, art. 6.
13 In the sense that they are dynamic rather than static, that their incidence is dependent upon the happening of an event rather than upon the mere existence of property, they may properly enough be classed as excises. In the features of being laid upon property and ad valorem, they are like estate taxes.

II. HISTORICAL DEVELOPMENT: FOUR PERIODS
The New Hampshire Supreme Court regularly cites tax opinions as far back as 1829, with little indication of any legal discontinuities. However, the constitutional law of New Hampshire taxation shows four distinct periods of increasing complexity. Only a few general principles survive from the earlier cases, and many specific holdings have been overturned, often indirectly or tacitly. 18 Some early general statements have been given new, very different meanings. The citations to old cases are a tribute to the court's determination to maintain principled consistency with as much of the ancient law as possible, but many once-critical distinctions have been swept away. The modern court is usually much more deferential to legislative judgment than its predecessors. Because decisions from before 1940 are as likely to mislead as to enlighten the reader, some sense of the spirit of each era and the turning points will reduce the risk of confusion. Moreover, the modern law is encrusted with bland generalities and string citations 19 that obscure issues, some of them unresolved. The peculiarities of 17. N.H. CONST. pt. II, art. 83 (amended 1877) (prohibiting use of tax money for religious schools); N.H. CONST. pt. II, art. 5 (amended 1942) (permitting special assessments, rates and taxes on growing wood and timber); N.H. CONST. pt. II, art. 5-b (amended 1968) (real estate may be valued based on current use); N.H. CONST. pt. II, art. 6-a (amended 1938) (revenue from automobile registrations, licenses, gasoline taxes, etc. dedicated solely to highway purposes).
18. Changes have often been indirect or tacit. As a result, the signals in citation services are not reliable-independent examination of later citations is recommended.
19. For example, in 1997, after a long, citation-studded survey of general principles derived from the main sources and limits of taxing authority, the court concluded: -Together, these three constitutional provisions require that taxation be just, uniform, equal, and proportional; in addition, our constitution demands that classifications be made between types of property, not taxpayers.‖ Smith v. N.H. Dep't of Revenue Admin., 141 N.H. 681, 686, 692 A.2d 486, 491 (1997). In the author's experience, this offers little practical guidance to legislative committees. current law make little sense without an understanding of the logic and the concrete cases through which they evolved.

A. 1784-1880: The Age of Innocence
From the adoption of the constitution to 1902, there was one principal property tax supporting each level of government. The legislature added and varied items to be included, set uniform statutory valuations for some of them, and experimented with exemptions to encourage various industries. From the beginning there was also an -excise‖ on alcoholic beverages and assorted other levies indifferently called taxes or fees that, while potentially problematic, were familiar from the colonial period and taken for granted. 20 Until 1829, there was little opportunity for the courts to test legislation against the tax philosophy embedded in the constitution. 21 In that year, the Supreme Court of Judicature took the occasion of an advisory opinion about a proposed local road tax to write a comprehensive dissertation on the constitutional framework. 22 The opinion has been regularly cited down to modern times. 23 At least four enduring propositions were developed. First, the -supreme legislative power . . . vested in the senate and house of representatives‖ 24 to -establish, all manner of wholesome and reasonable . . . laws . . . for the benefit and welfare of this state,‖ 25 is not plenary in matters of taxation, but is limited to -proportional and reasonable‖ levies on the specific subjects mentioned in part II, articles 5 and 6-at that time, only -polls and estates.‖ 26 Second, -proportional‖ means -the same tax shall be laid, upon the same amount of property, in every part of the [jurisdiction levying it].‖ 27 Third, the additional term -reasonable‖ adds something beyond mathematical proportionality, permitting variation to make taxes -just . . . so that each individual's just share, and no more, shall fall upon him.‖ 28 Fourth, -a very considerable latitude of discretion must be 20. See generally ROBINSON, supra note 13. 21. -The legislature exercised judicial power after the adoption of the constitution, as they did before, in reversing judgments and granting new trials: and that illegal procedure was not discontinued until it had flourished, under constitutional prohibition, for the space of thirty-four years.‖ State v. Express left to the legislature . . . as to the selection of proper subjects of taxation and the proportion of the tax that shall be laid on each subject . . . .‖ 29 The rise of business corporations, particularly railroads, telegraph companies, and various types of banks or insurance companies, strained the simple system. Was the property of a corporation to be taxed to the shareholders, to the corporation, to both, or somehow apportioned? 30 What if the corporation itself owned shares? 31 The full value of the tangible property of network industries and the intangible property of moneyed corporations could not reasonably be assessed and taxed by particular towns. The statutes of the mid-nineteenth century are strewn with experiments raising revenue from these industries by statewide levies in addition to, or in lieu of, localized taxes on tangible property. 32 The courts became increasingly concerned about double taxation and the actual incidence of various taxes.
In surveying this period (as he joined in bringing it to a close), Chief Justice Doe wrote: Inequality of operation, gradually introduced by new subjects of taxation, and by increased differences in the values and varieties of old ones, has been met by legislative efforts to rectify the wrong. Such changes have taken place that methods of dividing the public expense, equitable enough for practical purposes in the last century, would now be good cause of complaint. A great mass of questions of constitutional administration, to be raised by the progress of society, and the enlarged and complicated industries and interests of future generations, were left for those generations to solve. 33

B. 1880-1903: New Rigor, Powers and Limits Refined
In 1880, the New Hampshire Supreme Court began to strictly define proportionality and to strike down or advise against 34 a great deal of legis- 29 34. As economic and political demands for legislation increasingly ran afoul of constitutional limits, the House and Senate began to invoke part II, article 74 of the New Hampshire Constitution to secure advisory opinions on proposed legislation. Their precedential value is somewhat qualified: The true standing to be ascribed to them seems to be that while they are persuasive they are not controlling; and their persuasive value may be greater or less, as the circumstances under lation. In that year, it declared three tax statutes unconstitutional, 35 and two years later another. 36 It also began to develop the criteria for tax exemptions and the constitutional bases and limits for revenues that could be raised without qualifying as taxes. The decisive step was taken in State v. U.S. & Canada Express Co., when the court struck down a -license‖ fee of 2% on the gross revenues of express companies. 37 Although still cited and regarded as fundamental, by normal standards State v. Express should have had little precedential value. There was no opinion of the court. Two Justices did not sit, two wrote individual opinions, and the others concurred only in the result without opinion. The opinions of Justice Stanley and Chief Justice Doe display quite different approaches to the relevant constitutional provisions. Subsequent decisions long reflected Stanley's attitude toward proportionality. Doe's lasting contribution was to ground many exemptions and substantial non-tax revenues in the -protective power,‖ New Hampshire's version of the police power. 38 The attorney general argued that modern conditions required the court to recognize it had been wrong in 1829-that the legislative power to tax was not intended to be limited to proportional levies on polls and estates, but extended to -privilege‖ taxes on business. This was demonstrated by a century of business licensing and business taxes assessed at fixed sums or according to income. 39 The state maintained there was no difference between a license fee and a tax. 40 Both Justice Stanley and Chief Justice Doe believed that there was a difference, and that despite its terminology this statute's object was -to raise revenue by taxation.‖ 41 That made the case easy for Justice Stanley. He adhered to the prevailing view that the references to polls and estates in part II, articles 5 and 6 which they were rendered show finality of judgment or the reverse in the minds of their authors. were exclusive, limiting the legislature's more general powers. 42 Therefore, the statute was obviously unconstitutional in several ways: it taxed only express business carried by railroads, not other express business; it was not a -tax on property, or on polls or estates,‖ because it did -not regard the capital invested, the expenses incurred, or the losses sustained;‖ and if it were, it could not be reasonable and proportional because it was -not on net profits, but on gross receipts.‖ 43 It would also be a double-tax on the income producing power of property already taxed at full value. 44 Justice Stanley also presumed that if a business tax were permissible, it necessarily would have to be -on all business alike.‖ 45 Chief Justice Doe had a very different constitutional theory. He did not consider the references to polls and estates in part II, articles 5 and 6 to be exclusive. 46 The omission of the excise clause was not meaningfulthere was a plenary taxing power limited only by the more general clauses of the New Hampshire Bill of Rights, -the tax power of New Hampshire is included in the grant of the supreme legislative power (subject to the limitation of equality on which the whole government is founded) . . . .‖ 47 He thought business taxes, even on particular industries, could be constitutionally equal if assuredly passed along to consumers. In the previous year he had taken a dramatic position: It is the consumer or user who pays the tax laid upon the manufacture, production, or importation of personal property, whether the tax is assessed by statute to him, or to the manufacturer, producer, or importer . . . . Legislative power may reenact the law of nature by assessing the taxes of manufactured and imported goods upon the consumer and the land-tax upon the tenant, or assess the former upon the manufacturer and importer and the latter upon the owner, and leave the law of nature, without reenactment, to employ the manufacturer, importer, and landlord as tax-collectors . . . .

