{ "id": 3788520, "name": "DIANA L. COLEY, GERALD L. BASS, JOHN WALTER BRYANT, RONALD C. DILTHEY, and All Other Taxpayers Similarly Situated v. STATE OF NORTH CAROLINA and NORRIS TOLSON, Secretary of Revenue", "name_abbreviation": "Coley v. State", "decision_date": "2006-06-30", "docket_number": "No. 607A05", "first_page": "493", "last_page": "506", "citations": [ { "type": "official", "cite": "360 N.C. 493" } ], "court": { "name_abbreviation": "N.C.", "id": 9292, "name": "Supreme Court of North Carolina" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "620 S.E.2d 25", "category": "reporters:state_regional", "reporter": "S.E.2d", "case_ids": [ 12634104 ], "year": 2005, "opinion_index": -1, "case_paths": [ "/se2d/620/0025-01" ] }, { "cite": "173 N.C. App. 481", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8353857 ], "year": 2005, "opinion_index": -1, "case_paths": [ "/nc-app/173/0481-01" ] }, { "cite": "166 S.E. 918", "category": "reporters:state_regional", "reporter": "S.E.", "weight": 3, "year": 1932, "pin_cites": [ { "page": "921", "parenthetical": "\"[W]e may have recourse to former decisions, among which are several dealing with the subject under consideration.\"" }, { "page": "921", "parenthetical": "\"[W]e may resort to the natural significance of the words employed and if they embody a definite meaning and involve no absurdity or contradiction we are at liberty to say that the meaning apparent on the face of the instrumerit is the one intended to be conveyed.\"" }, { "page": "920-21" } ], "opinion_index": 0 }, { "cite": "620 S.E.2d 25", "category": "reporters:state_regional", "reporter": "S.E.2d", "case_ids": [ 12634104 ], "year": 2005, "opinion_index": 0, "case_paths": [ "/se2d/620/0025-01" ] }, { "cite": "152 L. Ed. 2d 381", "category": "reporters:federal", "reporter": "L. Ed. 2d", "year": 2002, "opinion_index": 0 }, { "cite": "535 U.S. 971", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 354467, 355206, 354599, 352300, 354733, 355215, 354608, 353457, 353364, 351830, 352184, 353755 ], "year": 2002, "opinion_index": 0, "case_paths": [ "/us/535/0971-12", "/us/535/0971-05", "/us/535/0971-09", "/us/535/0971-01", "/us/535/0971-07", "/us/535/0971-04", "/us/535/0971-10", "/us/535/0971-08", "/us/535/0971-03", "/us/535/0971-11", "/us/535/0971-02", "/us/535/0971-06" ] }, { "cite": "554 S.E.2d 331", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 2001, "pin_cites": [ { "page": "332" } ], "opinion_index": 0 }, { "cite": "354 N.C. 336", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 138423 ], "year": 2001, "pin_cites": [ { "page": "338" } ], "opinion_index": 0, "case_paths": [ "/nc/354/0336-01" ] }, { "cite": "708 F.2d 1385", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 1123221 ], "year": 1983, "pin_cites": [ { "page": "1392" } ], "opinion_index": 0, "case_paths": [ "/f2d/708/1385-01" ] }, { "cite": "366 U.S. 380", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 1285805 ], "weight": 2, "year": 1961, "pin_cites": [ { "page": "384", "parenthetical": "\"It is settled that each 'taxable year' must be treated as a separate unit, and all items of gross income and deduction must be reflected in terms of their posture at the close of such year.\" (emphasis added)" }, { "page": "360", "parenthetical": "\"It is settled that each 'taxable year' must be treated as a separate unit, and all items of gross income and deduction must be reflected in terms of their posture at the close of such year.\" (emphasis added)" } ], "opinion_index": 0, "case_paths": [ "/us/366/0380-01" ] }, { "cite": "418 S.E.2d 503", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1992, "pin_cites": [ { "page": "510", "parenthetical": "emphasis added" } ], "opinion_index": 0 }, { "cite": "332 N.C. 78", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2505309 ], "year": 1992, "pin_cites": [ { "page": "89", "parenthetical": "emphasis added" } ], "opinion_index": 0, "case_paths": [ "/nc/332/0078-01" ] }, { "cite": "66 N.C. 361", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 11277241 ], "weight": 2, "year": 1872, "pin_cites": [ { "page": "362" } ], "opinion_index": 0, "case_paths": [ "/nc/66/0361-01" ] }, { "cite": "129 S.E. 808", "category": "reporters:state_regional", "reporter": "S.E.", "year": 1925, "pin_cites": [ { "page": "809" } ], "opinion_index": 0 }, { "cite": "190 N.C. 332", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8601948 ], "year": 1925, "pin_cites": [ { "page": "334" } ], "opinion_index": 0, "case_paths": [ "/nc/190/0332-01" ] }, { "cite": "410 S.E.2d 887", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1991, "pin_cites": [ { "page": "891" } ], "opinion_index": 0 }, { "cite": "330 N.C. 331", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2508874 ], "year": 1991, "pin_cites": [ { "page": "337" } ], "opinion_index": 0, "case_paths": [ "/nc/330/0331-01" ] }, { "cite": "203 N.C. 749", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8619890 ], "weight": 3, "year": 1932, "pin_cites": [ { "page": "753", "parenthetical": "\"[W]e may have recourse to former decisions, among which are several dealing with the subject under consideration.\"" }, { "page": "753" }, { "page": "753" } ], "opinion_index": 0, "case_paths": [ "/nc/203/0749-01" ] }, { "cite": "410 S.E.2d 474", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1991, "pin_cites": [ { "page": "476" } ], "opinion_index": 0 }, { "cite": "330 N.C. 412", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2510573 ], "year": 1991, "pin_cites": [ { "page": "416" } ], "opinion_index": 0, "case_paths": [ "/nc/330/0412-01" ] }, { "cite": "75 S.E.2d 512", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1953, "pin_cites": [ { "page": "514", "parenthetical": "\"Constitutional provisions should be construed in consonance with the objects and purposes in contemplation at the time of their adoption.\"" }, { "page": "514" } ], "opinion_index": 0 }, { "cite": "237 N.C. 442", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8613723 ], "weight": 2, "year": 1953, "pin_cites": [ { "page": "444", "parenthetical": "\"Constitutional provisions should be construed in consonance with the objects and purposes in contemplation at the time of their adoption.\"" }, { "page": "444" } ], "opinion_index": 0, "case_paths": [ "/nc/237/0442-01" ] }, { "cite": "31 S.E.2d 858", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 1944, "pin_cites": [ { "page": "860" }, { "page": "860" } ], "opinion_index": 0 }, { "cite": "224 N.C. 581", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8610657 ], "weight": 2, "year": 1944, "pin_cites": [ { "page": "583" }, { "page": "583" } ], "opinion_index": 0, "case_paths": [ "/nc/224/0581-01" ] }, { "cite": "385 S.E.2d 473", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 3, "year": 1989, "pin_cites": [ { "page": "478", "parenthetical": "quoting State v. Emery, 224 N.C. 581, 583, 31 S.E.2d 858, 860 (1944)" }, { "page": "479", "parenthetical": "\"In interpreting our Constitution^ ] . . . where the meaning is clear from the words used, we will not search for a meaning elsewhere.\"" }, { "page": "478" } ], "opinion_index": 0 }, { "cite": "325 N.C. 438", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 2491477 ], "weight": 3, "year": 1989, "pin_cites": [ { "page": "449", "parenthetical": "quoting State v. Emery, 224 N.C. 581, 583, 31 S.E.2d 858, 860 (1944)" }, { "page": "449" }, { "page": "449" } ], "opinion_index": 0, "case_paths": [ "/nc/325/0438-01" ] }, { "cite": "76 N.C. 420", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8697620 ], "weight": 3, "year": 1877, "pin_cites": [ { "page": "423-24", "parenthetical": "emphasis added" } ], "opinion_index": 0, "case_paths": [ "/nc/76/0420-01" ] }, { "cite": "562 S.E.2d 377", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 2, "year": 2002, "pin_cites": [ { "page": "387", "parenthetical": "citing John L. Sanders, Our Constitutions: An Historical Perspective, in Elaine E Marshall, N.C. Dep't of Sec'y of State, North Carolina Manual 1999-2000, at 125, 134" }, { "page": "389", "parenthetical": "citation omitted" } ], "opinion_index": 0 }, { "cite": "355 N.C. 354", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 219939 ], "weight": 2, "year": 2002, "pin_cites": [ { "page": "367", "parenthetical": "citing John L. Sanders, Our Constitutions: An Historical Perspective, in Elaine E Marshall, N.C. Dep't of Sec'y of State, North Carolina Manual 1999-2000, at 125, 134" }, { "page": "370" } ], "opinion_index": 0, "case_paths": [ "/nc/355/0354-01" ] }, { "cite": "61 N.C. (Phil.) 76", "category": "reporters:state", "reporter": "N.C.", "weight": 10, "year": 1867, "pin_cites": [ { "page": "80" }, { "page": "82" }, { "page": "82" }, { "page": "82-83" }, { "page": "83" }, { "page": "85" }, { "page": "84" }, { "page": "85-86" }, { "page": "216" }, { "page": "216, 230" } ], "opinion_index": 0 }, { "cite": "61 N.C. 