Tig Insurance Co Inc v. Department of Treasury ( 2001 )


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  •                                                                        Michigan Supreme Court
    Lansing, Michigan 48909
    ____________________________________________________________________________________________
    C hief Justice                   Justices
    Maura D. Cor rigan
    Opinion
    Michael F. Cavanagh
    Elizabeth A. Weaver
    Marilyn Kelly
    Clifford W. Taylor
    Robert P. Young, Jr.
    Stephen J. Markman
    ____________________________________________________________________________________________________________________________
    FILED JULY 3, 2001
    TIG INSURANCE COMPANY, INC.,
    Plaintiff-Appellee,
    v                                                                                No. 115915
    REVENUE DIVISION, DEPARTMENT
    OF TREASURY, STATE OF MICHIGAN,
    Defendant-Appellant.
    ________________________________
    TIG PREMIER INSURANCE COMPANY, INC.,
    Plaintiff-Appellee,
    v                                                                                No. 115916
    REVENUE DIVISION, DEPARTMENT
    OF TREASURY, STATE OF MICHIGAN,
    Defendant-Appellant.
    ________________________________
    BEFORE THE ENTIRE BENCH
    CAVANAGH, J.
    These consolidated cases require us to decide whether a
    1988 amendment of the Michigan Insurance Code’s retaliatory
    tax, MCL 500.476a, deprived plaintiffs TIG Insurance Company
    and TIG Premier Insurance Company of equal protection of the
    laws under US Const, Am XIV and Const 1963, art 1, § 2, or
    violated the Uniformity of Taxation Clause of Const 1963, art
    9, § 3.    Absent an imposition on a fundamental right or a
    suspect   class,    tax   legislation     is   reviewed     to   determine
    whether its classifications bear a rational relation to a
    legitimate    state    purpose.      We    conclude       that   the    1988
    amendments of the retaliatory tax, which changed the tax
    calculation, are rationally related to the legitimate state
    purpose of promoting the interstate business of domestic
    insurers, the same legitimate purpose behind the retaliatory
    tax itself.    Thus, the amendments of the retaliatory tax do
    not violate equal protection, and also do not violate the
    Uniformity of Taxation Clause.          Accordingly, the judgment of
    the Court of Appeals is reversed.
    I
    This case involves the retaliatory tax that Michigan
    imposes on foreign insurers doing business in Michigan. Under
    the retaliatory tax, when an insurer’s state of incorporation
    imposes a larger aggregate tax burden on a Michigan insurer
    doing business in that state than Michigan imposes on a
    company from that state doing business in Michigan, the
    foreign   insurer     must   pay   Michigan     a   tax    equal   to    the
    difference in the aggregate tax burdens.             See MCL 500.476a.
    Thus, to compute the retaliatory tax due from a foreign
    insurer, if any, Michigan tallies all the taxes, fines,
    penalties, and other burdens it otherwise imposes on the
    foreign insurer doing business in Michigan.                Michigan then
    tallies the burden a hypothetical Michigan insurer would pay
    2
    to that insurer’s home state were the hypothetical Michigan
    insurer doing the same amount of business there. If the other
    state’s total burden on the hypothetical Michigan insurer
    doing the same amount of business in that state would be
    larger    than    the   burden   Michigan   imposed      on   the   foreign
    insurer, the actual burden Michigan imposes is subtracted from
    the other state’s burden on the hypothetical insurer, and the
    difference is the retaliatory tax the foreign insurer owes
    Michigan.    These taxes have been common in insurance taxation
    since the nineteenth century, see Western & Southern Life Ins
    Co v State Bd of Equalization, 
    451 U.S. 648
    , 668; 
    101 S. Ct. 2070
    ;
    
    68 L. Ed. 2d 514
    (1981), and Michigan has had a form of a
    retaliatory tax since 1871.         See 
    1871 PA 80
    , § 4 (adding what
    was then § 28 to the insurance code).