42.
Id. at 235. 43. Id. at 244. Both sub-classification and measurement by gross receipts are now permissible as a result of the 1903 amendment to part II, article 6. 44. Id. at 245. As will appear later in this article, while -double taxation‖ remains a concern, the 1903 amendment permits taxes on the income generated by property, in addition to those on the possession of the same property. 45 Whether the public expense is more justly and wisely divided by an inevitably unsuccessful effort to tax all property, or by the taxation of some class or classes of property that can be easily, equally, and certainly taxed, and the tax of which is equitably collected for the public from all classes of people by the higher government, is not a judicial question. If there is a class of property, the tax of which, by force of the natural law of tax distribution and equalization, would be eventually paid in just proportion by the whole community, the common burden may be wholly put upon that class. 48 Consequently an express company tax could be constitutional if designed to be an act of taxation, laying upon railway-express transportation a burden to be equally distributed, by natural law, among the purchasers of such transportation and their customers, as a tax laid on any articles of property is distributed among the consumers or users of the article. The object might be to make the expressmen mere collectors of the tax. 49 However, the Chief Justice discerned no such design and in the absence of contrary evidence presumed -the legislature did not intend to authorize such expressmen either to add to their charges as much as this statute requires them to pay to the state, or to raise their charges above the reasonable standard of the common law.‖ 50 Without this (and without the possible police power justifications addressed below) the tax failed, whatever its classification: Whether it is a tax imposed upon person, property, income, business, gross receipts, profits, or earnings, is immaterial. It is a tax which one class of men are required to pay, and from which all others are exempt. It is a perfect example of unequal division of public expense. 51 What of the array of income-based assessments of businesses, license fees, and industry-specific exemptions cited by the attorney general that appeared to fall short of the constitutional standard? Justice Stanley dis- posed of the first by showing the income provisions to be merely methods of determining the value of property: -Ferries, wharves, and mills are tangible; and their value can be estimated in different ways, either by taking their income, or the market or salable value, as the basis.‖ 52 Chief Justice Doe cautiously discounted the value of early practices as evidence of constitutional intent by contemporaneous construction, 53 and dealt with the remainder through an elaborate explication of the protective power as an alternative to the taxing power.
An act entitled an act of taxation may be valid, although not an exercise of the power of collecting the constitutional shares of expense. The title may be an immaterial misnomer and error of form only, and the act may be an exercise of some of the other powers which provide for the common benefit, protection, and security, and which may be conveniently grouped under the name of the protective power. A fine, imposed by this power, is practically as useful to the government as a tax of equal amount; and a protective law is not invalid merely because it produces public revenue. 54 This disposed of the so-called excise on intoxicating liquor, 55 the dog tax, 56 the lightning rod salesman's tax, 57 other peddlers' taxes, 58 and the like. He could have justified a railroad-express tax law, so called . . . designed to be an act of discouragement, like a liquor excise . . . to discourage the employment of railroad expressmen by increasing their rates, and to encourage other carriers who cannot successfully compete with railroad expressmen without the assistance of a protective tariff. 59 52. Id. at 239 (Stanley, J.). 53. Id. at 246-47 (Doe, C.J.). Doe believed the founding generation frequently did not apprehend the full meaning of the constitutional principles and language they adopted. Id The Chief Justice, however, did not discern, and declined to presume, such a purpose. 60 Also, taking it at face value, Justice Stanley declined to consider whether the statute -could be regarded as an exercise of the police power.‖ 61 That left the problem of exemptions. Industry-specific exemptions from the general property tax were apparent violations of proportionality. These seemed different from the implicit exemption of types of property by omission from the taxable list. 62 In the latter sense, -the selection of proper subjects of taxation‖ had long been held a necessary legislative prerogative, 63 but having once taxed manufacturing property generally, how could the legislature exempt such industries like linseed oil mills, plating iron mills, and factories for the manufacture of cotton, woolen yarn, and cloth? 64 As straight-forward bounties, Chief Justice Doe said that a subsidy to promote desirable activities was as much within the protective power, as a penalty to discourage the undesirable. 65 A tax exemption was simply an efficient type of direct subsidy: The protective power has been exercised by giving bounties of exemption from taxation, as well as by giving bounties of money obtained by taxation. The generation by whom the constitution was adopted understood the state could pay a sum of money to an individual, for a public purpose, by exempting him from the payment of the same amount of tax. They did not understand there would be any constitutional virtue in going through the form of collecting money from him, and immediately paying it back to him. 66 Otherwise, disproportionate exemptions within classes of taxed property may be justified as expenditures for a public purpose. The court closed the logical circle later in 1880: -Every exemption is an indirect tax upon other property, and can only be justified where a direct tax upon other property in its behalf would be within the power of the legislature.‖ 67 60. Id. at 262. This unwillingness to indulge in saving assumptions stands in marked contrast to the modern practice. Modern standards of review are discussed infra Part III, particularly sections D and F. 61. Id. at 233 (Stanley, J.). 62. This is a recurring problem in the modern era, as will appear several times below. The significance of the distinction is addressed infra Part III. Despite pejorative rhetoric in both opinions about taxes on particular businesses, State v. Express did not hold them unconstitutional. Earlier in the same term, the court indicated how a flawed, statewide tax on railroad property could be made constitutional by substituting a statewide uniform assessment and rate for a patchwork levy, based on assessments and rates in various towns where the railroad had property. 68 -[T]he rule of uniformity is coextensive with the territory to which a tax applies, and prevents unjust discriminations. A state tax must be uniform throughout the state, a county tax throughout the county, a town tax throughout the town.‖ 69 The hint was promptly taken and the statute amended in 1881 to levy the railroad tax in proportion to the statewide average of other property taxes. 70 On the same day, a new 1% levy on the property of telegraph companies (which had formerly been a 2% gross receipts tax) was converted to one -as near as may be in proportion to the taxation of other property throughout the state.‖ 71 The legislature had made statewide assessment and averaging possible by creating, in 1878, a state board of equalization. 72 This became the generally accepted method of taxing business at the state level. A matching tax was levied on telephone companies in 1883, 73 on express companies and sleeping, dining, and parlor cars in 1907, 74 and on the intangible value of electric utility franchises in 1931. 75 (1915), the majority adopted the view that this opinion had actually affirmed the constitutionality of the tax as a tax on property. Perhaps because it appeared to extend at that time saw -nothing in the form in which the tax is to be assessed and raised, nor in the general description of the property proposed to be taxed, that can be alleged as a legal objection to the validity of the law.‖ 77 This cannot be reconciled with State v. Express and its kin. It would be decades before such a view was again expressed by a majority of the court. 78 From 1880 to at least 1923, it was generally believed that all property taxes at a given level of government had to be levied not only ad valorem, but also at the same rate and valuation. 79 This model could not be reconciled with existing taxes on banks and insurance companies. These were levied as percentages of deposits, capital, premiums, and the like. Such taxes at fixed rates necessarily differed from the annually floating rate of the basic property tax, and the bases were not all easily described as property or estates. Their existence was one basis of the attorney general's argument for a plenary taxing power in both Boston, Concord & Montreal Railroad v. State and State v. Express. 80 Most of these were rationalized, albeit at the cost of confirming an alternative revenue theory-the concept of a voluntary payment for an accepted privilege. As such, the tax on commercial banks had already been removed from the -true‖ tax category: It has been argued that the annual payment of one per cent. on the capital of banks required to be paid to the literary fund is in substance a double tax. But it is not named nor assessed as a tax; it is a fixed sum paid yearly, and not varying in amount like other taxes, according as they are voted in different places and in different years; and has more the character of a bonus voluntarily paid for the right to exercise the privilege of banking than of an ordinary tax. 81 The tax of 1% on the premiums paid to foreign insurance companies was expressly structured as a condition voluntarily accepted, to secure the lito U.S. securities exempt under the U.S. Constitution, the tax seems not to have been put into effect. It is not mentioned in MAURICE H. ROBINSON cense to do business in New Hampshire. 82 It stood unchallenged until 1937, when the supreme court ratified this view: The -tax‖ imposed in 1869 [on foreign insurance company premiums], whatever its name, appears, at least until the constitutional amendment of 1903, to have been unsustainable as a tax. But it was sustainable as a condition for prosecuting business in New Hampshire in somewhat the same manner as the gasoline -tax‖ was conceived to be properly levied as a toll for the use of the highways. 83 In 1896, a requirement that railroads pay statutorily defined excess profits into the state treasury was sustained against taking and disproportionality attacks on the same basis-it was a condition on privileges voluntarily assumed by railroads. 84 Unfortunately, the very lucrative 85 tax on savings bank deposits had been repeatedly and explicitly held to be a property tax. 86 The savings bank tax could not be fit into the court's constitutional framework until 1927, when the constitutional amendment of 1903 was interpreted to permit different tax rates on different classes of property. 87 The nineteenthcentury court frankly admitted this and -grandfathered‖ the tax with a combination of prescription and necessity: -The savings-bank tax . . . is an anomaly, resting on peculiar grounds of public policy, and is universally understood to have acquired the position of an exception to the constitutional rule of equality.‖ 88 Modest license charges needed no privilege theory or special protective power analysis, so long as they were -merely an equivalent for the service rendered‖ in a legitimate regulatory scheme. 89 Throughout this era, there were also anomalous fees or taxes on certain corporations when chartered or re-capitalized on the basis of amount of authorized capital, with declining rates as capitalization increased. 90 Such graduation was not consistent with the fee theory and was impermissibly disproportional in a true tax. Nor  or as a condition on a privilege. 91 However, the court was not called on to resolve its constitutionality, perhaps because of the small amounts involved. 92 After State v. Express, there was one more dramatic nineteenth-century tax case. In 1879, the legislature adopted a death duty on legacies and successions. 93 The rate was 1%, with an exemption for property passing to surviving spouses, children, and grandchildren. In 1882 the court declared it unconstitutional in Curry v. Spencer. 94 Once again, the court was ambivalent about whether there could be taxes on -privileges,‖ but if there could be, the equality and proportionality rules would still govern: All measures for the imposition or collection of taxes must therefore conform to this general principle of just equality; and hence it is immaterial whether the tax imposed by c. 64 is to be regarded as a tax on property or upon a civil right or privilege, for the same principle of equality and due proportion applies to every species of tax alike. 95 Either theory left the tax unconstitutional: -If it is to be regarded as a tax on property, it is open to the objection of unequal and double taxation, and if it is to be regarded as a tax on a civil right or privilege, it is discriminating and disproportional.‖ 96 Nor would a cost-recovery, fee theory save itbecause of the exemptions. 97 Such exactions must fall proportionally on all classes of beneficiaries. 98 The requirement that fees be uniform was reemphasized in an 1889 decision that became the lead case in New Hampshire on equal protection in general. 99  a license. 100 His constitutional objection was that certain practitioners had been grandfathered on an arbitrary basis (continuous residence in one town) unrelated to qualification. 101 On a motion to quash, the supreme court declared the statute unconstitutional: For the right to continue the pursuit of his profession, one physician is not, while another, his neighbor, who may be his equal or superior in learning, experience, and ability, is, required to pay five dollars. This is not the equality of the constitution. The magnitude of the unequal burden is not material. If any inequality were permissible, the discrimination might be made prohibitory, and a monopoly of the business given to physicians who have resided in a town or city for a specified time. 102 At least five rules were settled in this era. First, all taxes had to be on polls or estates. Second, except for the savings bank tax, all taxes on estates by a given unit of government had to be at one rate with uniform valuation. Third, express tax exemptions were permissible to the extent that a bounty or subsidy under the protective power would be. Fourth, regulatory penalties and license fees were exercises of the protective power, not taxes, but subject to general requirements of uniformity and equality. Fifth, monetary charges for privileges voluntarily accepted were not taxes. All of these, but the first (changed by constitutional amendment), have endured. 103