78", "category": "reporters:state", "reporter": "N.C.", "pin_cites": [ { "page": "81" } ], "opinion_index": 0 }, { "cite": "2 S.E.2d 592", "category": "reporters:state_regional", "reporter": "S.E.2d", "weight": 7, "year": 1939, "pin_cites": [ { "page": "599" }, { "page": "598-99" }, { "page": "598" }, { "page": "599" }, { "parenthetical": "emphases added" } ], "opinion_index": 0 }, { "cite": "215 N.C. 491", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8630467 ], "weight": 4, "year": 1939, "pin_cites": [ { "page": "501" }, { "page": "499-501" }, { "page": "499-500" }, { "page": "501" } ], "opinion_index": 0, "case_paths": [ "/nc/215/0491-01" ] }, { "cite": "526 S.E.2d 650", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 2000, "pin_cites": [ { "page": "650" } ], "opinion_index": 0 }, { "cite": "351 N.C. 462", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 1155787 ], "year": 2000, "pin_cites": [ { "page": "463" } ], "opinion_index": 0, "case_paths": [ "/nc/351/0462-01" ] }, { "cite": "2001 N.C. Sess. Laws 1670", "category": "laws:leg_session", "reporter": "N.C. Sess. Laws", "weight": 3, "opinion_index": 0 }, { "cite": "173 N.C. App. 481", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 8353857 ], "year": 2005, "opinion_index": 0, "case_paths": [ "/nc-app/173/0481-01" ] }, { "cite": "76 N.C. 420", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8697620 ], "weight": 2, "year": 1877, "pin_cites": [ { "page": "423-24" }, { "page": "424" } ], "opinion_index": 1, "case_paths": [ "/nc/76/0420-01" ] }, { "cite": "61 N.C. (Phil.) 76", "category": "reporters:state", "reporter": "N.C.", "weight": 2, "year": 1867, "pin_cites": [ { "page": "82-86" } ], "opinion_index": 1 }, { "cite": "61 N.C. 78", "category": "reporters:state", "reporter": "N.C.", "opinion_index": 1 } ], "analysis": { "cardinality": 1406, "char_count": 35942, "ocr_confidence": 0.754, "pagerank": { "raw": 3.8071015859223307e-07, "percentile": 0.8976988619799842 }, "sha256": "ba2b014e3398926f383dda5b4c0e935e9efd77576150d5e8fe87382161b04811", "simhash": "1:6aeda1a3660d6696", "word_count": 5815 }, "last_updated": "2023-07-14T22:28:24.883894+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [], "parties": [ "DIANA L. COLEY, GERALD L. BASS, JOHN WALTER BRYANT, RONALD C. DILTHEY, and All Other Taxpayers Similarly Situated v. STATE OF NORTH CAROLINA and NORRIS TOLSON, Secretary of Revenue" ], "opinions": [ { "text": "EDMUNDS, Justice.\nIn this case, we consider whether the provision of the North Carolina Constitution that forbids a retrospective tax on \u201cacts previously done\u201d applies to a midyear tax increase on income. For the reasons given below, we hold that Article I, Section 16 of the North .Carolina Constitution applies to such an increased tax but that the increase here is not unconstitutionally retrospective. Accordingly, we modify and affirm the opinion of the Court of Appeals.\nOn 26 September 2001, Governor Michael Easley signed into law Session Law 2001-424, titled the \u201cCurrent Operations and Capital Improvements Appropriations Act of 2001.\u201d Current Operations and Capital Improvements Act, ch. 424, 2001 N.C. Sess. Laws 1670. Section 34.18.(a) of this Session Law rewrote portions of N.C.G.S. \u00a7 105-134.2(a) and enacted a temporary new income tax bracket for individuals with high incomes, increasing the highest marginal tax rate from 7.75 percent to 8.25 percent. Id., sec. 34.18.(a) at 2108-10. Pursuant to Section 34.18.(b), the new bracket became \u201ceffective for taxable years beginning on or after January 1, 2001\u201d and, at the time of its passage, was scheduled to expire \u201cfor taxable years beginning on or after January 1, 2004.\u201d Id., sec. 34.18.(b) at 2110.\nPlaintiffs filed their 2001 personal income tax returns under protest, then on 25 April 2003 filed suit under N.C.G.S. \u00a7 105-267 in Wake County Superior Court as \u201ccitizens and taxpayers of the State of North Carolina.\u201d Plaintiffs\u2019 complaint was a purported class action on behalf of themselves and all persons similarly situated. They sought a judgment declaring that the above-cited portion of Section 34.18.(b) of Session Law 2001-424 violates the provision of Article I, Section 16 of the North Carolina Constitution that states: \u201cNo law taxing retrospectively sales, purchases, or other acts previously done shall be enacted.