    Until 1987, the retaliatory tax was one of two taxes
    imposed on foreign insurers.        The other was the premiums tax,
    MCL 500.440, repealed by 
    1987 PA 261
    , which taxed a percentage
    of the insurers’ business.          However, in 1987, the Court of
    Appeals held that the premiums tax violated equal protection,
    and struck it as unconstitutional.          See Penn Mut Life Ins Co
    v Dep’t of Licensing & Reg, 
    162 Mich. App. 123
    , 130-133; 412
    NW2d 668 (1987).        After the Court of Appeals decision in Penn
    Mutual, which was not appealed to this Court, the Legislature
    revised     the    Michigan    Insurance    Code   tax    provisions     by
    repealing    the    premiums     tax,   subjecting    foreign       insurers
    instead to the Single Business Tax, MCL 208.1 et seq., and
    repealing and reenacting the retaliatory tax.                 See 
    1987 PA 261
    , 262. The new retaliatory tax, MCL 500.476a, mirrored the
    prior retaliatory tax. However, the revision added subsection
    3
    (2), stating that “[T]he purpose of this section is to promote
    the interstate business of domestic insurers by deterring
    other states from enacting discriminatory or excessive taxes.”
    In 1988, actual revenue from insurance taxes was below
    the level of projected revenue the Legislature had relied upon
    in enacting 
    1987 PA 261
    and 262.           One of the reasons that
    revenue was lower than expected was that foreign insurers were
    including assessments paid to private insurance associations
    and facilities, such as the Worker’s Compensation Placement
    Facility, among their Michigan burdens when calculating their
    retaliatory taxes.     When these assessments were included in
    the foreign insurers’ Michigan burden, their Michigan burden
    grew larger, and any differences between the Michigan burden
    and the burden the insurers’ home states imposed shrank.            The
    result was less retaliatory tax revenue.
    After these facts were clear, the Legislature enacted
    
    1988 PA 349
    .      This provision did not affect the retaliatory
    tax’s    scope.     Instead,   it   only   changed   the   method    of
    calculating the tax by providing that payments to private
    insurance associations and facilities are not counted as part
    of the Michigan burden when calculating retaliatory taxes.
    The resulting statute provides:
    (5) Any premium or assessment levied by an
    association or facility, or any premium or
    assessment of a similar association or facility
    formed under a law in force outside this state, is
    not a burden or special burden for purposes of a
    calculation under section 476a, and any premium or
    assessment paid to an association or facility shall
    not be included in determining the aggregate amount
    a foreign insurer pays to the commissioner under
    section 476a.
    (6) As used in this section, “association or
    facility” means an association of insurers created
    4
    under this act and any other association or
    facility formed under this act as a non-profit
    organization of insurer members, including, but not
    limited to, the following:
    (a)   The  Michigan   worker’s  compensation
    placement facility created under [MCL 500.2301 et
    seq.]
    (b) The Michigan basic property insurance
    association created under [MCL 500.2901 et seq.]
    (c)   The  catastrophic   claims          association
    created under [MCL 500.3101 et seq.]
    (d)   The   Michigan   automobile  insurance
    placement facility created under [MCL 500.3301 et
    seq.]
    (e) The Michigan life and health insurance
    placement facility created under [MCL 500.7701 et
    seq.]
    (f) The property and casualty guaranty
    association created under [MCL 500.7901 et seq.]
    [MCL 500.134(5), (6).][1]
    Hence, payments to these and other similar facilities are not
    part of the Michigan burden on foreign insurers, and such
    payments required by other states cannot be considered part of
    those states’ burden when calculating retaliatory taxes.
    The dispute in this case originally involved plaintiffs’
    retaliatory tax returns for 1990, 1991, and 1996.                   In those
    years,     plaintiffs   had   made        payments    to     the    Worker’s
    Compensation Placement Facility, the Basic Property Insurance
    Association, and the Automobile Insurance Placement Facility.
    Subsections 134(5) and (6), however, required plaintiffs to
    exclude    those   payments   from    their    Michigan      burdens    when
    calculating     the   retaliatory     tax    they    owed.         Plaintiffs
    initially excluded these payments from their Michigan burden
    1
    The Michigan Assigned Claims Facility created under MCL
    500.3171 was subsequently added to the statute as subsection
    6(g). See 
    1990 PA 256
    .