C. 1903-1940: Constitutional Change, the Struggle to Give it Meaning
There were no significant constitutional challenges to the state's tax system in the two decades after State v. Express and Curry v. Spencer, nor were there any new attempts to assert a plenary taxing power. However, there was increasing demand for constitutional revision to broaden the taxing power. The Constitutional Convention of 1902 considered several The fourteenth amendment of the constitution of the United States, providing that -no state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States . . . nor deny to any person within its jurisdiction the equal protection of the laws,‖ adds nothing to the rights and liberties of the citizens of this state. It merely confirms to them by federal sanction the rights secured by the action of their ancestors a century ago. It has wrought no change in the law of the state. An enactment obnoxious to this provision of the national constitution is in New Hampshire no more ineffective than it would be in its absence. Id proposals to permit new forms of taxation. It rejected a general power to impose -any kind of tax under heaven or known among civilized men . . . .‖ 104 Instead, the Convention proposed narrower revisions. The voters rejected an amendment permitting a tax on income from certain intangibles. 105 They adopted, however, a seemingly modest addition to the legislature's authority to tax property. The reference in part II, article 6 to -polls and estates‖ was supplemented with the phrase -and other classes of property, including franchises and property when passing by will or inheritance.‖ 106 For more than three decades the court struggled with the necessary implications of this seemingly simple phrase.
The new power was exercised in 1905 with the adoption of a tax on legacies and succession, 107 and promptly challenged in Thompson v. Kidder. 108 Perhaps inspired by Chief Justice Doe's theory that the taxing clauses of part II of the constitution were subordinate to the equality clauses of the New Hampshire Bill of Rights, 109 the challengers argued the tax violated part I, article 12 and the unchanged proportionality requirement of part II, article 5: It is not claimed that the language of article 6, as it now stands, is not sufficient to authorize legislation of this character; but the contention is that such action is contrary to the requirements of other provisions of the instrument, namely, article 12 of the bill of rights,--Every member of the community has a right to be protected by it in the enjoyment of his life, liberty, and property. He is, therefore, bound to contribute his share in the expense of such protection,‖-and the provision of article 5, part 104. STATE OF NEW HAMPSHIRE, CONVENTION TO REVISE THE CONSTITUTION 597 (1903) (remarks of delegate Chandler). This seems to refer to an early proposal by Chandler to amend article 6 allowing taxes on polls and estates -by taxation in such other method as may be equal, equitable, and just.‖ Id. at 250. That proposal was later postponed indefinitely on Chandler's own motion. Id. at 684. Strangely, in Opinion of the Justices, 77 N.H. 611, 93 A. 311 (1915), the majority seemed to assert that the amendment submitted to the people was the one characterized as permitting -any kind of tax under heaven‖ and to partly rely on that to permit taxing income. Id second, granting -full power and authority‖ to the general court -to impose and levy proportional and reasonable assessments, rates, and taxes upon all the inhabitants of, and residents within, the said state, and upon all estates within the same.‖ 110 Such an argument could hardly prevail over a constitutional amendment with -express language admittedly sufficient for the purpose.‖ 111 As with poll taxes, which had never been proportional in the commonly accepted senses, 112 a tax expressly authorized was necessarily constitutional, despite disproportionality. 113 However, the exception to the general constitutional rule did not extend beyond logical necessity. It was not necessary to conclude, because by amendment an additional disproportional tax has been authorized, that it was intended to abrogate the fundamental rule of equal rights or the general rules of equality and proportion as to other taxes. All taxes that can be made proportional must be so assessed. 114 The tax, where applicable, was at a uniform rate of 5%, so there was no issue of graduation. 115 All persons were equally privileged to dispose of property in either taxable or non-taxable ways, and similarly to inherit. 116 The only possible inequality was in the exemption, which the court found permissible: -There are good reasons why the passing of property to near relatives, or the gift of it to charitable purposes or directly to the public, should not be subject to an exaction by the state. For some time, the legacy and succession tax seems to have been thought the only innovation permitted under the 1903 amendment. 118 The new power to tax -other classes of property‖ did not immediately change the rule that all taxes on property (other than legacies and successions and deposits in savings banks) had to be at the same rate throughout each taxing district. 119 The people rejected constitutional amendments permitting the -tax[ation] of credits at a less[er] rate than other property,‖ 120 and a lesser rate for standing timber 121 in 1912, and graduated income taxes in 1920 and 1921. 122 Without apparently realizing it, the court took the first step toward differential tax rates on classes of property in 1915. The House of Representatives requested an advisory opinion on a proposal to exempt certain securities from the general property tax and to instead tax the income derived from them -at the uniform rate‖ (taken to mean the same rate as imposed on other property). 123 This was the beginning of the interest and dividends tax (IDT). A four-justice majority advised that the proposal was constitutional. Removing classes of property from the list of taxable estate was incontestable. 124 They believed using the uniform property tax rate cured the disproportionality fatal to a previous interest and dividends tax proposal. 125 Taxing money which might also have been taxed as part of the property of the securities issuer raised issues of double taxation, but the majority resolved them. 126 The remaining question was whether this apparent income tax was constitutionally authorized: It may be said that the proposed tax is in effect an income tax. An income tax is generally understood to be a tax an arbitrary rate-an excise tax. It has even been held not to be a property tax, and to be a direct tax under the federal Constitution. But the fact that this tax in certain of its features resembles an income tax does not place it beyond the legislative power of classification. 127 Although it referred to the anomalous 1866 opinion upholding an income tax, 128 the majority did not -express an opinion as to the validity of the taxation of incomes‖ when approving the proposal as a tax on property received by the investor, which would otherwise have been taxable in the hands of the issuer. 129 This was just a rearrangement of the formal incidence of a tax on estates; it was as constitutionally indifferent as whether real estate was taxed to the mortgagor or mortgagee. 130 Possible implications of the new constitutional authority to tax -other classes of property‖ were not considered or, apparently, even noticed. 131 Treating income as a category of estate, the court said investment income had to be taxed at the same rate as other property. 132 Justice Peaslee wrote a long and compelling dissent, demonstrating that taxing some incomes at the same rate as property could not be in any meaningful sense proportional. The resulting effective rates were radically different: The practical situation presented by the proposed law is this: The owner of a farm worth $ 1,000 pays (at a two per cent rate) a tax of $ 20, while the owner of a five per cent note for $ 1,000 pays a tax of $ 1. Upon whatever theory it is founded and by whatever argument it is justified, the practical, everyday result is that this inequality exists as between those two neighbors. Two property taxpayers of equal property, of equal ability to pay, and with equal duty to support the state, are taxed unequally by the ratio of 20 to 1. 133 Despite Justice Peaslee's analysis, the court clung for some years to the irrational proposition that gross incomes were a taxable -estate‖ and while taxing them was permissible, the rate applicable to static property was re-127. Id quired. 134 However, in 1925, with Justice Peaslee writing for the court, it discovered the rationale for taxing incomes as property, but differently, despite manifest disproportionality.
The occasion was a constitutional challenge to the interest and dividends tax adopted in 1923. 135 Invoking nineteenth-century decisions forbidding taxation of shares in the hands of shareholders of corporations already taxed on their property, 136 the challengers alleged it was a disproportionate double-tax. The court conceded this, but found the disproportion necessarily authorized by the 1903 amendment permitting taxation of -other classes of property‖: In 1903 a fundamental change was made in the people's grant of the taxing power. In the generation just preceding that time, the idea that the constitutional provision for contribution of -his share‖ by each taxable party meant a share determined by a common and unvarying method had been upheld and amplified in great detail and with a wealth of argument.
What was intended by the grant of power to tax -other classes of property‖? Other provisions of the amendment show, by elimination, what it does not mean. It does not refer to any form of tax upon estates-that is, to taxes upon ownership, possession or enjoyment of property. It had theretofore been decided that the term estates covers all these matters. 137 As all ownership, possession, or enjoyment of property was already taxable under existing powers, the new language must have intended something else: [T]he provision means that property may be taxed for reasons other than ownership. The test of taxability may be put upon other grounds. -Other classes of property‖ is here used as the equivalent for property otherwise classified. The incidence of the tax is to be determined by some fact other than mere ownership. Once it was clear that other classes of property could be taxed on a different basis from, and necessarily in addition to, estates, the logic that permitted double taxation of inheritances 139 in Thompson v. Kidder 140 applied. 141 The power to tax other classes of property, or property classified in some way other than as estate, was granted. No form of tax coming within this description, which would not impinge upon the rules theretofore laid down as to constitutional limitations upon the power to tax property, has been suggested. It is believed that none can be found. The implied exception from earlier provisions is necessary if this phrase in the amendment is to be given any effect. 142 The expressed power to define and tax classes of property based on something other than ownership, possession, or enjoyment necessarily precluded a challenge to any double taxation or other disproportionality inherent in the difference between the classes. 143 Taxable estates were -static‖ property, the new classes were -dynamic.‖ 144 The distinction has also been described in the modern era as the difference between static property and -property in motion.‖ 145 This re-conceptualization of the 1903 amendment is the foundation of most modern state taxes. It was not, however, the breakthrough hoped for by the advocates of plenary taxing power. In 1927, during a burst of fiscal creativity, the legislature submitted to the court two proposals: a comprehensive scheme of occupational taxes with -118 separate classes, each with one or more schedules of stated charges,‖ and an income tax. 146 The court, apparently shocked, declared that the occupational taxes -appear[ed] to have been drawn without any reference to the structure of our state government‖ and -unquestionably exceed[ed] the legislative power.‖ 147 The legislature characterized these as -privilege‖ taxes, but the court noted that [m]any of the occupations or acts thus sought to be levied upon involve only the ordinary transactions of private life. They contain no 139. While the constitutional language is -property passing by will or inheritance‖ and the related legislation usually refers to legacies and succession, I will sometimes follow the frequent practice of the court by referring to these as inheritance taxes. This would not have been permitted even under the rejected excise clause of the Massachusetts Constitution. 149 The same proposals were addressed as taxes on -franchises,‖ a form of tax expressly permitted by the 1903 amendment. Such a franchise was a -right to do certain things, giving a power to enter upon transactions which is not possessed by the people as of common right . . . .‖ 150 Not only did many of the occupations taxed lack this quality, they were also subject to different rates, and franchise taxes were subject to the same rules of proportionality among all holding the franchise. 151 In reply to a general question about taxing corporations differently from those engaged in similar businesses, the court laid down what became a fundamental principle of New Hampshire tax law: If the privilege is taxed when held by a corporation, it must be when exercised by collective owners associated together under some other form of agreement, or by an individual. Singling out corporations, and taxing them upon privileges, while permitting other holders of like privileges to go tax free, is a discrimination not permitted by the constitution. 152 Of course, a corporate charter of perpetual succession and limited liability is itself a franchise, but if the bare franchise to be a corporation is to be considered as property, and therefore taxable, it could be taxed only upon an ad valorem basis. The valuation would necessarily be confined to an appraisal of the worth of the power to be a corporation, as distinguished from the power to do certain business. 153 The court volunteered an alternative. A franchise, being both a property right and a privilege voluntarily assumed, could be either taxed as prop- erty or, without need of proportionality, be granted on condition of a payment. -[T]he power to impose conditions upon grants is not to be treated as a power to tax, as taxation is understood in this jurisdiction.‖ 154 It had long been held that a payment could be exacted as a condition on granting a true privilege. 155 The court did not choose to identify anything other than corporate capacity that could be treated as a privilege. Concluding that, as a whole, the specific legislation before them was irretrievably unconstitutional, the court declined -to examine the long list of occupations, etc., which the bill declare[ed] to be privileges, or to attempt to ascertain the validity of such a classification.‖ 156 The income tax would have been constitutional, despite being levied at a rate different from that on -estates‖ (i.e. the general property tax), but for the fact that different rates were hypothesized for different types of income. 157 The previous opinion that all taxes on -other classes of property‖ had to be at common rate 158 was -no longer tenable.‖ 159 This however, was done in a way that introduced the idea that classification of property, by distinctive events, created classes of taxes: The rule is firmly established that all taxes of a given class must be laid at a common rate. This rule applies to annual taxes upon estates, and to inheritance taxes. The reasoning in the case last cited leads to the conclusion that the principles there enunciated must be applied in the taxation of incomes. The rate must be uniform. 160 In 1930, and again in 1937, the court confirmed that taxes on receipts from sales were a fourth class of tax that could not be correlated with those on estates, inheritances, and incomes, justifying a different rate. 161 They might be thought a fifth class, but franchises as such are static property, to be correlated by rate and valuation with the general property tax. 162 154. Id Throughout this era, differences in rate or valuation between taxes on classes of property were justifiable only when the type of tax could not be -correlated and made uniform with the average of the general property tax . . . and disproportion [was] inevitable.‖ 163 So firm was the notion that uniform rates were required within broad classes of taxes, that a proposed tax on the annual increment of growing timber was -in the nature of an income tax,‖ and had to be -coordinated with other income taxes.‖ 164 However, the broad classes were not exhaustive. On the same day it issued the timber increment opinion, the court advised that a timber severance tax would be in a class by itself, and it -could not be correlated with other taxes, and therefore the rate could be fixed without direct relation to that imposed by other taxing statutes.‖ 165 There were several opinions during this era attempting to clarify and apply standards for exemptions. 166 The use of conditional grants of privileges as an alternative to taxation was expressly affirmed. 167 However, the great and lasting work of this period was the court's determination that the -other classes of property‖ made taxable in 1903 necessarily included property determined by -some element other than ownership, possession or enjoyment,‖ 168 that the power to define and tax such property necessarily permitted some forms of double taxation, and that, when differing classes of property could not be rationally correlated, uniformity of rate and assessment were not meaningful and therefore not required. characteristics of an excise. 169 However, they remain property taxes and must be laid ad valorem. 170 -[T]he taxing power is fixed by the language of the amendment and not by a classification of taxes by authorities upon economics.‖ 171 Classes of -property in motion‖ could be defined and taxed. Some of those classes were so incommensurable with others that meaningful proportionality was impossible and differing rates were justified. However, the nature and limits of the classification process had not been explored. When a tax was levied on something other than the -ownership, possession, or enjoyment‖ of property, what connection, if any, was there between the kind of property in the class and the -other grounds‖ 172 for levying the tax, the -characteristic event‖ 173 that justified classification? Timber, when severed, was an approved classification. 174 Yet that was based on -a characteristic event, not common to other property.‖ 175 What of an event that was common to multiple types of property? Before 1940, the court appeared to believe that the event was the controlling factor, at least to the extent rates or valuations differed between classes. The 1903 amendment gave authority to lay various kinds of ad valorem taxes upon property, incident upon some characteristic event, which may fairly be considered to reasonably delimit a class of property, so that the selection cannot be rejected as arbitrary, if the event itself affords some rational basis for the imposition of a tax. 176 Thus one could tax sales, incomes, and inheritances; but must each kind of taxed property, sharing the defining event, be taxed at the same rate? Exemptions could differ within sub-classes, 177 producing different effective rates. The principal opinion authorizing exemptions varying by type of income referred equivocally to both the protective power and the power of classification. 178 -The rule [was] firmly established that all taxes of a given class must be laid at a common rate.‖ 179 But classes were anything but -given.‖ If, 169 for example, sale of goods at retail defined the class, was failure to include all such sales an exemption? Among those sales taxed, could there be differing rates for separate classes or subclasses? If so, on what basis? The court had approved taxing one sort of income defined by its source. What were acceptable classes of income? Were some so incommensurable that the rates could differ? Ultimately, what was a distinct class of property in the constitutional sense?

D. 1940-Present: Proliferation of Categories
I will deal with the modern era first by analyzing the decision that inaugurated it, then by tracing the court's treatment of sales, income, franchise, and estate taxes, as well as some issues that cross all categories. These categories, however commonly used, are also highly artificial in New Hampshire. As our taxes are on property, not persons, formal incidence in terms of the payor is largely irrelevant. 180 Who pays and how are matters of convenience, efficiency, and the politics of appearances. Labels, as opposed to actual operation, can skew arguments and confuse analysis, but, in principle, are meaningless under the state constitution. However, their political significance has sometimes led to judicial efforts for truth in labeling. 181 When the focus is on the property moving or being transformed, for example, there is no constitutionally meaningful distinction between a sales tax on the consumer and a gross receipts tax on the seller. A franchise can be taxed as a personal estate or as the source of income. At least when it involves a regulated utility, a tax on even net income recovered in the rates can be indistinguishable from a sales tax on the utility's consumers. Classification and exemption issues cross all these lines. The categories nevertheless are a necessary part of the common vocabulary, and they have sometimes shaped the arguments and decisions.