\u201d In addition, plaintiffs prayed for refunds on all \u201ctaxes paid on wages, earnings and other taxable income . . . for the 271 day period [from] January 1, 2001 through September 28, 2001\u201d or, in the alternative, \u201crefunds for all excess taxes paid on acts done during the entire year.\u201d The matter was designated as exceptional by the Chief Justice pursuant to Rule 2.1 of the General Rules of Practice for the Superior and District Courts.\nDefendants filed consolidated motions to dismiss and to strike portions of the complaint. Plaintiffs subsequently filed motions for judgment on the pleadings and for summary judgment. Following a hearing on all these motions, the trial court filed a memorandum of decision and on 6 August 2004 entered an order denying plaintiffs\u2019 motion for summary judgment and allowing defendants\u2019 motion to dismiss pursuant to N.C.G.S. \u00a7 1A-1, Rule 12(b)(6). Plaintiffs entered notice of appeal to the Court of Appeals and, on 4 October 2005, a divided panel affirmed the trial court\u2019s ruling. Coley v. State, 173 N.C. App. 481, 620 S.E.2d 25 (2005). Plaintiffs appeal to this Court on the basis of the dissent.\nWe review the trial court\u2019s dismissal of plaintiffs\u2019 suit to determine \u201cwhether the allegations of the complaint, if treated as true, are sufficient to state a claim upon which relief can be granted under some legal theory.\u201d Thompson v. Waters, 351 N.C. 462, 463, 526 S.E.2d 650, 650 (2000). Plaintiffs contend that Section 34.18 of Session Law 2001-424 is retrospective because it requires payment of taxes on income earned from 1 January 2001 to the date of the law\u2019s signing on 26 September 2001, thereby taxing income-producing \u201cacts previously done.\u201d Defendants respond that the legislation taxes income, not \u201cacts,\u201d and thus falls outside the purview of the constitutional prohibition. Accordingly, we must make two related inquiries. First, is Session Law 2001-424 a tax upon acts, or, phrased differently, does Article I, Section 16 apply to an increase in income tax rates? Second, if so, does Session Law 2001-424 tax retrospectively? See Unemployment Comp. Comm\u2019n v. Wachovia Bank & Tr. Co., 215 N.C. 491, 501, 2 S.E.2d 592, 599 (1939).\nThe genesis of the constitutional provision in question was legislation creating criminal liability for failure to pay taxes on previous purchases. See John V. Orth, The North Carolina State Constitution: A Reference Guide 53 (1993) [hereinafter Orth, State Constitution] (noting that the rationale for the ban on retrospective tax laws \u201cwould seem to be similar to that for . . . retrospective criminal laws\u201d). Specifically, in State v. Bell, this Court upheld the conviction of the defendant, a merchant who refused to pay a tax levied on all purchases made by those \u201cbuying or selling goods, wares or merchandise of whatever name or description.\u201d 61 N.C. 78, 81, 61 N.C. (Phil.) 76, 80 (1867). Although the statute was ratified on 18 October 1865, it \u201cwas to apply and operate during the twelve months next preceding the first of January, 1866.\u201d Id. at 82, 61 N.C. (Phil.) at 80. The defendant offered to pay the tax on his purchases made after 18 October 1865, but he refused to pay taxes on purchases before that date and was convicted of a misdemeanor. Id. at 82, 61 N.C. (Phil.) at 81.\nOn appeal, the defendant argued that the tax was unconstitutional and void either as an ex post facto law or as a retrospective law \u201cagainst the spirit... of the Constitution.\u201d Id. at 82-83, 61 N.C. (Phil.) at 81-82. We observed that ex post facto laws apply only \u201cto matters of a criminal nature\u201d and held that the law was prospective \u201cin respect to [the defendant\u2019s] criminality\u201d because the defendant could avoid all criminal liability by paying the tax. Id. at 83, 61 N.C. (Phil.) at 81-82. We then discussed the State\u2019s \u201clarge and essential power\u201d to tax, id. at 85, 61 N.C. (Phil.) at 86, and reasoned that without some particular \u201crepugnancy to the Constitution of the United States or of the State,\u201d id. at 84, 61 N.C. (Phil.) at 83, we could \u201csee nothing to prevent the people from taxing themselves [retrospectively], either through a convention or a legislature,\u201d id. at 85-86, 61 N.C. (Phil.) at 86. Accordingly, the defendant\u2019s conviction was affirmed.