    5
    and fully paid their retaliatory tax for each year.                Later,
    though,   they    filed   amended   returns     that    included   these
    payments in their Michigan burdens, claiming that requiring
    them to exclude the payments violated the Equal Protection
    Clauses of the state and federal constitutions, as well as the
    Uniformity of Taxation Clause of the Michigan Constitution.
    Plaintiffs,      therefore,   sought     a   refund    of   the   alleged
    unconstitutional     overcharge.         Defendant,    however,    denied
    refunds for all three years.
    Plaintiffs appealed the denial of refunds to the Michigan
    Court of Claims, which consolidated their cases. The Court of
    Claims held that MCL 500.134(5) violates equal protection
    because it was enacted to raise revenue rather than to deter
    other states from imposing discriminatory or excessive taxes
    on Michigan insurers doing business in those other states.
    Also, the court held that plaintiffs’ 1990 and 1991 claims
    were time-barred by MCL 205.27a(6).            The court, therefore,
    ordered defendant to pay plaintiffs refunds consistent with
    their amended 1996 retaliatory tax returns.
    Both parties appealed, and the Court of Appeals affirmed.
    That Court believed that when the Legislature revised the
    retaliatory tax in 1987, the Legislature did not intend to
    change the definition of “burden,” and later did so only
    because revenues did not meet expectations.             Thus, the Court
    concluded that equal protection was violated because it was
    “abundantly clear that 
    1988 PA 349
    was enacted as a stop-gap
    measure to raise funds in response to a projected shortfall in
    insurance tax revenues.         This is not a valid reason for
    discriminating against foreign insurers.”             
    237 Mich. App. 219
    ,
    6
    230; 602 NW2d 839 (1999).       The Court of Appeals also affirmed
    the Court of Claims conclusion that plaintiffs’ 1990 and 1991
    claims were time-barred, leaving plaintiffs with a judgment
    for refunds for 1996. Defendant appealed the Court of Appeals
    conclusion that 
    1988 PA 349
    violates equal protection, we
    granted leave, 
    463 Mich. 905
    (2000), and we now reverse.
    II
    The     United    States       Supreme   Court    addressed       the
    constitutionality of retaliatory taxes in Western & Southern
    Life Ins Co v State Bd of 
    Equalization, supra
    .              In that case,
    California    had     adopted   a     retaliatory     tax    similar    to
    Michigan’s,     and    an   Ohio      corporation     challenged       its
    constitutionality.       The Supreme Court noted that several
    provisions of the constitution generally limit states’ ability
    to regulate foreign corporations, but under the Commerce
    Clause, US Const, art 1, § 8, Congress has delegated insurance
    regulation to the states, see 15 USC 1011 et seq., and the
    privileges and immunities clause, US Const, art 4, § 2, does
    not apply to corporations, see Hemphill v Orloff, 
    277 U.S. 537
    ,
    548-550; 
    48 S. Ct. 577
    ; 
    72 L. Ed. 978
    (1928), leaving only the
    Equal Protection Clause as a basis for the challenge. Western
    & Southern at 656.      After reviewing its prior decisions, the
    Court concluded that a state’s authority to treat foreign
    corporations differently than domestic corporations should be
    upheld if the different treatment bears a rational relation to
    a legitimate state purpose. California’s retaliatory tax, the
    Court held, had the legitimate state purpose of promoting
    domestic insurers in other states by discouraging other states
    from excessively taxing domestic insurers.                  The tax was
    7
    reasonably related to that purpose because the California
    Legislature could have believed that the tax would “induce
    other States to lower the burdens on California insurers in
    order    to       spare    their    domestic          insurers   the    cost    of   the
    retaliatory tax in California.”                         
    Id. at 672. Thus,
    the
    Supreme Court confirmed that retaliatory taxes do not violate
    equal protection, and do not violate the constitution.
    In        light    of      Western        &     Southern,       the     general
    constitutionality of Michigan’s retaliatory tax is clear. The
    question in this case surrounds 
    1988 PA 349
    .                           That amendment
    of   Michigan’s            retaliatory          tax      did     not     change       the
    classification            plan   drawn     by     Michigan’s     retaliatory         tax.