The Tobacco Tax, Narrower Classification Permitted
In 1940, Havens v. Attorney General 182 opened the modern era by confronting some of these questions. The plaintiff, a tobacconist, challenged on several constitutional grounds a new 15% tax on retail sales of tobacco. 183 The court split three to two, with the majority holding that the law was -a sales tax and not an occupation tax.‖ 184 At the time, a tobacco tax 180 was considered a revenue matter, not an exercise of the police power to protect public health. 185 Chief Justice Allen dissented, calling the decision -a revolutionary departure from the views expounded and developed in this State.‖ 186 The court's prior opinions approving a sales tax were no warrant for a tax on the sale of a single commodity. The event defining the class was a sale. If there were to be a tax on some sales but not others, that involved an exemption-an exemption of the kind that required a public purpose sufficient to justify disproportionality. 187 -If out of ten subjects or forms of property only one is taxed, the others are exempted.‖ 188 While Chief Justice Allen could conceive of a separate class of luxuries, he could not discern a public interest: [I]t is not perceived how it can be found to be for the public welfare, in taxing the sale of tobacco products, to exempt the sale of such articles, for example, as smoking accessories, chewing gum, playing cards, certain forms of cosmetics, and certain forms of jewelry. 189 The Chief Justice argued that the various bases on which the majority permitted separate classification of tobacco sales could be used to selectively tax nearly any other business selling a particular commodity, 190 or further sub-classify tobacco based on use in cigars, cigarettes, or pipes. 191 Although dissenting separately, with additional alternative grounds, Justice Page agreed that the Chief Justice had articulated -the judicial theory of classification consistently held in New Hampshire for over a hundred years.‖ 192 -[A] retail sales tax must operate alike on all retail sales which cannot be distinguished upon reasonable and just grounds.‖ 193 Of 185. Id. at 118, 14 A.2d at 638. While restriction of sales to minors was mentioned, all the published opinions said or assumed the sole purpose of the tax was revenue. Chief Justice Allen's dissent did discuss possible health issues, but only hypothetically, and in a way he found these insufficient to justify singling out one potentially unhealthy commodity. Id course, as will appear below, the majority concluded there were reasonable and just grounds.
The majority declined to survey the slippery slopes posited by Chief Justice Allen. It considered the issue to be selection, not exemption: -[T]he essential inquiry would appear to be whether the selection of tobacco as the subject of the tax is so arbitrary and unreasonable as to violate the legal requirements of classification.‖ 194 Although not directly citing them, the court appeared to be invoking opinions reaching back to 1829 recognizing very broad discretion in the legislature to select objects of taxation. 195 The one decision actually cited was Town of Canaan v. Enfield Village Fire District. 196 The Canaan decision, along with those cited in support of legislative discretion in the selection of subjects of taxation, involved only the tax on estates-the general property tax; the only selectivity involved was whether to include particular kinds of property in the one class then permitted, with the entire class taxed at one uniform rate and valuation. Selection was in part necessary-it would be impractical if not impossible to tax all conceivable kinds of property. It also presented little threat of narrowly selective, discriminatory taxation. None of the taxes struck down in the nineteenth century involved including particular categories of property in the general tax on estates, or excluding them. Each was a special levy with differing rates, valuations, or exemptions. Until 1903 there was no power to create -other classes of property‖ specially defined and taxed at differing rates and valuations. 197 The implications of selection in the latter case for proportionality, equality, and just shares are manifestly different than when there was one class and one rate. As later recognized by the court, it was this new power that entailed the -danger of creating, by narrow classification, a tax upon occupations or privileges.‖ 198 The nineteenth-century opinions of the court gave support for both the majority view and the dissent. The court had treated the legislature's decision to put a particular class of property on the taxable list (selection) as being almost unreviewable: Whether the public expense is more justly and wisely divided by an inevitably unsuccessful effort to tax all property, or by the taxation of some class or classes of property that can be easily, equally, and certainly taxed, and the tax of which is equitably collected for the public from all classes of people by the higher government, is not a judicial question. If there is a class of property, the tax of which, by force of the natural law of tax distribution and equalization, would be eventually paid in just proportion by the whole community, the common burden may be wholly put upon that class. The non-assessment of other classes of property would not be an exemption of any class of people. 199 The court of that era referred to exemption as occurring either by failure to list property as taxable or by express exceptions for property that was otherwise on the taxable list. 200 Some ambiguity seems to have arisen from the fact that both inclusion (selection) and exclusion (tacit or express exemption) were used to define taxable -estates.‖ Under the statutory scheme all real estate was taxed unless expressly exempted, 201 but personal property was taxed only if listed. 202 There was also a practical problem with judicial review of any failure to list a type of personal property. The court could not order a tax unauthorized by the legislature and would have had to void the entire personal property tax to give a remedy for underinclusion. 203  press exemptions were often thought of as somehow different. 204 They could be nullified if unconstitutional. They involved differential treatment of persons or of property that the legislature had already determined was a suitable subject of taxation-a direct shifting of the burden among taxpayers prima facie situated similarly. -Every exemption is an indirect tax upon other property, and can only be justified where a direct tax upon other property in its behalf would be within the power of the legislature.‖ 205 The payment of a bounty or subsidy out of the public treasury, by the protective power, may be made in the form and under the name of a tax exemption. . . . The generation by whom the constitution was adopted understood the state could pay a sum of money to an individual, for a public purpose, by exempting him from the payment of the same amount of tax. 206 As expressed in Chief Justice Allen's dissent in Havens, -to aid some . . . without aiding others can be justified only by a line of distinction based on a public benefit for those aided not applicable to those not aided.‖ 207 None of this, even had it been less ambivalent, was of much use to either side in Havens. Whatever approach one took when there was only one class of taxable -estate,‖ the problem now was how to define additional, differing classes. Was the court facing a highly selective, discriminatory occupational tax, or a simple sales tax on tobacco? And if the latter, could it, or should it be distinguished, as the court would come to be asked, from a sales tax on bottled soft drinks, 208 apples, 209 milk, 210 or barber and beauty services? 211 The majority said the view that -an act of the legislature imposing a tax should be considered primarily as an exemption statute is believed to 204 be wholly without foundation.‖ 212 Unless the word -primarily‖ was employed to convey an unexplained qualification, the court was mistaken. In 1927 the court had been presented with two possible income taxes, one that taxed only incomes above $2,000 and one that taxed incomes categorically but exempted amounts below $2,000. 213 Some question was raised about the difference, but the court dismissed it: -The terminology used does not control. The substance of the provision must be considered. The question is one of power to grant exemption.‖ 214 Even Chief Justice Doe, who long before the 1902 amendment believed the taxing power was not limited to polls and estates, rejected the railway express tax precisely because it was too narrow: Whether it is a tax imposed upon person, property, income, business, gross receipts, profits, or earnings, is immaterial. It is a tax which one class of men are required to pay, and from which all others are exempt. It is a perfect example of unequal division of public expense. 215 For the proposition that imposition of a tax could not be treated as an exemption, the majority quoted only a different proposition from the problematic opinion in Canaan: 216 -No case is to be found holding a tax invalid because of the exemption of other property by either express provision or failure to enumerate it as taxable.‖ 217 While literally true in the original context, that passage in Canaan did not mean that unjustified exemption could not invalidate a tax. One ground for the unconstitutionality of the inheritance tax in Curry v. Spencer had been that the state -cannot lawfully make discriminations and cast the burden upon one class of beneficiaries, and exempt all other classes from its operation.‖ 218 Between Canaan and Havens the court had twice declared that a general $2,000 exemption from an income tax would be fatally excessive: -The duty to contribute to the maintenance of government is a primary one, the performance of which is not to be excused for light reasons.‖ 219 It had also said that leaving corporate income out of a taxed class of business income would be unconstitutional. 220 The majority invoked two specific post-1903 classification decisions involving sub-classification of franchises and incomes. When taxation of electric and gas utility franchises was challenged for failure to include other utility franchises, the court had said: The power of the legislature to classify property as taxable or nontaxable is a broad one, and the validity of its exercise has rarely been called in question. Classification of property by kind has always been recognized as proper. So, too, classification by use is said to be permissible. So long as there is a reasonable line of demarcation, and there is no attempt to make taxability depend upon a classification of owners, the legislative power in this matter is supreme. 221 However, Havens appears to have overlooked the fact that the franchise issue was one of inclusion in, or exclusion from, a statewide tax on estates, not the creation of a new -other‖ class of property to be taxed at a different rate. 222 The power to select particular types of property for inclusion in a general estate tax had long been settled. The power to tax -[o]ther classes of property‖ was not based on classification by kind, but -by some fact other than mere ownership.‖ 223 A non-estate tax could be levied on a -distinctive class of property‖ depending upon -a certain event . . . a characteristic event, not common to other property.‖ 224 The Havens majority quoted this and declared that with -slight changes in phraseology,‖ it could be applied to sustain the tobacco sales tax. 225  The only clear precedent for an arguably under-inclusive tax on a new class of property was the court's treatment of taxes on income. Money at interest was, of course, property, and the legislature had very broad authority to sub-classify it and subject any or no part of the classes to the general tax on estates at the common rate. 227 In 1915 the court approved a proposal to remove from the taxable list various interest or dividend-bearing items and levy instead a tax at the common rate on the income they produced. 228 The bill explicitly defined such incomes as -personal estate,‖ and the court upheld it as such, with the understanding that it would be taxed at the same rate as other property. 229 Legislative power to make such exclusions from and additions to the list of taxable estates could not -be regarded as open to investigation.‖ 230 The court went further in response to the objection that they had approved an income tax. The proposal remained a tax on -personal estate.‖ 231 As such, -[t]he failure to tax all incomes would not be a constitutional objection. The taxation of a class only would present the situation of our present tax laws, which do not tax all classes of property.‖ 232 Despite the fact that it resulted in different effective tax rates on differently invested -estates,‖ 233 the same plan was approved in 1923. 234 However, one dissenting justice foresaw hazards in applying the old concepts of classification and selection to new classes of property: [D]isproportion in taxation within the meaning of the constitution can be accomplished as effectually by taxing a part of a given class of taxable or non-taxable property and giving it a fictitious name, as by varying the rules governing the ascertainment of value, or by varying the rate. There is no limit to the diverse classifications which might be made once we embark on this method. To adopt such a method would be . . . an elimination of the word -propor-tional‖ from the constitution . . . . 235 In Conner v. State, the court upheld the 1923 IDT, using it as the vehicle for announcing its conclusion that the 1903 amendment authorizing 227 taxation of -other classes of property‖ permitted what had previously been considered double taxation. 236 The Havens majority conceded that no issue involving the breadth of the class was raised. 237 The Conner opinion recognized that other questions about the new theory were likely to arise and declined to explore them. 238 However, the court had approved treating income as a new class of property and upheld a tax applicable to only certain types of income. It has repeatedly done so since, approving differential taxation of an extraordinary of variety sub-classifications of gross, net, or blended incomes. 239 However, Havens involved only one type of tax at one rate on the movement of one kind of property. 240 Taxonomical complexities would arise after the attempt to settle whether a class was defined by the -characteristic event‖ or a combination of the event with other factors. In Havens the court tacitly repudiated the position it had taken in 1930 and decided that, at least in some cases, factors other than the characteristic event could justify separately classifying and taxing only some of the property subject to the event. 241 Although unwilling to treat the allegedly narrow classification as a type of exemption, the majority also declined to treat the definition of -other classes of property‖ as unreviewable in the way it had been for personal estates. The majority offered some criteria for determining -the legal requirements of classification.‖ 242 In addition to the characteristic eventtriggering incidence of the tax, the levy was on a commodity distinguished by a restriction on sales or gifts to minors, one -so distinctively in a class of its own that it is generally considered by economists as an appropriate 236 subject of taxation.‖ 243 Its sale was distinct from -the ordinary transactions of private life which contain no element subject to supervision either under the police power or as things affected with a public use.‖ 244 It was not a necessity. 245 As bulwarks against discriminatory taxation, these distinctions were hardly formidable. Chief Justice Allen's dissent observed that a justification for regulatory exercise of the police power bore no logical connection to an exercise of the taxing power, and that such a basis for classification would leave -any selection . . . just and reasonable and the legislative will . . . uncontrolled.‖ 246 -[A] law taxing only bread . . . would not be validated by including in the law requirements for the weight and quality of the bread.‖ 247 He could have pointed to special regulation of many other commodities, including milk, 248 and many common activities, including hunting and fishing. 249 Other commodities were dangerous and subject to sales restrictions. 250 The opinions of economists were a poor guide for the court-they generally also supported constitutionally forbidden progressivity. 251 Although the Chief Justice was merely dismissive, the criterion of economic theory was manifestly unsound. Economic writing about state taxation presupposes the nearly universal power to levy excises, grounded in a power to declare any occupation -a privilege and tax it as such.‖ 252 It takes for granted the very authority New Hampshire's founders withheld. As observed in one of the opinions cited by the Havens majority itself, -the taxing power is fixed by the language of the amendment and not by a classification of taxes by authorities on economics. Subsequent decisions reveal that the listed distinctions in Havens have been neither necessary nor sufficient to define a distinctive -other class‖ of property separately from the -characteristic event.‖

Developments by Type of Tax a. Other Sales and Commodity Taxes
Questions remained about what sales of other commodities might be classified and whether tax rates could vary among them. In 1947 the advice of the court was sought regarding a tax proposed on the sale of bottled soft drinks. 254 The sponsors had cautiously proposed the same 15% levy and valuation method as the tobacco tax, 255 so any issue was confined to classification. The court said the tax was on a distinctive class of property, depending on a characteristic event, a sale. There was no reference to the police power. Instead, the court relied on other abundant reasons. Soft drinks, like tobacco, are not necessaries, but may be properly classified as luxuries which were recognized by the dissenting judges in Havens v. Attorney General, as proper subjects for taxation. Their fitness as subjects of taxation has been generally recognized. Similar taxes have been imposed in many of the states. The fact that this burden of the tax will be very widely distributed over almost the entire population of the state indicates that it is a good tax, according to accepted theories of taxation. The incidence of the tax depends upon a characteristic event, a sale, which has been held to a proper criterion for determining the incidence of a tax. 256 Two years later the same justices peremptorily condemned conversion of the electric utility franchise tax to one on kilowatt-hours of electricity produced, since it would have been a -privilege tax.‖ 257 Although the levy might not have been strictly ad valorem, 258 that seems to have been beside the point at the time. It is hard to avoid the conclusion that the briefs and arguments failed to reveal an attempted and salvageable sales or gross income tax behind all the references to franchises and privileges. 259 Some years later, the court used the flat rate distinction to -harmonize‖ this decision with its approval of a proposed conversion of the tax on a franchise as property to a tax on income generated by a franchise. 260 Many years later the court approved such a tax on the gross receipts of electric and gas utilities, essentially a -sales tax on the consumption of electricity and gas.‖ 261 The same year a proposed tax on apples -moving into the channels of commerce‖ was rejected as a forbidden -occupation tax‖: 262 The raising and selling of apples involves -only the ordinary transactions of private life.‖ It contains -no element subject to supervision either under the police power or as things affected with a public use.‖ -The mere statement of the general proposition is sufficient to show that it unquestionably exceeds the legislative power.‖ 263 As drafted the tax had a structural flaw (flat rate again), but the court ignored that. 264 That the proceeds of the apple levy were devoted to promoting the sale and use of apples did not enter into the analysis. 265 An effort similar to the apple excise regarding milk distribution in 1953 failed as either a tax or a fee. 266 No mention was made in either the electric franchise or milk distribution cases of the unique and elaborate police power regulations and price controls to which those industries were subject. 267 Contrary to its practice in some cases, 268 (1927)). 264. The apple tax was one cent per bushel. 265. Either a fee theory or a special benefit assessment theory might have had some merit. In a subsequent, more thorough analysis of a similar charge on milk distributors, the court held that establishing a fund for advertising and -stimulating milk consumption is not in aid of regulation as the definition is understood,‖ although promotion of the sale of milk was -not of itself an invalid purpose. the legislature how it could lawfully achieve its purposes in any of these decisions. The criteria laid out in Havens and supplemented in the soft drinks decision were not used in the kilowatt, apple, or milk opinions.
In 1951, confronting proposed sales taxes at differing rates on a miscellaneous assortment of goods and services, the court had to reconcile its expansive language in the tobacco and soft drinks opinions with its duty to the constitution. Leaving tobacco at 15%, the bill would have taxed restaurant meals at five, soft drinks at twenty, and admissions at five. 269 The court maintained its view that tobacco was in a class by itself, and expressly stated it could be taxed -at a rate distinct from the rate of a general sales tax.‖ 270 This was a bit awkward without resort to stronger justifications than laid down in Havens. Just the week before-in the immediately preceding opinion in the official reports-the court had insisted that all incomes were one class and that intangibles and income from mercantile and manufacturing had to be taxed at one rate. 271 No attempt was made to reconcile the differing approaches to classification.
On -the issue of still further classification,‖ the court hypothesized justifiable distinctions based on various differences-sales of real property versus personal, of luxuries versus necessities. 272 It wrote of permitted disproportion -inherent in the tax itself,‖ 273 but cautioned against failure [t]o promote -equal or honest division of [the] common burden.‖ The danger of creating, by narrow classification, a tax upon occupations or privileges is apparent. -Under our constitution, the power to tax is a power not to destroy the right of property by a discriminating process of classification or selection, but to equitably defray the expense of protecting the right of property and other rights.‖ 274 Referring to the -complexities of the subject‖ and the limited time available for answering the inquiry, the court expressed its -tentative con-clusion‖ on the limited information before them. 275 The justices were -unable to declare the proposed bill constitutional.‖ 276 When it was proposed to tax cigarettes at 20% and other tobacco products at fifteen, the court saw doubtful constitutionality, the court suggested simply narrowing the taxable class to cigarettes. There was one class, not two. While each activity in the two classes presumably had -some unique trait,‖ the -‗characteristic event' which justifies imposition of a tax differing from the general property tax is the samenamely, the furnishing or sale of a service.‖ 280 Without equalizing the rates the bill would be unconstitutional. With a uniform rate it could stand. 281 Tobacco was special-the default position is apparently -a general sales tax‖ at one rate. 282 In contrast to the tobacco and soft drinks decisions, these later opinions warning of the dangers of narrow classification have no judicial elaboration of distinctions justifying the classifications in issue. The court has clearly applied the Havens criteria to goods and services in only two later cases: once to justify narrowing the class of taxable tobacco to cigarettes, 283 and once to validate a proposed tax on production of refined petroleum products. 284 Since then the court has apparently forsaken any effort to comprehensively define -the legal requirements of classification.‖ Instead it has fallen back on more general language like that in the soft drinks opinion requiring -reasons which may fairly be thought just and in the public interest‖ for selecting goods and services to be taxed at different rates.

