There's No Constitutional Bar to a Tax Break for TeachersIt's legal to use such exemptions to reward a behavior or activity that benefits the community.


May 29, 2000|FRED GALVES | Fred Galves is a professor at McGeorge School of Law in Sacramento


Critics have charged that Gov. Gray Davis’ proposal to exempt teachers from state income taxes unconstitutionally singles out one profession for special and favorable treatment. If that is so, then someone had better tell the state Legislature and the U.S. Congress to rewrite most of their tax codes because they are replete with such targeted exemptions and subsidies.

Further, since a pay increase earmarked specifically for teachers is clearly constitutional, it would be equally permissible under the U.S. Constitution to grant teachers a tax exemption because a pay increase is what this tax exemption proposal essentially amounts to.

Other subsidies or exemptions/deductions, such as the ones for homeowners (the mortgage interest deduction), parents (exempting children as dependents) or targeted tax credits for certain businesses or “enterprise zones,” often are used by communities to reward a behavior or activity that benefits the community as a whole. This same approach is valid when it comes to making sure our teachers are the best that our children can have.

In terms of favoring a particular occupation, consider the fact that police officers and firefighters are allowed early retirement packages that amount to special treatment for their professions. This not only directly benefits them personally, but also, more important, benefits all of us because we are ensured that mostly younger, healthy individuals are charged with protecting our collective life and limb.

In the same vein, teachers would not only benefit directly from a tax exemption, but the proposal presumably would also provide a general benefit to society in terms of a better education for our children because over time it would result in higher-quality teachers.

The question is whether requiring the rest of us to pay state income taxes, while K-12 teachers do not, is a violation of the equal protection of law guaranteed in the U.S. Constitution, and thus illegal. To be legal, it must pass some legal tests.

Laws involving race or national origin are subject to the “strict scrutiny” test–the hardest test to pass. For example, in Brown vs. Board of Education (1954), state-sanctioned racial school segregation was deemed an unconstitutional denial of equal protection of the law because the unequal treatment of African American children was based on the immutable characteristic of race. Under the strict scrutiny test, the U.S. Supreme Court determined that there was no compelling state interest to justify the denial of equal protection to a race-based class.

The strict scrutiny test, however, clearly does not apply to Gov. Davis’ tax exemption proposal for teachers.

The second, or “mid-level scrutiny,” test applies if the law makes a classification based on sex. Thus, if a group identified by sex is suffering unequal protection of the law, that law must be proved to meet an important government objective. Since the governor’s teacher tax exemption applies regardless of sex, this test does not apply either.

The third test, the “rational basis” test, is applied to all laws that do not involve the classification of groups based on race, national origin or gender. Most laws fall into this category, and the test is simple. If a law applies to one group of people and not to another–and if the distinction between the groups is not based on race, national origin or sex–then such a law only must be rationally related to its legislative purpose. It must have some logical connection to, or rational basis in, the legislative purpose behind the law (here, to enhance public education by duly compensating and recruiting quality teachers).

Under the governor’s proposal, the teaching occupation is the distinguishing characteristic between those who will receive the benefit and those who will not. Being a teacher is not an immutable characteristic. Unlike race, national origin or sex, people can choose either to become teachers or to cease to be teachers. Indeed, one of the ideas behind the exemption is to encourage quality non-teachers to become teachers.

Numerous tax laws that discriminate on one basis or another have passed this rational basis test, reflecting our values as a society. Laws that allow only those who are homeowners to receive certain tax breaks are rationally related to the social benefit of encouraging and helping people to own homes. Tax laws that apply only to parents are rationally related to encouraging and helping them to rear children. The same is true for laws allowing tax exemptions for charitable donations, which encourage philanthropy.

All such laws were enacted in response to various calls by citizens and, most important for our purposes, all are constitutional. The teacher tax exemption is one of many ways that the governor is answering one of the loudest calls of Californians today: providing better compensation to K-12 public schoolteachers so that current quality teachers will stay and other people with quality teaching potential will be attracted to the profession.

In his May revision to the state budget, the governor has proposed adding nearly $4 billion in education funding, much of which will result in pay increases for teachers. But due to local control of this money, teacher-pay increases will vary across the state. Eliminating state taxes for teachers is a fair way to ensure that all K-12 public school teachers receive an adequate benefit, no matter what region or district they teach in.

And in this, the governor’s proposal not only passes the legal test, it gets an A for specifically responding to one of California’s greatest needs.

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