    Rather, it only changed the calculation method of a foreign
    insurer’s          Michigan      burden    by     providing      that    payments      to
    certain private insurance associations and facilities are not
    included in the burden.                  Whether the amendment violates the
    state        or    federal       Equal     Protection       Clauses,      which       are
    coextensive, see Armco Steel v Dep’t of Treasury, 
    419 Mich. 582
    , 591; 358 NW2d 839 (1984), or Michigan’s Uniformity of
    Taxation Clause, which is not discernably different from equal
    protection in cases involving tax statutes, see 
    id. at 592, presents
    a question of law.                     We review questions of law de
    novo.        See Tolksdorf v Griffith, 
    464 Mich. 1
    ; ___ NW2d ___
    (2001).
    As Western & Southern declared, rational basis review
    applies in challenges of retaliatory taxes.                         “Rational basis
    review does not test the wisdom, need, or appropriateness of
    the legislation, or whether the classification is made with
    ‘mathematical nicety,’ or even whether it results in some
    8
    inequity when put into practice.”             Crego v Coleman, 
    463 Mich. 248
    , 260; 615 NW2d 218 (2000).          Rather, it tests only whether
    the   legislation      is   reasonably       related    to    a     legitimate
    governmental        purpose.      The        legislation          will      pass
    “constitutional        muster   if    the    legislative       judgment       is
    supported by any set of facts, either known or which could
    reasonably be assumed, even if such facts may be debatable.”
    
    Id. at 259-260. To
    prevail under this standard, a party
    challenging a statute must overcome the presumption that the
    statute is constitutional.           Thoman v Lansing, 
    315 Mich. 566
    ,
    576; 24 NW2d 213 (1946).              Thus, to have the legislation
    stricken,     the   challenger       would    have     to    show    that    the
    legislation is based “solely on reasons totally unrelated to
    the pursuit of the State’s goals,” Clements v Fashing, 
    457 U.S. 957
    , 963; 
    102 S. Ct. 2836
    ; 
    73 L. Ed. 2d 508
    (1982), or, in other
    words, the challenger must “negative every conceivable basis
    which might support” the legislation. Lehnhauser v Lake Shore
    Auto Parts Co, 
    410 U.S. 356
    , 364; 
    93 S. Ct. 1001
    ; 
    35 L. Ed. 2d 351
    (1973).
    In this case, plaintiffs claim that Michigan has exceeded
    its authority to treat foreign corporations differently than
    domestic corporations because the different treatment does not
    bear a rational relation to a legitimate state purpose.                     This
    is so, plaintiffs claim, because 
    1988 PA 349
    , which excluded
    certain     payments    from    plaintiffs’      Michigan         burdens    for
    retaliatory tax calculations, converted the retaliatory tax
    from a tax intended to discourage other states from imposing
    excessive levels of taxation on Michigan insurers to a tax
    designed to raise revenue at the expense of foreign insurers.
    9
    Thus,    plaintiffs    argue       that    the   1988    amendment     of   the
    retaliatory tax cannot be constitutional.
    Initially, we emphasize that Michigan’s retaliatory tax
    has never, either before or after the 1988 amendment, treated
    foreign insurers as a single class.                 Rather, the subset of
    foreign insurers that must pay Michigan any retaliatory tax is
    actually      determined      by     the     laws       of   other    states.
    Specifically, the subset is determined by the laws of those
    states that impose more onerous burdens on Michigan insurers
    than Michigan imposes on insurers from those states.                         The
    Supreme Court made this same observation about the retaliatory
    tax     it   held   constitutionally        permissible      in    Western    &
    Southern, stating that “[t]he retaliatory tax is not imposed
    on foreign corporations qua foreign corporations, as would be
    expected were the purpose of the tax to raise revenue from
    noncitizens; rather, it is imposed only on corporations whose
    home States impose more onerous burdens on California insurers
    than California otherwise would impose on those corporations.”
    Western & Southern at 670, n 23.