b. Taxes on Incomes or Expenses
As noted above, the court had approved taxes on various classes of income some years before Havens. 286 It did not have to confront two different classes of income taxed at two different rates. It had, however, said that the rate for taxation of incomes -must be uniform.‖ 287 In 1949 the court's advice was sought on a proposal to tax gross incomes. 288 The House of Representatives described it as -classifying gross income with regard to its type, rather than with regard to its recipient.‖ 289 The court rejected varying rates for the -types‖ of income: A gross income tax does not differ from a net income tax with respect to the constitutional requirements. Either form of income constitutes a class of property taxable under the 1903 amendment to our Constitution. They are what is sometimes called property in motion as distinct from static property. Both classes are subject, however, to the constitutional requirement of proportionality or equality of rate within each class. 290 On the same day, in response to a net income tax proposal, the court approved defining net income with reference to the U.S. Internal Revenue Code, observing that it would -greatly facilitate the administration of the act.‖ 291 Later it made clear that a tax could be levied as a percentage of federally defined income, but not as a percentage of federal taxes. To do so would introduce unconstitutional graduation. 292 When it was first proposed to except the stock in trade of merchants and manufacturers from taxable personal estate and replace it with a tax on their net income, the court reaffirmed its previous approval of such reclassifications. 293 However it also reaffirmed its position that all income taxes -constitute one class for purpose of establishing a rate,‖ expressly stating 286 the same rate would apply to the tax on intangibles, namely interest and dividends. 294 The first opinion approving taxation of one type of income at a special rate came in 1958. 295 The previous year the court had held the public utility franchise tax unconstitutional. 296 It had been a traditional property tax on the intangible value of the franchise as measured by the difference between the value of the utility as a whole, based on capitalization of earnings, and its net assets. 297 The earnings part of the statutory formula was irrational and had long notoriously been -a farce.‖ 298 Facing budgetary shortfall and the need for a special legislative session, the governor and executive council asked the court for comprehensive advice about utility taxation. 299 As a franchise was personal property, it could be taxed as -estate,‖ 300 but that meant it would have to be taxed at the same rate and valuation as other property taxes at the state level (principally the railroad tax). 301 The statutory formula producing a differing valuation had therefore been unconstitutional. However, franchises had been one of the two examples of -other classes of property‖ listed in the 1903 amendment, and incomes were also a recognized -other class.‖ Therefore it was the court's opinion that franchises of utilities may properly be taxed at a special rate, distinct from that imposed upon incomes, or inheritances, or by the general property tax. We see no reason why such a special tax upon utility franchises may not validly be imposed by reason of the receipt of income from the exercise of such franchises, or why it may not be levied at a special rate, and in proportion to the amount of income received through exercise of the franchises. 302 The court was still speaking in terms of classes of taxes so it had a choice to make: income, franchise, or both. It said, -uniformity and proportionality must be maintained within this separate class of franchise taxes.‖ 303 As with other classes, this one need not be comprehensive-inclusion of other income-generating franchises was not required. 304 But the court considered the issue of a rate differing from the IDT -difficult.‖ 305 The rates could differ if the franchise tax were levied on net income, as the intangibles tax was on the gross. That gross and net income were different classes had already been stated in the abstract. 306 Yet, without regard to gross or net, the court also said that franchise income could be separately classified, and -[t]he class so selected is as distinctive as that of the class upon which the tax upon interest and dividends is imposed.‖ 307 The tax had characteristics of both classes, and the distinctive qualities of the franchises justified a different rate on the incomes.
There was another proposal in 1965 to repeal the troublesome stock in trade tax and replace it with an income tax at a uniform rate. 308 It had one easily corrected flaw-a portion was characterized literally as a property tax, a misnomer that would have been fatal for lack of coordination with the other state property taxes. 309 More seriously, however, the tax would not apply to income from personal services -for which wages or salaries are received from an employer.‖ 310 Consequently the self-employed would pay the tax, while those doing the same work but drawing a salary from a corporation would not. This not only made the tax easily circumvented; it was an unconstitutional discrimination among taxpayers. 311 Coordinating the deductibility of compensation among various business forms has been a recurrent design problem in New Hampshire taxation as the state has increasingly relied on definitions from a federal internal revenue code that promiscuously discriminates among taxpayers.
In 1969 a legislatively created Citizens Task Force worked out a -Grand Bargain‖ to thoroughly revise the state's revenue structure. 312 The tax on stock in trade and many other business-related classes of personal property would be repealed. 313 A tax on the net profits of any corporation, partnership, or proprietorship would take its place, with revenue sharing compensation provided to cities and towns to reduce their tax bases. 314 Definitions were based on the federal internal revenue code, but unincor- porated entities were allowed a state deduction for the value of owners' services to equalize the treatment of all business forms. State credits or exclusions were designed to avoid possible double taxation where taxes on other revenue streams overlapped with business profits. In anticipation of a special legislative session, the governor and council asked the court's advice on the constitutionality of the proposal; the court saw no constitutional flaws. 315 This was the genesis of the business profits tax (BPT). In its scrutiny of the proposed BPT, the court had to distinguish other classes of property taxed differently or implicitly created where the BPT base overlapped them. The IDT rate could differ as it was levied on gross income. To the extent interest and dividends were taxed under the IDT, that income was excluded from the BPT base. This, however, had the effect of denying businesses the benefit of certain exemptions allowed under the IDT and also of creating a different effective rate for some intangible business income. However, the court said business income could be -classified separately from salaries, wages, and unearned income of individuals,‖ and taxed at a rate differing from intangibles -held to the accounts of nonbusiness interests.‖ 316 As to the better rate for business income from intangibles, the court characterized it as a rational -partial exemption‖ to avoid discouraging investments. 317 The state taxes on railroads and telephone companies were traditional property taxes that did not need to be coordinated with an income tax. The taxes on gas and electric franchise income were of a distinct class justifying a different rate, and making their higher taxes a credit against the BPT prevented double taxation. 318 The tax on interest and dividends paid out by banks was called a franchise tax and remained in a class by itself. 319 Taxes on insurance companies were distinguished on the traditional theory that they were not taxes but voluntary payments for special privileges. 320 At about the same time it was signaling that sales of ordinary goods and services might fit in only one or two classes, each with a common rate, 321 the court was allowing a profusion of distinct categories of income: gross or net; business receipts, wages and salaries, or unearned income; of the latter, rents or interest and dividends; franchise income with subclasses of franchises. More distinct classes were to come (presumably subdivisible by other recognized factors): earnings of non-resident commu- ters; 322 capital gains, both ordinary and from residences; 323 interest and dividends paid by domestic financial institutions; 324 and net business profits with compensation added back. 325 Double taxation issues and the complexities of taxing multi-state or international business groups have also produced many credits and exemptions sometimes indifferently referred to as acts of classification. 326 Except for franchised utilities, however, the court was skeptical of classification of income by industry. In 1975 it was proposed to exclude from the reach of the business profits tax net income derived from sales of spirits and wine -under the express direction of, or under an agreement with, the State liquor commission for sale to the commission.‖ 327 With no apparent irony, the court said: If the effect of the proposal is to exempt certain taxpayers, i.e. those who sell -spirits and wines‖ to the State liquor commission, from this State's general business profits tax, it is unconstitutional. If, however, Senate bill No. 138 merely classifies net income from the sale of -spirits and wines‖ to the State liquor commission as property exempt from taxation and if a -just reason‖ can be found for doing so, it is constitutional. 328 The justices indulged in no speculation about possible -just reasons‖ and said no more.
A separate corporate income tax remained forbidden. 329 However, the BPT's necessary allowance of a reasonable compensation deduction for working owners of unincorporated businesses meant that many small businesses, particularly professional and other service businesses, paid little or no tax. The narrow incidence of the BPT in practice and its volatility in relation to the business cycle led to repeated efforts to find a way to reach more businesses that was both politically viable and constitutional. 330 In 1981 the legislature created a complicated minimum business tax of $250 on any business with gross income over $12,000 and insufficient profit to trigger the BPT. 331 Applying a flat rate to varying income necessarily produces effective rates that are regressively graduated. 332 Despite an effort to distinguish between gross and net, the formula reached the same income-the purported classes were indistinguishable. 333 From a different perspective, there was no -just reason‖ to tax income below the BPT threshold at a higher rate that that above. 334 The tax was void ab initio and refunds were due. 335 Further experiments in this direction were pre-tested through advisory opinions. The next effort was to define two classes of business profits, one broadly defined and taxed at 1%, the other the existing BPT class, then taxed at 8.75%. They were to be alternatives, a business being required to pay whichever was greater. 336 The court saw both as -essentially classifications of business income.‖ 337 Therefore, there was one class of property taxed at two different rates. What really was going on was a classification of taxpayers, not property. However laudable its motive, the legislature -may not create alternative systems of taxation which inevitably result in two classes of taxpayers, paying differing rates of tax on essentially the same class of property, business income.‖ 338 In the same opinion the court approved a proposal to reconfigure the BPT by adding back all compensation paid, granting a uniform $25,000 deduction for all entities, and taxing at a lower rate. 339 While constitutional, it was not politically successful.
Later that month the court advised on another two-class proposal under which tax paid at a low rate on the more broadly defined base could be taken as a credit against the BPT. 340 Because the court still saw the two classes as essentially the same, differential rates doomed the proposal. 341 The idea of two layers with a credit however, was itself viable and ultimately produced the solution. The court simply required that the broader low rate tax be on a clearly different class of property such as, it suggested, compensation or payroll. 342 There was another decade of false starts before the legislature took this advice.
One idea was to cap BPT compensation deductions at $100,000 per employee. -The effect . . . would be to impose differing tax burdens and differing [effective] tax rates on business organizations which have identical gross income and aggregate reasonable compensation expenses.‖ 343 Those with any employees paid more than the cap would, to that extent, pay tax at a higher rate than others. This -would violate the constitutional principle that the legislature must substantially treat all business entities uniformly and equally.‖ 344 Repealing all the compensation deductions and replacing them with a flat credit per worker (pro-rated for part-timers under 1,800 hours per year) was seen as having the same flaw. 345 The court declared the credit proposal unconstitutional despite a stated purpose to encourage employment. 346 As employment is a recognized public purpose justifying tax exemptions, 347 this seems to have been a misstep by the court. Alternatively, the court may have concluded that other motives and likely practical effects outweighed that recital. It is in any case hard to reconcile with the -rational basis‖ analysis that the court was applying in other tax classification cases. 348 The solution suggested by the court in 1983 was adopted in 1993 with the business enterprise tax (BET). Instead of some variation of business income, the BET base is roughly business expenses. It is the sum of compensation, interest, or dividends paid out-the cost of labor and most capital. 349 It comes out of the third part of the income equation (gross minus cost equals net), manifestly a different class of property in motion. Levied at a low rate and credited against the BPT, the BET can reach all operating businesses. Those operating at no or low BPT net because of compensation paid to owners now contribute to state revenues. What the constitution prohibited in one tax was, through deft use of the classification power, possible with two coordinated taxes.

c. Franchises
Much of this ground has already been covered. It has long been settled that franchises are intangible personal property, taxable ad valorem. 350 The legislature may tax some franchises and not others. 351 So long as they were so taxed, it was done at the common rate. 352 Franchises are also listed in the 1903 amendment among -other classes of property.‖ However, in the modern era the court ruled that when they are taxed directly as property, the common rate is required, 353 as is a rational valuation formula. 354 Income from franchises can be taxed as a class of dynamic property. 355 When it is, it may be taxed at a rate differing from other income taxes. 356 However, if the tax is on income, it must be income actually received and rationally defined. 357

d. Property Taxes
The modern history of traditional property taxes, the ancient tax on -estates,‖ does not involve constitutional issues directly. The nineteenthcentury decisions on proportionality remain sound. All estates in a given taxing jurisdiction are to be taxed at a uniform rate and valuation. If, despite the statutory command to appraise property at full value, a different proportion in fact prevails, the constitutional proportionality rule controls. It is neither necessary nor sufficient to show flawed assessment methodology--disproportionality, and not methodology, is the linchpin.‖ 358 To secure abatement, the taxpayer must show his appraisal is above the average of other property in the taxing district. 359 When differing types of property in the base are generally assessed at differing proportions of value, a taxpayer need not compare subclasses-the ratio of full value of all district property to the total of assessed values is the test. 360 There is one recently developed exception to the general rule requiring proof of actual disproportionality to secure an abatement. If a similarly situated class of persons is subject to a tax, and, with no rational basis, some are singled out for tax and others not taxed at all, there is an independent violation of equal protection. The tax is unconstitutional as applied until the discrimination is ended. 361 Taxes on estates are now primarily land taxes. 362 As a legislative and judicial dialectic developed and defined the power to tax other classes of property, most personal property taxation flowed into the new channels. The general tax on personal estate was repealed in 1981. 363 Utility taxes are now on receipts for or consumption of the service, not the franchises themselves. With the real property transfer tax, even land has developed a dynamic side. 364 However, less land is taxable at full value. Concerns about conservation, agriculture, and open space led to the constitutional amendment of 1968 permitting valuation of land based on -current use.‖ 365 Exemptions have accumulated for various public purposes. 366 Yet these real property taxes are the main support of local government. Consequently the modern cases have involved the increasing pressure for tax relief and challenges to exemptions. 367 The state's long-running struggle over school funding also put state-level general property taxes on the table, sharpening some controversies and obliging the court to declare that legislative power to classify and exempt could not be used to defeat the constitutional requirement of uniformity and equality. 368 shows that when a district allowed this without adjustment, a merchant taxed mostly on stock in trade could always secure an abatement.

