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May 1, 1997


Before: Honorable James Gardner Colins, President Judge, Honorable Joseph T. Doyle, Judge, Honorable Bernard L. McGINLEY, Judge, Honorable Doris A. Smith, Judge, Honorable Dan Pellegrini, Judge, Honorable James R. Kelley, Judge, Honorable Sandra Schultz Newman, Judge. Opinion BY Judge Kelley *fn1 Dissenting Opinion By: Judge Doyle. Judge Smith joins in this Dissenting opinion.

The opinion of the court was delivered by: Kelley



Presently before this court for Disposition are the cross-motions for summary judgment filed by Felice Newman and Steve Zupcic (petitioners) *fn2 and the Pennsylvania Department of Revenue (department) *fn3 to the petition for review filed in our original jurisdiction by the petitioners. The petition for review raised a constitutional challenge to the department's enforcement of the sales tax exemption for the sale of religious articles, Bibles and other religious publications sold by religious organizations provided by section 204(28) of the Tax Reform Code of 1971 (Tax Code) *fn4 and section 31.3(22) of Title 61 of the Pennsylvania Code (tax regulations) *fn5 *fn6 . Because we find that the foregoing tax exemptions violate both the United States and Pennsylvania Constitutions, the petitioners' motion for summary judgment is granted and the department's motion for summary judgment is denied.

The relevant facts of this case, as stipulated by the parties, are as follows. Newman owns and operates a publishing company, known as Cleis Press, located in Pittsburgh, Pennsylvania; none of the books published by Cleis Press are exempt from the foregoing sales tax. (Stipulation of Facts, Para. 6). During 1993, Zupcic purchased books of both a religious and non-religious nature from various stores in Pittsburgh. "Zupcic was not required to pay sales tax on the purchase of a Bible but was required to pay sales tax on other publications, both religious and non-religious, which were not published by a religious organization." (Stipulation of Facts, Para. 8). In addition, it was stipulated that the department "has interpreted the term Bible as used in [section 204(28) of the Tax Code] in such a manner as to include the sacred texts of all religious groups, including such books as the Koran and the Book of Mormon." (Stipulation of Facts, Para. 9). The parties further stipulated that the department "has not discriminated against any religious groups in its enforcement of [the exemption under section 204(28) of the Tax Code]." (Stipulation of Facts, Para. 10).

We initially note that a motion for summary judgment may be properly granted only in those cases where: (1) there is no outstanding issue of material fact; (2) the moving party's right to prevail is free from any doubt; and (3) the moving party is entitled to judgment as a matter of law. Johnston v. Lehman, 168 Pa. Commw. 245, 649 A.2d 730 (Pa. Commw. 1994). Because the parties have stipulated to all material facts in this case, the only issues which need to be addressed are the legal issues concerning the constitutionality of the tax exemption for the sale of religious publications under section 204(28) of the Tax Code and section 31.3(22) of the tax regulations.

The petitioners first claim that they are entitled to judgment as a matter of law because the tax exemptions violate the Establishment Clause of the First Amendment to the United States Constitution, and Article 1, Section 3 of the Pennsylvania Constitution. *fn7 The First Amendment states, in pertinent part, that "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof ..." U.S. Const. amend. I.

Regarding the purpose underlying the adoption of the Establishment Clause, the Supreme Court has noted that:

Our history vividly illustrates that one of the specific evils feared by those who drafted the Establishment Clause and fought for its adoption was that the taxing and spending power would be used to favor one religion over another or to support religion in general. James Madison, who is generally recognized as the leading architect of the religion clauses of the First Amendment, observed ... that "the same authority which can force a citizen to contribute three pence only of his property for the support of any one establishment, may force him to conform to any other establishment in all cases whatsoever." ... The concern of Madison and his supporters was quite clearly that religious liberty ultimately would be the victim if government could employ its taxing and spending powers to aid one religion over another or to aid religion in general. The Establishment Clause was designed as a specific bulwark against such potential abuses of governmental power, and that clause of the First Amendment operates as a specific constitutional limitation upon the exercise by Congress of [its] taxing and spending power ... .

Flast v. Cohen, 392 U.S. 83, 103-04, 20 L. Ed. 2d 947, 88 S. Ct. 1942 (1968) (citations and footnotes omitted).

In support of their claim that the tax exemptions are unconstitutional, the petitioners principally rely on the Supreme Court's opinion in Texas Monthly, Inc. v. Bullock, 489 U.S. 1, 103 L. Ed. 2d 1, 109 S. Ct. 890 (1989). In that case, the Supreme Court considered whether a similar tax exemption for the sale of religious publications by religious organizations enacted by the Texas Legislature violated the Establishment Clause. The statute in question, Tex. Tax Code § 151.312 (1982), exempted from taxation "periodicals that are published or distributed by a religious faith and that consist wholly of writings promulgating the teaching of the faith and books that consist wholly of writings sacred to a religious faith." Texas Monthly, Inc., 489 U.S. at 5.