    Absent a change in the legislative classification, we
    cannot agree with plaintiffs’ claim that a 1988 amendment
    converted the retaliatory tax into a tax designed to raise
    revenue      from   foreign    insurers.         Rather,     the     selective
    imposition of the tax on only those insurers incorporated in
    states that tax Michigan insurers more heavily than Michigan
    taxes them indicates that the purpose of the legislation is to
    pressure those states to relieve the tax burden on Michigan
    insurers doing business in those states.                This is the precise
    purpose the Legislature stated for adopting the retaliatory
    10
    tax, see MCL 500.476a(2), and the same purpose the Supreme
    Court found “not difficult to discern” in Western & Southern
    at 668.      Further, in Western & Southern, the Supreme Court
    held, without discussing the means a state may adopt to
    calculate the retaliatory tax, that states are reasonable to
    suppose that a retaliatory tax will induce other states to
    lower their insurance tax rates.             
    Id. at 672. Even
    with the
    change      in   the   method    of   calculation      of   the   burden     of
    Michigan’s retaliatory tax, the tax remains rationally related
    to this legitimate purpose, and plaintiffs cannot prevail.
    However, even presuming that 
    1988 PA 349
    can somehow be
    viewed separately from Michigan’s retaliatory tax structure,
    the Legislature could have rationally decided to exclude
    payments to certain insurance associations and facilities from
    Michigan’s retaliatory tax burden.                 The three facilities in
    this case, the Worker’s Compensation Placement Facility, the
    Automobile       Insurance      Placement    Facility,      and   the   Basic
    Property Insurance Association, exist to provide insurance
    coverage to insureds that may be unable to “procure the
    insurance through ordinary methods.”                 MCL 500.2301(a); see
    also MCL 500.3301(a) and MCL 500.2925 (describing eligibility
    for Basic Property Insurance). Because high risk or otherwise
    uninsurable insureds are provided for outside the normal
    insurance market, insurers doing business in Michigan need not
    bear the risks of insuring them, at least arguably benefitting
    such insurers. The Legislature could have believed that if it
    did   not    require    payments      to   these    facilities    not   to   be
    excluded from the retaliatory tax burden, other states would
    not be discouraged from establishing similar facilities to
    11
    grant the same benefit to insurers doing business in those
    states, including Michigan insurers. Indeed, if another state
    had facilities and associations that paralleled the facilities
    and    associations         mentioned    in      MCL     500.134,        then   any
    retaliatory tax that insurers from the other state may owe
    Michigan would not be affected by 
    1988 PA 349
    at all.2                      Again,
    then, the Legislature could have had the permissible purpose
    of promoting domestic insurers abroad, the same purpose it
    stated in the retaliatory tax legislation.                  Because it is at
    least debatable that excluding payments to such facilities
    from Michigan’s retaliatory tax burden would encourage other
    states to establish such facilities, the 1988 amendment is
    rationally      related     to   a   legitimate        purpose,     and    is   not
    constitutionally infirm.
    Plaintiffs maintain, however, that the 1988 amendment
    conflicts with the Supreme Court’s decision in Western &
    Southern because it was designed entirely “to generate revenue
    at    the   expense    of    out-of-state      insurers.”           As    we    have
    explained, the tax does not affect foreign insurers as a
    single      class.     Further,      though,     plaintiffs       overlook      the
    presumption of constitutionality, and cannot account for the
    legitimate bases of the legislation. Instead, plaintiffs seek
    one    possible       illegitimate       basis     for     the    legislation.
    Plaintiffs’ approach conflicts with Supreme Court precedent
    because they have not shown that the legislation rests “solely
    on reasons totally unrelated to the pursuit of the State’s
    2
    We note that several other states similarly exclude
    payments to special associations and facilities from their
    retaliatory tax burdens. See, e.g., Conn Gen Stat, 12-211;
    215 Ill Comp Stat, 5/444.1(2).
    12
    goals . . . .”       Clements at 963.           Because there is at least
    one    conceivable       rational     basis     that   might   support     the
    legislation,        plaintiffs      have        not    “negative[d]      every
    conceivable basis which might support” it, and cannot prevail.
    Lehnhauser at 364.
    In response, plaintiffs have argued that they need not
    negate every conceivable basis for the legislation.                   This is
    because, they claim, in equal protection cases, the Court
    “need not . . . accept at face value assertions of legislative
    purposes, when an examination of the legislative scheme and
    its history demonstrates that the asserted purpose could not
    have    been   a    goal    of   the    legislation.”          Weinberger    v
    Weisenfeld, 
    420 U.S. 636
    , 648, n 16; 
    95 S. Ct. 1225
    ; 
    43 L. Ed. 2d 514
    (1975).        However, as discussed, an examination of the
    legislative scheme in this case indicates that the asserted
    purpose could well have been the goal of the legislation. For
    plaintiffs to prevail, they must negate every conceivable
    basis of the legislation.           Because plaintiffs have not, they
    cannot prevail.
