Cite as: 505 U. S. 1 (1992)
Stevens, J., dissenting
burgh, a "State may divide different kinds of property into classes and assign to each class a different tax burden so long as those divisions and burdens are reasonable." 488 U. S., at 344.
Consistent with this standard, the Court has long upheld tax classes based on the taxpayer's ability to pay, see, e. g., Fox v. Standard Oil Co. of New Jersey, 294 U. S. 87, 101 (1935); the nature (tangible or intangible) of the property, see, e. g., Klein v. Board of Tax Supervisors of Jefferson County, 282 U. S. 19, 23-24 (1930); the use of the property, see, e. g., Clark v. Kansas City, 176 U. S. 114 (1900); and the status (corporate or individual) of the property owner, see, e. g., Lehnhausen v. Lake Shore Auto Parts Co., 410 U. S. 356 (1973). Proposition 13 employs none of these familiar classifications. Instead, it classifies property based on its nominal purchase price: All property purchased for the same price is taxed the same amount (leaving aside the 2% annual adjustment). That this scheme can be named (an "acquisition value" system) does not render it any less arbitrary or unreasonable. Under Proposition 13, a majestic estate purchased for $150,000 in 1975 (and now worth more than $2 million) is placed in the same tax class as a humble cottage purchased today for $150,000. The only feature those two properties have in common is that somewhere, sometime a sale contract for each was executed that contained the price "$150,000." Particularly in an environment of phenomenal real property appreciation, to classify property based on its purchase price is "palpably arbitrary." Allied Stores of Ohio, Inc. v. Bowers, 358 U. S. 522, 530 (1959).
II
Under contemporary equal protection doctrine, the test of whether a classification is arbitrary is "whether the difference in treatment between [earlier and later purchasers] rationally furthers a legitimate state interest." Ante, at 11.
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