Other Developments a. Tax Relief
The first modern decision on exemptions for tax relief appears to be an advisory opinion in 1963. 369 The questions involved additional exemptions from the interest and dividends tax for taxpayers aged sixty-five and over and for the totally disabled, neither with a means test. 370 In approving the age exemption, the court broke with older decisions without acknowledging it had done so.
When analyzing proposals in 1927 to levy a tax on all business income with a $2,000 exemption and to levy the IDC only on income above $2,000, the court said it was not merely a matter of classification. -The terminology used does not control. The substance of the provision must be considered. The question is one of power to grant exemption.‖ 371 It then struggled to define -general‖ as opposed to -special‖ exemptions, reviewed various grounds for minimum amounts, and made some very broad statements about legislative discretion. 372 The only specific grounds for a lowincome exemption was that -[t]he recipient of the small income is not in a position to pay, and the exemption tends to promote thrift.‖ 373 At the end, the court hedged: -the problem of legislative power to make quantitative exceptions from taxability is a difficult one. There are substantial arguments for either view. There are difficulties in attempting to define limitations, if the power is thought to exist.‖ 374 By 1930 the court had resolved its doubts. Substantial quantitative exemptions were personal, not matters of property classification: The question presented concerns the power to exempt because of the amount of income received by the individual. It does not relate to the power to grant a general exemption as to a certain class of income. Such personal exemptions are granted upon a theory that everyone should have a certain amount of income tax free, and, except in a general way, they have no relation to the nature of the income. The ground upon which a substantial quantitative person- al exemption is here sustained is that the exempted party is too poor to pay. 375 Quantitative personal exemptions above some ability to pay threshold were simply a way of importing progressivity, and -our constitution does not permit the laying of a graduated or progressive tax. A tax levy cannot be sustained here upon any theory that the richer one is the higher his tax rate should be.‖ 376 The court concluded that particular amounts lower than those in the proposal were the most that could be thought reasonable. 377 The next year the court declared that public benefits based on age without a means test would violate both the pensions clause of the constitution 378 and the prohibition on taxes for private purposes found in part I, article 12 and part II, article 6. 379 A backdoor way of achieving an age exemption by excluding pensions and retirement allowances from an income tax was blocked in 1937. 380 Despite this, the 1963 opinion said a blanket, quantitative exemption based on age was a permissible classification. -While . . . age and poverty are by no means synonymous, . . . in many cases they may have some common attributes. . . . [and] poverty and misfortune have long been regarded as just grounds of relief.‖ 381 The court cited eligibility for old age assistance and medical assistance to the aged at age sixty-five, and the exemption from poll tax at age seventy. 382 Without articulating the connection, it suggested that retirement ages had some relationship to income from -sources other than earnings.‖ 383 Remarkably, the court cited its 1930 opinion without comment as if it supported this radical departure, and it ignored the 1931 opinion on pensions. 384 It seems unlikely the court would have permitted sending a check to every resident over the age of sixty-four. Yet by conflating classification of property with personal exemptions the court had upheld a classification of persons on speculative grounds without the traditional requirement of a public purpose sufficient to justify a public expenditure.
When the more visible and politically touchy property tax was involved, proponents of relief for the elderly were more circumspect. A means test was built into a 1970 bill to exempt the first $5,000 of assessed value of residences owned by those aged seventy or more. 385 The court, with no reference to the means test, declared the bill consistent with the state constitution in one long quotation from its 1965 IDT opinion. 386 A 1971 income tax proposal included a limited property tax -circuit-breaker‖ in the form of a credit for property taxes or, to the extent the taxpayer did not owe property taxes, a direct payment. 387 The credit was designed to provide limited relief for low-and moderate-income households from tax on their residences, whether owned or rented. By working through an income tax, the expense would be borne by the state rather than the municipalities. There were three limitations: Only property tax in excess of 6% of household income was considered; no more than $900 of that excess could be counted; and the credit was capped at $300. 388 Faced with potential cash payouts and a scheme classifying people by income and tax burden, the court invoked traditional exemption analysis. The limitations were -an essential prerequisite to constitutionality.‖ 389 The court quoted the pension decision's prohibition on -assignment of public funds to other than public purposes,‖ and, citing that decision, said -[p]ublic assistance, afforded in a limited way and without discrimination, to persons eligible therefor [sic] by reason of a lack of means of their own, is a recognized exercise of the protective power.‖ 390 Echoing the depression-era decisions, the court apparently made its own determination that the amount involved was -reasonable.‖ 391 A later proposal to -return‖ state funds to homeowners failed as discriminating among taxpayers. -A rebate out of public funds to some taxpayers but not others would clearly constitute discrimination unless sustainable upon grounds of reasonable classification.‖ 392 The one major property tax relief measure to have been adopted was declared unconstitutional in 1974. 393 It was a local-option system under which cities and towns could adopt a partial exemption from local taxes (not county or state) for owner-occupied residential property. The court discussed the public-purpose aspect of the exemption extensively, finding encouragement of home ownership itself a legitimate public purpose. 394 Thus a means test was not strictly necessary, and the lack of provision for 385 renters irrelevant. 395 The previous year's opinion regarding state payments to homeowners was distinguished, as that scheme -displaye[d] overtones of public welfare‖ with -no criteria by which to limit its assistance to those homeowners in financial straits.‖ 396 The scheme, unfortunately, had a fatal design flaw. Instead of exempting the first dollars of home valuation, the statute applied the full tax rate on the first $8,000, exempted the next $5,000 ($10,000 for taxpayers over age sixty-five), and applied the full tax rate to the anything higher. The reason for taxing the first $8,000 was to assure that every homeowner paid some taxes to the community. 397 However, the result was that only those with properties assessed at $8,000 or less 398 paid the full tax rate, which had increased 10% to fund the exemption. 399 There were other paradoxical effects, but this was sufficient: -In our view the law is unconstitutional because the minimum valuation provision discriminates against the poor by unreasonably raising their taxes to finance tax relief for persons owning more expensive homes.‖ 400

b. Exemptions for Economic Development
Exemptions to encourage economic development were once of uncertain constitutionality. In 1929 the court decided Eyers Woolen Co. v. Town of Gilsum. 401 A special act had authorized -the town of Gilsum . . . to exempt from taxation for a term of not more than ten years a new woolen mill and the machinery to be installed therein proposed to be erected in said town by or for the Eyer Woolen Mill.‖ 402 The actual issue was easythe exemption was unique and granted to a named private business, thus violating the principle of equality. 403 However, the court wrote extensively about broader issues, and much of this dictum argues that industrial development was an insufficient public purpose to justify tax exemption. -Aiding a private manufacturing corporation is not a public purpose.‖ 404 A few years later the court held the same view: The indirect public advantage of industrial welfare and general prosperity is not a valid reason for the aid. Even if the public ad- vantage takes specific form, such as work for those in need of employment and without employment dependent on public assistance, public aid to the employer is a violation of the constitutional principle against taxation for private purposes. 405 Eyers Woolen Co. has been frequently cited for various propositions, but its view of the legitimacy of aid to industry by uniform, general exemptions was repudiated in the modern era: The State and its citizens presumably receive direct benefits from tax exemptions for industrial construction by attracting new industries into the State and keeping existing industry here, thereby creating economic growth. Since all industrial uses that meet the statutory definition may qualify for limited tax exemptions, the bill does not improperly classify property. The legislature has determined that the public welfare would benefit from the encouragement of industrial construction in the State and that this may be accomplished through the proposed bill. The purpose of stimulating economic growth is one properly within the legislature's discretion in acting for the welfare of the state. 406 This seems to have replaced an intermediate position that allowed the exemption of industrial facilities, but only if a -just share of the public ex-pense‖ was secured through a payment in lieu of taxes, set by a quasijudicial body taking into account all relevant factors including -employment opportunities to be created or retained.‖ 407

c. Double Taxation
Double taxation has been described as one form of disproportionality. 408 It comes in two kinds-constitutional or not. Nineteenth-century cases on double taxation lost their meaning with the 1903 amendment. When for a given level of government there was only one rate and valuation for any property taxed, any duplication was unconstitutional. Then problems arose with questions such as whether the stock of a corporation, taxed to the shareholder in his town of residence, was the same property as 405 the physical assets of that corporation taxed in their location. 409 From the beginning, however, proportionality has been judged only within taxing jurisdictions-district, municipality, county, or state. 410 A statewide property tax layered on property subject to local taxes is not (and has never been) disproportional. 411 When the 1903 amendment permitted taxation on -other classes of property‖ in addition to taxes on estates (rather than in place of them), it necessarily permitted the same property to be taxed in two or more ways depending on what classes it fit into and the extent to which they overlapped. -Disproportion in the tax, in the sense that taxes are laid in several ways rather than in one way, is not objectionable, in the absence of some constitutional prohibition of such procedure. The power to impose disproportional taxes is put beyond question when it is specifically permitted by constitutional provisions.‖ 412 What was once denounced as an unconstitutional assertion of -despotic power‖ 413 is now permissible, even routine.
Double taxation is now a problem of classification. If a given dollar or thing fits within or passes through two or more classes, it may constitutionally be subject to two or more taxes if the classes are so defined that -the incidence of the two taxes is determined by separate and distinct factors.‖ 414 This is frequently misunderstood. The court itself took some time to work out the distinction. It had briefly taken the position that a net profit tax on a business paying gross sales tax would be unconstitutionally double, 415 but, noting that profit was net of expenses (which would include the sales tax), it later concluded each tax's incidence was different and reversed its position. 416 The focus is on practical effect rather than taxonomy-although the gasoline -toll‖ is not even a tax, the court has said gasoline would have to be exempted from a general sales tax. 417 As recently as 1951, the House of Representatives was concerned that taxing goods as personal estate in the manufacturing process might be incompatible with a retail sales tax on the same goods. It was not. 418 Nor did the railroad tax 409 on tangible property need to be credited against the BPT: -the incidence of the two taxes is determined by separate and distinct factors.‖ 419 Difficulties developed with the proliferation of classes of taxable income. The interest and dividends tax first occupied the field. Each proposal to adopt a more general income tax had to deal with it. 420 One version of the proposed gross income tax of 1949 provided for exempting income subject to the IDT. 421 As the tax was pervasively flawed, the court did not reach that issue. In 1965, the proponents of a net income tax overlooked the layering, and the court held that stacking another income tax on the IDT would be unconstitutionally double. 422 The successful business profits tax of 1970 excluded from the definition of income any income that had been taxed under the IDT. 423 In all of these cases, the general income tax rate was different from the IDT. Although the incidence of two classes of tax might be so similar they could not be stacked, they could still be sufficiently distinct to justify different rates. -The Constitution does not require the rate of a tax upon net income to be uniform with that of the existing interest and dividends tax, which is a tax upon certain gross income, now fixed at 4 1/4%.‖ 424 Similarly, although stacking was avoided by allowing a BPT credit, there was no constitutional problem in the difference between the BPT and the significantly higher tax on electric and gas franchise income. 425 While capital gains have been held sufficiently distinct from business profits to be taxed at a different rate, business capital gains could not be subject to double taxation as both. 426 There is also potential for double taxation on receipt by a shareholder (individual or corporate) of dividend income that may have already been taxed as dividend income of the corporation. This is the reason corporations are not subject to the IDT itself. 427 Similarly, a parent subject to the BPT has a deduction for dividends received from subsidiaries also paying the tax. 428 The BET deals with a similar cascading problem through deductions for previously taxed distributions. 429 The court's position that classes could be sufficiently distinct to justify differential rates, but sufficiently similar to justify a credit or exclusion to avoid double taxation, is what made our present combination of the BPT with a broader business enterprise tax (BET) possible. 430

d. Retrospectivity
The New Hampshire Constitution prohibits retrospective laws. 431 A retrospective law is one that -takes away or impairs vested rights acquired under existing laws, or creates a new obligation, imposes a new duty, or attaches a new disability, in respect to transactions or considerations already past . . . .‖ 432 Imposition of a new tax on transactions completed in prior years is prohibited. 433 However, the taxable event may trigger recognition of appreciation attributable to periods prior to the adoption of the tax. 434 The few cases on retrospective taxation are fairly recent. At one point a bare majority of the court advised that a change in the rate of the land use change tax after the owner had opted for current use valuation would be unconstitutionally retrospective. 435 In a subsequent contested case, the court unanimously renounced that view and adopted that of the dissenters. 436 The taxability of property defined by an act or event is determined by the law at the time of the act or event, not by some prior law on which the taxpayer may have relied. As the legislature lacks power to grant an irrevocable exemption, repealing one cannot be retrospective. 437 However, a statute may not retroactively annul a contract for a payment in lieu of taxes that was lawfully authorized when made. 438 PIERCE LAW REVIEW Vol. 7,No. 3 One decision has apparently permitted a degree of retrospectivity. In Estate of Kennett v. State, 439 the legislature had adopted a business profits tax. The statute became effective April 22, 1970, but by express terms applied to gross business profits earned after January 1, 1970. The transactions in question were two sales of real estate pursuant to options. 440 The options were -exercised‖ in 1969, deeds were delivered and recorded in February and March of 1970, and payment was received in February and October of 1970. 441 The tax was defined with respect to amounts shown on federal tax returns. Under applicable federal rules, the sales occurred on delivery and recordation of the deeds, not receipt of payment. 442 Although the court accepted this determination of the moment of recognition, it still upheld the levy. 443 The business profits tax had been adopted at a special session called for that purpose. 444 It had previously been the subject of months-long, very public study, and refinement by a legislatively created task force with participation of more than 300 citizens. 445 Its reliance on federal tax calculations imposed a choice among retrospectivity: a year's delay in efficacy, or presumably daunting complexities of proration. 446 Faced with the legislature's choice, the court apparently found the levy fundamentally fair and a practical necessity. 447 A later proposal to similarly back-date the scope of a gross receipts tax on electric utilities was declared unconstitutional, although in part because the utility would have been prevented from recouping its payment through a rate increase. 448 The court has since cast doubt on the -vitality‖ of the -reasoning and holding of Kennett,‖ 449 and it is almost certainly confined to its peculiar context.