    Finally, plaintiffs attempt to distinguish this case from
    Western & Southern by arguing that the tax revenue generated
    in that case was “relatively modest,” see Western & Southern
    at 669, but under the amendment, Michigan’s retaliatory tax
    immodestly generates over a third of Michigan’s insurance tax
    revenue.       As    a     preliminary       point,    the   fact   that    the
    retaliatory tax raises revenue does not prove that raising
    revenue was the state’s goal in adopting the tax. On rational
    basis    review,     this     Court      only     considers    whether      the
    legislation is reasonably related to a legitimate purpose, and
    13
    does not test for “some inequity when [the legislation is] put
    into practice.”       Crego at 260.          But further, though the
    Western & Southern Court’s statement strikes us simply as an
    observation and not, as plaintiffs contend, as the linchpin of
    the Court’s analysis, even if it is an important point, this
    case is distinguishable.          Michigan’s retaliatory tax may
    generate a third of Michigan’s insurance tax revenue, but the
    Supreme Court did not state that the retaliatory tax it
    approved raised a relatively modest amount of insurance tax
    revenue, just that it raised a modest amount of revenue.            The
    joint     appendix    shows     that     although   Michigan    raised
    approximately $67 million annually in retaliatory taxes for
    the years 1991 through 1995, for example, when compared with
    Michigan’s overall tax revenue for that period, which ranged
    from $10.5 billion to $17.2 billion annually, see Michigan
    Dep’t of Treasury, Annual Report of the State Treasurer
    (1996), p 25, retaliatory tax revenue is certainly “relatively
    modest.”      Thus, even if retaliatory tax revenue must be
    modest, as compared with Michigan’s overall tax revenue,
    retaliatory     tax   revenue    is    not    immodestly   large,   and
    plaintiffs again have not shown Michigan’s retaliatory tax or
    
    1998 PA 349
    to be unconstitutional.          Again, plaintiffs cannot
    prevail.
    III
    In conclusion, neither Michigan’s retaliatory tax nor the
    1988 amendment of that tax violates the state or federal
    constitutions, which are coextensive in their equal protection
    provisions.     The retaliatory tax, and the amendments of it,
    are rationally related to the legitimate governmental purpose
    14
    of promoting Michigan insurers in other states.         Because the
    tax and its amendment do not violate equal protection, they
    also do not violate the Michigan Constitution’s Uniformity of
    Taxation Clause, which is not discernibly different from the
    Equal Protection Clause when the constitutionality of a tax
    statute is being reviewed.      Plaintiffs have not carried their
    considerable burden, and the judgment of the Court of Appeals
    is reversed.
    CORRIGAN , C.J., and WEAVER , TAYLOR , YOUNG , and MARKMAN , JJ.,
    concurred with CAVANAGH , J.
    15
    S T A T E    O F     M I C H I G A N
    SUPREME COURT
    TIG INSURANCE COMPANY, INC.,
    Plaintiff-Appellee,
    v                                                         No. 115915
    REVENUE DIVISION, DEPARTMENT
    OF TREASURY, STATE OF MICHIGAN,
    Defendant-Appellant.
    ____________________________________
    TIG PREMIER INSURANCE COMPANY, INC.,
    Plaintiff-Appellee,
    v                                                         No. 115916
    REVENUE DIVISION, DEPARTMENT
    OF TREASURY, STATE OF MICHIGAN,
    Defendant-Appellant.
    ____________________________________
    KELLY, J. (concurring).
    While    I   agree   with   the    conclusion   reached   by   the
    majority, I write separately to state my disagreement with
    certain of the reasoning it employs.            Whereas the majority
    articulates what would be legitimate purposes for adoption of
    the amendment, it completely ignores the evidence presented by
    plaintiffs.       This evidence throws into doubt whether the
    Legislature's actual purpose was legitimate, as it has to be
    in order to conform with precedent from the United States
    Supreme Court.
