OCTOBER TERM, 2002
certiorari to the supreme court of iowa
No. 02-695. Argued April 29, 2003—Decided June 9, 2003
An Iowa law that, among other things, authorized racetracks to operate slot machines and imposed a graduated tax upon racetrack slot machine adjusted revenues, with a top rate that started at 20 percent and would automatically rise over time to 36 percent, left a 20 percent tax rate on riverboat slot machine adjusted revenues in place. Respondents, racetracks and a dog owners' association, filed a state-court suit challenging the law on the ground that the 20 percent/36 percent tax rate difference violated the Equal Protection Clause, U. S. Const., Amdt. 14, § 1. The District Court upheld the statute, but the Iowa Supreme Court reversed.
1. This Court has jurisdiction to review the state court's judgment, which does not rest independently upon state law. The state court's opinion says that Iowa courts should apply the same analysis in considering either state or federal equal protection claims. In such circumstances, this Court considers a state-court decision as resting upon federal grounds sufficient to support jurisdiction. P. 106.
2. Iowa's differential tax rate does not violate the Federal Equal Protection Clause. A law, such as Iowa's, which distinguishes for tax purposes among revenues obtained within a State by two enterprises conducting business in the State, is subject to rational-basis review. See Nordlinger v. Hahn, 505 U. S. 1, 11-12. The Iowa law, like most laws, might predominantly serve one general objective, e. g., rescuing racetracks from economic distress, while containing subsidiary provisions that seek to achieve other desirable (perhaps even contrary) ends as well, thereby producing a law that balances objectives but still serves the general objective when seen as a whole. And this law, seen as a whole, does what the state court says it seeks to do, namely, advance the racetracks' economic interests. A rational legislator might believe that the law's grant to the racetracks of authority to operate slot machines should help the racetracks economically—even if its simultaneous imposition of a tax on revenues means less help than respondents might like—and the Constitution grants legislators, not courts, broad authority (within the bounds of rationality) to decide whom they wish to help
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