Summary of Changes in the Modern Era
The modern era opened with approval of a product-specific sales tax shocking to judges steeped in the philosophy of earlier times. To justify this change, the court drew on sweeping language about the legislative power of classification based on the pre-1903 single-rate system. It tentatively undertook to define the -the legal requirements of classification‖ 450 under the power given in 1903 and skeptically deflected proposals for differing taxes on the sale of sub-classes of ordinary goods or services. The suggestion that there might be some basic form of sales tax was last signaled in 1971. 451 The notion that there were a few broad classes of taxes within which rates and valuation methods must be uniform 452 disappeared after 1951. 453 The income tax opinions validated numerous classifications with differing rates, merely requiring a -rational basis.‖ 454 The old proposition that -[a]ll taxes that can be made proportional must be so as-sessed‖ 455 has been stood on its head. It now seems no tax levied on a distinct class need be proportional to any other. Only when the court has considered two income classes to be essentially the same 456 or found a class irrationally under-inclusive 457 has it constrained legislative discretion in creating classes of taxable property. While sometimes treating exemptions in the old way, as indirect expenditures to be justified under the protective power, 458 the court more often treated exemption as a variety of classification, justifiable on any rational ground, 459  Limits on the legislature's powers, both overall and with respect to taxation, are rooted in particular constitutional passages and concepts. Given the founders' discursive style, the passages sometimes overlap and the concepts are expressed in differing terms. A problem can often be approached in several ways. For example, a highly selective tax may be attacked as violating equal protection, lacking reason, creating an improper classification, and being disproportional. An exemption may similarly be attacked on all those grounds, as well as for being an application of public resources to private purposes.
Arguments by litigants and questions from the other branches of government take any of these approaches, singly or in combination. Consequently, some of the court's opinions address a problem on narrow or uncommon grounds, 462 while others blend the arguments in conclusory language or cite constitutional provisions and lines of cases en masse. There are nearly two centuries of judicial gloss. In the nineteenth century, the court created a workable synthesis faithful to the founders' philosophic language. The constitutional amendment of 1903 was irreconcilable with part of that synthesis, but, as it labored for decades to resolve the resulting tension, the court cited the old cases and used the same language in an increasingly different context. Key words have been repeatedly used in multiple senses. What follows is an effort to distinguish and describe the current applications of the most important concepts and restate them more simply.

A. Public Purpose, Equality, Reason
The first question arising when a tax is imposed is -whether the purpose of such burden may properly be considered public. taxation must be equal.‖ 464 However, -[e]qual protection permits classifications that are reasonable and not arbitrary and have a rational relation to the public purpose sought to be achieved by the legislation involved.‖ 465 In actual cases, these three concepts are inextricably related. A rational distinction made for a public purpose does not violate the principle of equality. Conversely, if a tax or exemption treats similarly situated persons differently, it either improperly favors one class for private benefit (violating several articles of the Bill of Rights), 466 or is irrational (violating the limit on legislative power in part II, article 5), 467 or both. If a particular tax is irrational, it either lacks a public purpose, or unequally burdens those subject to it, or both. 468 Respect for the legislative branch and the presumption of validity mean that the reason and public purpose requirements are often phrased in the negative. A distinction or classification will be upheld -as long as ‗the proposed selection is not arbitrarily made or for the sole purpose of preferring some taxpayers to others.'‖ 469 Coupling these requirements permits the court to avoid impugning legislative motives while preventing invidious discrimination. Thus, in Claremont School District v. Governor,470 the court conceded that the stated legislative motive for a transitional exemption from the statewide school tax to taxpayers of some towns (avoidance of foreclosures, bankruptcies, etc.) was a proper purpose. 471 However, to extend the exemption to everyone in the -property rich‖ communities rather than the minority who might face hardship from an immediate tax increase was -so arbitrary as to serve no useful purpose of a public nature‖ and -unreasonable.‖ 472 Similarly, tax relief for low and moderate income homeowners was -directed toward a legitimate public purpose‖ in Felder v. City of Portsmouth, 473 but the mechanism irrationally discriminated against those very groups. 474 A dubious proposal to exempt wine and liquor dealers from the business profits tax could be deflected by indicating that no -just reason‖ had yet been articulated. 475 While public purpose/reason analysis is routine in challenges to exemptions, it occasionally defeats a tax. Utilities seem to inspire particular legislative attention. They may, of course, be separately taxed on their franchises, their income, 476 or their gross receipts. 477 The tax, however, must be rational. In 1957, the franchise tax on electric utilities was declared unconstitutional on the sole ground that the statutory valuation formula (which guaranteed overvaluation) was -illogical and unjust.‖ 478 A later proposal to levy a state property tax on electric plants capable of generating 500 megawatts or more would have reached only one facility, the Seabrook nuclear plant. 479 While the court speculated that nuclear power generation might justify a special classification, capacity alone did not, and -in the absence of a just reason‖ for separate classification, the proposal was unconstitutional. 480 In 1982, a lucrative administrative interpretation of the utility income tax had to be overturned because its application would mean the statutory formula would -not bear a rational relationship to economic reality.‖ 481 When the City of Rochester taxed Verizon New England's use of public ways without taxing similar use by other utilities, it lost on equal protection despite the application of minimum scrutiny. 482 The city had offered, and the court could conceive of, -no rational reason for selectively impos-ing‖ the tax and no -legitimate governmental interest . . . furthered by [the] disparate treatment.‖ 483 These requirements operate within taxing districts. So long as they are uniform in the taxing district, 484 taxes and exemptions can be subject to local option. The legislature frequently provides that cities and towns may adopt particular exemptions from local taxes. 485 No unconstitutional delegation of authority results when the legislature establishes the terms of a general act, but leaves the determination of whether it shall have the force of law to the governing bodies of the localities to be affected or to the people themselves. Constitutionally mandated requirements for uniformity and equality of taxation would not be violated should less than all cities and towns adopt the optional exemptions provided by the bill, with a resulting uneven system of taxation. 486

B. Proportionality
Proportionality is used in different ways in the cases, inviting confusion. Sometimes it refers to part I, article 12: -Every member of the community has a right to be protected by it, in the enjoyment of his life, liberty, and property; he is therefore bound to contribute his share in the expense of such protection.‖ In Smith v. New Hampshire Department of Revenue Administration, the court said this passage -literally imposes a requirement of proportionality of a taxpayer's portion of the public expense, according to the amount of his taxable estate, and requires that similarly situated taxpayers be treated the same.‖ 487 Paradoxically, however, the same opinion continues that -[s]trictly speaking, the rule of equality and proportionality does not apply to the selection of the subjects of taxation, provided just reasons exist for the selection made.‖ 488 Thus, one kind of proportionality is constitutionally required, but another is not. The state and current court have not been well served by loose use of the word in many older opinions.
-Proportionality‖ or -disproportionate‖ appear in the cases in at least four senses: (1) equal protection claims about selection and classification of the subjects of taxation or exemption; (2) the requirement of uniform rates and valuations in the design of a particular tax; (3) the possible requirement that different taxes of the same type have the same rate; and (4) 485  taxpayer challenges to their assessments under a tax that is constitutional but misapplied in their cases.
Since 1903, part I, article 12 should be primarily understood in the first of these senses, although it has some bearing on the fourth. While the provision that each -contribute his share‖ is obviously directed toward fairness in taxation, it does not contain the word proportionality. There is no formula by which a just -share‖ of the expense of protecting -life, liberty, and property‖ can be calculated. Relative benefits enjoyed, needs for protection, ability to pay, practicality of enforcement, costs of collection, etc., lurk in this general expression of the social contract. Balancing these factors -is not a judicial question.‖ 489 Under the single-rate system, the court could force a sort of overall proportionality once the legislature selected the objects of taxation, but it is impossible in a system of layered classes. This provision is now simply an emphatic and specific expression of the general principle of equality found in other parts of the Bill of Rights. 490 Translating it into proportionality adds nothing to public purpose, equal treatment, and reason. -The reasons which may justify the use of the selective power as to the subjects for taxation may be as various as the motives which induce any rational action,‖ 491 and -similarly situated taxpayers [must] be treated similarly.‖ 492 The second sense is a textually-based and distinct limitation. Article 5 of part II actually uses the word proportional, empowering the legislature to -impose and levy proportional and reasonable assessments, rates, and taxes . . . .‖ This provision has always been applied to the structure of particular tax laws. Except for polls, all taxes are on property. Part II, article 5 proportionality requires taxes to be proportional to the value of the property-i.e., ad valorem. That requires a uniform rate and uniform valuation. 493 The rate may not be varied on the basis of a personal characteristic of the taxpayer such as relative wealth. 494 The word -reasonable‖ qualifies the mathematical requirement, authorizing exemptions for just cause. 495 This is one source of confusion. An unjustified exemption vi-olates part II, article 5 proportionality, but exemption is often conflated with classification of property (part II, article 6) or approached as merely a matter of equal protection. If the same criteria and standards of review prevailed in all cases, this untidiness would be harmless. However, as explained below, some exemptions are based on the protective power, including some defined by personal characteristics that are forbidden as bases for a classification of property. It is also possible that different standards of review are or should be applied in these different contexts.
The third sense, that different taxes of the same type have the same rate, may be obsolete. At one time, the court held that there were classes of taxes, and that -all taxes of a given class must be laid at a common rate.‖ 496 -The object in requiring the use of a common rate [was] to insure the imposition of a proportionate burden.‖ 497 It was said as recently as 1951 that -[a]ll income taxes must be laid at a common rate,‖ 498 but thereafter the types of income taxable at different rates multiplied as the court approved various classifications. 499 In evaluating possible taxes on sales of goods or services, the court seems to have resolved the issue by merging the concept of classes of taxes with classification of property so that all property not properly distinguishable would necessarily be taxed proportionally because it would have to be in one class. 500 As part II, article 6 speaks only of classes of property, not classes of taxes, this seems the correct approach.
The fourth use of proportionality in the tax cases involves disproportionate assessment of a taxpayer's property under a valid tax. To secure abatement, the taxpayer must show his appraisal is above the average of other property of the same class in the taxing district. 501 The process dates back to the nineteenth century when the court treated uniformity, equality, and proportionality as general principles without specifying particular constitutional provisions. 502 This usage could be grounded in part I or part II PIERCE LAW REVIEW Vol. 7, No. 3 of the constitution, but it deals only with the application of proportionality to the administration of a valid tax, not a limit on legislative authority. The distinction was recently made in Verizon New England, Inc. v. City of Rochester, where the tax failed on equal protection grounds as irrationally under-inclusive without any need to show that the taxpayer's total assessment was disproportionally high in comparison with the average rate for other taxpayers. 503 The term proportionality seems best confined to the second and fourth senses in which it is used: the requirement of uniform rates and valuations in the design of a particular tax, and taxpayer challenges to their assessments under a tax that is constitutional but misapplied in their cases.