    The states cannot impose more onerous taxes or other
    burdens on foreign corporations than on domestic corporations,
    unless they bear a rational relation to a legitimate state
    purpose.       Western & Southern Life Ins Co v State Bd of
    Equalization, 
    451 U.S. 648
    , 667-668; 
    101 S. Ct. 2070
    ; 
    68 L. Ed. 2d 514
    (1981).       A retaliatory tax act, like that in question,
    makes of foreign corporations a special classification of
    taxpayers.
    In    evaluating   the    constitutionality            of    a   challenged
    classification, we must consider two separate issues.                       First,
    whether the statute in question advances a legitimate purpose
    and,    second,    whether,       in   passing      it,       the       Legislature
    reasonably could have believed that the classification would
    promote that purpose.           
    Id. at 668. Only
    after a legitimate
    purpose is ascertained does a rational relationship between
    the    classification     and     purpose      become         relevant.         See
    Metropolitan Life Ins Co v Ward, 
    470 U.S. 869
    , 881; 
    105 S. Ct. 1676
    ; 
    84 L. Ed. 2d 751
    (1985).
    While this two-step inquiry does not require that the
    Legislature articulate its purpose in forming the challenged
    classification,      it   does     require     that       a    conceivable       or
    reasonable purpose exist.          Nordlinger v Hahn, 
    505 U.S. 1
    , 15;
    
    112 S. Ct. 2326
    ; 
    120 L. Ed. 2d 1
    (1992).                      The United States
    Supreme Court rejected the proposition that promotion of
    domestic industry is always a legitimate purpose, reasoning
    that    it     "eviscerate[s]      the      Equal   Protection             Clause."
    Metropolitan Life, supra at 882.              The Court stated that, if
    2
    this proposition were accepted, any discriminatory tax would
    be   upheld   if    it    could   be   shown    that   it    was    reasonably
    "intended to benefit domestic business."               
    Id. This appears to
    be the rationale used by the majority in
    upholding the amendment at issue.                 The majority does not
    discuss the evidence presented by plaintiffs or how this
    evidence is insufficient to overcome the presumption of the
    amendment's constitutionality.              Rather, it concludes that the
    purpose of the amendment may have been the same as the purpose
    stated in the underlying retaliatory tax act.                      That was to
    promote domestic insurers abroad, a permissible purpose.
    It seems unlikely that was the Legislature's purpose
    because, as stated by the majority, the amendment appeared
    when the Legislature discovered that retaliatory tax revenue
    was far less than expected.                  See slip op at p 4.            If
    sufficient evidence had been presented by plaintiffs that the
    purpose was to cover the shortfall, the legitimate purposes
    opined by the majority would not necessarily carry the day.
    Therefore, this Court should state explicitly that the
    rational basis test, while deferential, does not ensure that
    all taxation legislation will pass constitutional muster.                   In
    this case, plaintiffs presented evidence that employees from
    the Department of Management and Budget and the Department of
    Treasury advocated the amendment for a purpose that was
    impermissible.           This     evidence     does    not    overcome      the
    presumption        of    constitutionality       because      it     does   not
    explicitly demonstrate that the "classification is a hostile
    3
    and oppressive discrimination."            Lehnhausen v Lake Shore Auto
    Parts Co, 
    410 U.S. 356
    , 364; 
    93 S. Ct. 1001
    ; 
    35 L. Ed. 2d 351
    (1973).    But this is not to say that, in another case, the
    burden in overcoming the presumption of constitutionality
    cannot be met.
    In failing to address this fact, it appears that the
    majority     would    uphold   any    classification,    regardless      of
    evidence demonstrating an actual improper purpose for it. The
    majority's scant treatment of the evidence presented seems to
    eliminate any possibility of future litigants demonstrating an
    improper purpose for a challenged classification.               It reduces
    the   test     for    evaluating      the    constitutionality      of    a
    classification to no more than abstract judicial imaginings
    with little or no apparent basis in fact.                 Moreover, it
    elevates a plaintiff's burden of proof to insurmountable
    heights.     Such reasoning is contrary to the United States
    Supreme    Court     precedent   of   Western    &   Southern    Life    and
    Metropolitan Life.
    4