Writing for a plurality Court, Justice Brennan noted that:

In proscribing all laws "respecting an establishment of religion," the Constitution prohibits, at the very least, legislation that constitutes an endorsement of one or another set of religious beliefs or of religion generally. It is part of our settled jurisprudence that "the Establishment Clause prohibits government from abandoning secular purposes in order to put an imprimatur on one religion, or on religion as such, or to favor the adherents of any sect or religious organization." ... The core notion animating the requirement that a statute possess "a secular legislative purpose" and that "its principal or primary effect ... be one that neither advances nor inhibits religion," ... is not only that government may not be overtly hostile to religion but also that it may not place its prestige, coercive authority, or resources behind a single religious faith or behind religious belief in general, compelling nonadherents to support the practices or proselytizing of favored religious organizations and conveying the message that those who do not contribute gladly are less than full members of the community.

Id. at 8-9 (Brennan, J., plurality) (citations and footnote omitted).

However, Justice Brennan noted that government policies with secular objectives which may incidentally benefit religion are not violative of the First Amendment prohibition. Id. at 10. Rather, the First Amendment is offended only where the benefits of governmental policies flow solely to aid religion, thereby creating the appearance of state sponsorship of religion. Id. at 11.

In defense of the sales tax exemption for religious publications, Texas argued that without such an exemption, its sales tax might violate the Free Exercise Clause of the First Amendment. Id. at 17. In addition, Texas argued that the sales tax exemption neither advanced nor inhibited religion, as required by the Establishment Clause, and its elimination would entangle church and state to a greater degree than the exemption itself. Id.

However, as the plurality opinion stated:

We reject both parts of this argument. Although Texas may widen its exemption consonant with some legitimate secular purpose, nothing in our decisions under the Free Exercise Clause prevents the State from eliminating altogether its exemption for religious publications. "It is virtually self-evident that the Free Exercise Clause does not require an exemption from a governmental program unless, at a minimum, inclusion in the program actually burdens the claimant's freedom to exercise religious rights."

Id. at 18. In that case, Texas had presented no evidence that the payment of sales tax by the purchasers of religious materials would offend their religious beliefs or inhibit religious activity. Id. Thus, the plurality opinion concluded, Texas could not persuasively claim that the sales tax exemption for religious materials was compelled by the Free Exercise Clause. Id.

The plurality opinion also stated:

Texas' further claim that the Establishment Clause mandates or at least favors its sales tax exemption for religious periodicals is equally unconvincing. Not only does the exemption seem a blatant endorsement of religion, but it appears, on its face, to produce greater state entanglement with religion than the denial of an exemption.

Id. at 20. Thus, the plurality opinion ultimately concluded that Texas' sales tax exemption for religious publications violated the First Amendment. See id. at 21-25.

Clearly, the statute in question in Texas Monthly, Inc. was quite similar to the one under scrutiny in the instant matter. However, the department argues that because Justice Brennan's plurality opinion failed to garner a majority of the Justices who agreed both upon the result and the underlying rationale for that result, we should not follow that decision as binding precedent in ruling on the instant motions for summary judgment. See, e.g., CTS Corporation v. Dynamics Corporation of America, 481 U.S. 69, 95 L. Ed. 2d 67, 107 S. Ct. 1637 (1987) (The reasoning of a plurality opinion which does not represent the views of a majority of the Court is not binding on the Court). *fn8 Rather, the department argues that the Supreme Court's opinion in Walz v. Tax Commission of New York City, 397 U.S. 664, 25 L. Ed. 2d 697, 90 S. Ct. 1409 (1970) should control our Disposition of the instant motions.

In Walz, the Supreme Court considered whether a tax exemption for the real property of religious organizations contained in Article 16, Section 1 of the New York Constitution violated the Establishment Clause. The relevant constitutional provision stated, in pertinent part:

'Exemptions from taxation may be granted only by general laws. Exemptions may be altered or repealed except those exempting real or personal property used exclusively for religious, educational or charitable purposes as defined by law and owned by any corporation or association organized or conducted exclusively for one or more of such purposes and not operating for profit.'

Walz, 397 U.S. at 666.

This constitutional provision was implemented through section 420 of the New York Real Property Tax law which stated, in pertinent part:

Real property owned by a corporation or association organized exclusively for the moral or mental improvement of men and women, or for religious, bible, tract, charitable, benevolent, missionary, hospital, infirmary, educational, public playground, scientific, literary, bar association, medical society, library, patriotic, historical or cemetery purposes ... and used exclusively for carrying out ...

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