C. Selection and Classification
When all taxes but polls were on estates, at one rate and uniform valuation in each taxing district, the legislature had one choice-to tax or not. Excises were forbidden, but in selecting property subject to taxation, legislative discretion was supreme and limited only by a requirement that it be -reasonable.‖ 504 As the constitution prohibits any taxation without legislative authority, 505 the limit was largely theoretical in some cases because the state supreme court's only option for an under-inclusive tax was (and remains) to strike down the entire tax. 506 It could strike an express exemption (leaving the general taxing provision in place), but not a tacit one. 507 Consequently the old cases tend to treat the selective power as practically absolute. 508 In the modern era the real property tax remains inclusive, subject only to express exemptions. 509 Other levies occur under specific statutes defining the property to be taxed. Some of these treat personal property as realty for taxation purposes, which is permissible. 510 The modern cases still refer to the -selection of the subjects of taxation,‖ but in the context of 503 classification under part II, article 6 as amended in 1903. 511 The requirements in principle are the same-taxation only of property and reason in selection. The legislature has -broad power to declare property to be taxable or non-taxable based upon a classification of the property's kind or use, but not based upon a classification of the property's owner.‖ 512 The oft-repeated prohibition on classification of -owners,‖ 513 -taxpayers,‖ 514 or -persons‖ 515 is a loose and misleading way of describing what remains of the prohibition on excise taxes. To tax (or exempt) ownership, sale, severance, receipt, expenditure, etc., of a particular class of property necessarily classifies the taxpayers who do those things. The tobacco tax classified sellers or purchasers of tobacco. Denial to private landfill operators of an exemption for pollution control facilities classified the operators. Both were perfectly constitutional. 516 Yet a tax on apples put into commerce was an unconstitutional occupation tax, 517 as was one on milk distribution. 518 There is more to this than minimum-rationality equal protection-all of the distinctions are in some sense rational.
Taxation that meets the requirements of public purpose, equality, and reason can still fail. New Hampshire's classification power in taxation is narrower than it is in ordinary economic regulation, because the legislature may only tax -polls, estates, and other classes of property.‖ 519 Pure excise taxes remain ultra vires. Since 1903, some of the appearance and effect of the forbidden excise can be achieved by classification of -property in motion,‖ but not all. The state may not directly tax the exercise of an occupation, nor some act. Charges on those things must be justified under some other power, such as cost recovery fees or police power penalties. 520 However, the state may identify a class of property defined in part by some event and require a person associated with that property and event to pay the tax. There are two ways taxes may fail as classifications of property no matter how rational they are in the equal protection sense. The most obvious is to make taxability or tax rate depend on a characteristic of the taxpayer unrelated to the definition of the class of property. Thus, taxing the income of only corporations is forbidden. 521 Graduation is forbidden-it amounts to classification on the basis of wealth rather than qualities of the taxed property. -A tax levy cannot be sustained here upon any theory that the richer one is the higher his tax rate should be. All taxes on like property and for like purposes must be equal.‖ 522 Taxation of business profits that would vary with the labor intensity of taxpayers' business or the taxpayer's size or legal structure would unconstitutionally -result in two classes of taxpayers, paying differing rates of tax on essentially the same class of property.‖ 523 This has nothing to do with the number of taxpayers linked to the property. Taxing unusual forms of property that may be uniquely valuable to only one or a few persons in a particular business is not necessarily an improper classification. 524 Nor is taxing a type of property distinctively used by only two entities in the state. 525 The state supreme court is -not concerned with the number of properties within a particular group, but with whether the distinction drawn between the taxable and nontaxable properties is a proper one, in that it is sufficiently inclusive to create distinctive classes.‖ 526 The other form of forbidden excise involves under-inclusive classification-a tax on property used in or generated by a particular industry or group that is not sufficiently and meaningfully distinguishable from similar property of other industries or groups. This is why the apple and milk taxes were forbidden -occupation‖ taxes. While making the distinction is essential to preserving a fundamental constitutional limit, at least with regard to commodity taxes, it is not easy. Commercially produced apples were too narrow a class, 527 but severed timber was not. 528 Receipts on sale of bottled soft drinks were once approved as a class, 529 but the income of milk distributors apparently was not. 530 Tobacco sold for human consump-tion and refined petroleum products are in classes by themselves. 531 The state supreme court has repeatedly warned of the -danger of creating, by narrow classification, a tax upon occupations or privileges,‖ 532 and proposals for narrow sales or service taxes seem to have waned. However, if they recur, the state supreme court may have to again take up the sketchy law on the -legal requirements of classification.‖ 533 The language of the decisions along this difficult boundary has ranged from broadly deferential to legislative discretion to harshly peremptory.
Most classifications are justified at the equal protection level as rational distinctions with a public purpose. However, the limitation of taxing authority to classes of property is an additional restriction. Classification turning on personal characteristics unrelated to the property taxed is only permissible through police power exemptions, as described below. Narrow classification by specific products, services, or industries is inherently suspect, and the state supreme court has in fact required something more than minimum rationality to avoid it being treated as an impermissible occupation tax.

D. Exemptions
While some exemptions are a form of classification, some are not. It is better to keep the terms distinct. As described in the cases, exemptions can be tacit or expressed. Expressed exemptions may be justified as matters of administrative practicality, as a way of defining a class of taxable property, as a way of avoiding double taxation (which is a special case of the classification power), and as exercises of the police/protective power. All of these must meet the requirements of public purpose, equality, and reason, but only the last may legitimately discriminate on the basis of personal characteristics unrelated to the definition of the property taxed or exempted.
Tacit exemptions are those implicit in the legislature's choice not to levy a tax. Given the nineteenth-century practice of levying the tax on estates both inclusively (real property) and exclusively (personal property) it is understandable that from the earliest times the state supreme court has sometimes referred to this as a form of exemption, but it led to an unresolved tension in the cases because at least some express exemptions were treated very differently. Tacit -exemption‖ by silently excluding property from a taxable class is an exercise of the power to select and classify. The line of cases saying selection of some property for taxation is not an exemption of other property is the better guide. 534 Referring to silence in the tax statutes as an exemption was harmless before 1903, but now it adds confusion to the analysis of exemptions. Tacit exemption is simply a matter of selection and classification. The appropriate analysis has only two levels-the selection of the objects of taxation must meet the requirements of public purpose, equal treatment, and reason, and it must define a distinct class of property without resort to unrelated personal characteristics of the taxpayer. Defining a class of property with a stated exclusion, for example all income over $2,000, is not a tacit exemption. 535 Small express exemptions are sometimes permitted as matters of administration and practicality. 536 Most other exemptions are now treated as exercises of the classification power, whether in the usual form of exemptions, or as -deductions, adjustments and credits.‖ 537 Defining classes of property by carving out or adding back sub-classes is a natural and efficient method. However, add-backs or exceptions from exemptions can misdirect attention. This was recently illustrated in North Country Environmental Services v. State. 538 The taxpayer operated a landfill-it had previously taken advantage of an exemption for pollution control facilities from the real property tax. 539 In 2006 the legislature amended the relevant exemption statute prospectively to except privately owned landfills. 540 The taxpayer, one of only two in the state then affected by the statute, argued discrimination and disproportion, but the state supreme court held that pollution-control facilities associated with landfills were a distinct class of property based on use, and that denial of exemption was rationally related to a declared legislative purpose to discourage that method of waste disposal. 541 As reasonable as this approach was, it seems more a response to the taxpayer's sense of grievance than a necessary holding. The exception simply restored the taxability of the property at the same rate as all other realty. The real question was whether the remaining exemption for other sorts of pollution control facilities was constitutional. If there were a proper purpose in encouraging them as a distinct class, a reason to discourage other activities was superfluous.
Perhaps most exemptions other than those to avoid double taxation are grounded in the protective/police power. Their effect is to encourage certain activity or aid particular persons. It may not matter if those exemptions designed to encourage certain uses of property are treated as classifications, but there are some express exemptions that should not be. Exemptions based on personal characteristics unrelated to the taxed propertyage, wealth, disability, family relationship, form of business organization-are not exercises of the power to select objects of taxation. It is axiomatic that the power to classify and select objects of taxation is confined to property: -the legislature may not classify owners for differing taxation.‖ 542 Taxing or not on the basis of personal characteristics or activities unrelated to the taxed property is at the heart of the forbidden excise power. Taxing the wealthy as such may be progressive, but it is unconstitutional in New Hampshire. The state supreme court long ago observed that a quantitative exemption to an income tax could be forbidden graduation, and a tax -cannot be sustained here upon any theory that the richer one is the higher his tax rate should be.‖ 543 Personal exemptions have historically required an explicit protective power justification, such as relief of actual poverty, and the state supreme court has usually made an independent judgment about the effect of the exemption. 544 Yet the modern state supreme court has sometimes applied the minimal scrutiny that originated in generic classification cases to personal exemptions. 545 The difference is shown in the treatment of age-based exemptions to the IDT in 1963. The state supreme court made do with a vague reference to -some common attributes‖ of age and poverty and then simply listed a series of statutes that drew lines for various purposes at age 542 546 Age-related distinctions were rational in taxation because they existed for other purposes. Whether from laxity or naïveté, that decision has left us with working families having substantial savings subsidizing (to a modest degree) some much wealthier elders. 547 The state supreme court of 1930 would have insisted on a means test or some alternate justification under the protective power. Opinions on age-based exemptions since 1963 have involved proposals with a means test, so it is unclear whether the state supreme court would return to its traditional position on quantitative exemptions.
As with the -occupation tax‖ problem in classification, the tests for protective power exemptions, particularly those based on personal characteristics, are unclear. General language lumping all forms of classification and exemption together is common, sometimes with language suggesting minimum scrutiny. In other cases there is different language and what appears to be a higher threshold. It is possible the state supreme court is once again prepared to require more than minimum rationality for all express exemptions. There is a discernible difference in the tone in some of the most recent cases. While the -rational basis test‖ has been invoked as recently as 2003, 548 there is another line of cases coming down to 2008 speaking of -just reasons‖ that -reasonably promote some proper object of public welfare or interest.‖ 549

E. Justice
The word -just‖ does not appear in any of the constitutional provisions bearing on taxation. The term entered the case law in 1829 when the court said that -reasonable‖ in part II, article 5 -seems to be used as having the same meaning with the word just.‖ 550 This was in the context of explaining and justifying legislative discretion to deviate from strict mathematical proportionality-what became the selective power and the power to provide for exemptions. 551 A tax of a particular sum, upon every poll in the state, might be easily laid, and would be, in one sense of the term, a proportional tax. person would suppose that such a tax would be just and reasonable. -No one would think, that the polls of children, in their earliest infancy, or of idiots and distracted persons, were proper subjects of taxation.‖ 552 The classification and exemption powers are now fully developed. Yet the state supreme court has repeatedly included the term -just‖ in lists of requirements as if it were an independent limitation: -taxation [must] be just, uniform, equal, and proportional.‖ 553 There are variations of thissome free-floating and some attributed to part II, article 5. 554 An exercise of the taxing power that meets all the other constitutional requirements is necessarily -just‖ as far as judicial review is concerned. Such a protean term, now unnecessary in its original context, can only confuse litigants and the public. The state supreme court is frequently at pains to explain it has nothing to do with the wisdom of otherwise valid legislation, but this repeated inclusion of an extra-constitutional word in lists of constitutional requirements needlessly invites a contrary inference.

F. Standards of Review
Sometimes standards of review are not articulated in the modern taxation cases. When they are, they are not in entirely consistent language, in part because the same issue can be and often is characterized in a variety of ways. Even when the language and issues are parallel, it is difficult to reconcile the outcomes in all the cases. This situation was not improved when the three-tier federal approach to equal protection began to be applied in some tax cases 555 during a period when the chief justice expressed concern over -the confusion in our standards of constitutional review.‖ 556 While I believe some of the limitations on the taxing power should be and have been maintained with special scrutiny, an analysis and critique of standards of review in constitutional challenges to New Hampshire tax legislation will require a separate article.

G. Modern Rules Summarized
The modern law can be summarized in fairly simple and precise terms without the cascade of overlapping, multifarious, and redundant terms that have accumulated over two centuries. Each of the following propositions is supported by decisions in the modern era, and none has been repudiated.
While the legislature has great discretion in selecting the objects and methods of taxation, all tax legislation must meet the requirements of public purpose, equality, and reason. The term proportional in part II, article 5 means that every tax must be ad valorem, which requires a uniform rate applied to a uniform valuation for everyone paying the tax. Classification for taxation has two aspects-it must be applied to property, and it must be rational. So long as it is applied to property, classification under part II, article 6 need only meet the public purpose, equality, and reason standard. However, classification based on personal characteristics of the taxpayers unrelated to the defining characteristics of the property is not authorized. A narrow classification of property that fails to include similar property defined by the same characteristic event is possible but may fail as either insufficiently distinct or as an excise. Exemptions may be used to define classes of property, or to determine which of two overlapping classes will apply when double taxation threatens. These need only meet the public purpose, equality, and reason standards. Exemptions may also be exercises of the protective power to encourage particular acts or aid particular persons, and such exemptions are only permitted to promote some definite and proper object of public welfare or interests. Taxability of property defined by an act or event is determined by the law at the time of the act or event.

IV. CONCLUSION
In the 1880s the New Hampshire Supreme Court developed a logical, elegant, and comprehensive interpretation of the constitutional limits on the taxing power. One could imagine it being workable in a modern world, but the people soon found it too confining. However, rather than granting taxing powers more like those of other states, they authorized in 1903 two specific new property taxes and the taxation of -other classes of property.‖ A large part of the old learning was thereby rendered meaningless, as the state supreme court gradually discovered. Exercise of the power to define and tax other classes of property necessarily implied taxation of property based on some event, permitting something like an excise. It also necessarily involved the power to have more than one tax applied to some property and to have different tax rates for different classes of property. Still lacking the excise power, however, the legislature must structure each new tax as an ad valorem property tax.
The 1903 amendment embedded a fundamental tension in the constitution. The nineteenth-century synthesis partially survives in the remaining broad language of proportionality and equality, the prohibition of excises, and the restriction of taxes to property and polls. But the new power to create multiple classes of property taxable in different ways at disparate rates opens the door to unequal, perhaps invidious, tax burdens and to classifications indistinguishable from occupation or other excise taxes. The fault line along which this tension is resolved in particular cases is the limit of the legislature's power to define classes of taxable property. These are also the cases with the widest variation in language and outcomes. Had the state supreme court adhered to its occasional position that there were only a few major classes of taxes, New Hampshire might have been obliged to adopt a general sales or income tax. Yet that view was neither grounded in the constitutional language nor consistent with the state supreme court's previous declarations about the legislature's power to select and classify the objects of taxation.
One could criticize the outcome or language of a given decision or urge a stricter standard of review, but each critical step in the development of the modern law has been logical, faithful to the language of the constitution, and supportable by reference to earlier decisions. A regime where everyone who was taxed was taxed the same way and at the same rate has, by the probably unforeseen implications of a vague phrase, been utterly transformed.