\nShortly after we issued our opinion in Bell, the North Carolina Constitutional Convention of 1868 convened. The Journal from the Convention illustrates that preliminary versions of the draft Constitution contained in the Declaration of Rights a provision against ex post facto laws. Journal of the Constitutional Convention of the State of North Carolina 168, 213 (Raleigh, Joseph W. Holden 1868) [hereinafter Convention Journal]. However, the provision did not include a prohibition against retrospective taxation until delegate William B. Rodman, an attorney, moved to add the following language: \u201cNo law taxing retrospectively sales, purchases, or other acts previously done ought to be passed.\u201d Id. at 216. As detailed below, plaintiffs argue that Rodman\u2019s personal papers indicate that he was aware of the Bell decision and suggest that the holding in that case influenced his motion. Rodman\u2019s amendment was adopted, and the final version, \u201cRetrospective laws, punishing acts committed before the existence of such laws, and by them only declared criminal, are oppressive, unjust, and incompatible with liberty; wherefore, no ex post facto law ought to be made. No law taxing retrospectively, sales, purchases, or other acts previously done, ought to be passedf,]\u201d appeared in Article I, Section 32 of the Constitution approved in April of 1868. Id. at 216, 230; see also Orth, State Constitution 13.\nIn November of 1970, North Carolina voters ratified a revised and amended state constitution generally known as the 1971 Constitution. See Stephenson v. Bartlett, 355 N.C. 354, 367, 562 S.E.2d 377, 387 (2002) (citing John L. Sanders, Our Constitutions: An Historical Perspective, in Elaine E Marshall, N.C. Dep\u2019t of Sec\u2019y of State, North Carolina Manual 1999-2000, at 125, 134). Article I, Section 32, while remaining in the Declaration of Rights, was renumbered as Section 16 and the language slightly altered, with the word \u201cshall\u201d replacing \u201cought to.\u201d N.C. Const. art. I, \u00a7 16.\nPlaintiffs contend that the increased income tax imposed in Session Law 2001-424 violates this provision. They take an historical approach, arguing that Rodman\u2019s papers demonstrate that he proposed amendments to the 1868 Constitutional Convention relating to retrospective taxation. According to plaintiffs, under Rodman\u2019s leadership, the Convention initially considered an amendment to Article I, Section 32 stating that \u201csales, purchases and other transactions previously done\u201d could not be taxed retrospectively, but ultimately chose to use the broader term \u201cother acts\u201d in lieu of \u201cother transactions.\u201d Plaintiffs then maintain that the Convention\u2019s decision to use the more expansive term \u201cacts\u201d signals the Framers\u2019 intent that the earning of income is an \u201cother act[]\u201d that cannot be taxed retrospectively.\nAlthough the papers cited by plaintiffs are provocative and may well reflect the evolution of Rodman\u2019s thoughts as he experimented with alternative versions of his amendment, the Journal of the Convention does not indicate that the term \u201ctransactions\u201d was ever proposed or that the delegates in session ever considered it. The strongest implication of the papers, read in light of the Bell opinion, is that Rodman was more concerned with the retrospective nature of a tax than with the subject of a tax. See also Henry G. Connor & Joseph B. Cheshire, Jr., The Constitution of The State of North Carolina Annotated 105 (1911) (\u201cBefore the adoption of this clause by the Convention of 1868, laws, taxing retrospectively acts previously done, were valid.\u201d). Ultimately, we are able to conclude with confidence no more than that Rodman proposed an amendment to then-Article I, Section 32 containing a ban on retrospective taxation on \u201csales, purchases, or other acts previously done\u201d and that the amendment was adopted. Convention Journal 216.\nPlaintiffs also argue that Young v. Town of Henderson, 76 N.C. 420 (1877), written by Rodman after he joined this Court, supports their position. However, the tax involved in Young was levied on \u201cmerchandise purchased\u201d in the approximately twelve months prior to the enactment of the tax, and such a tax was expressly forbidden by Article I, Section 32. Id. at 423-24 (emphasis added). Accordingly, Young is inapposite to the present case.\nAlthough we decline to adopt plaintiffs\u2019 historical analysis, we nevertheless must determine the proper interpretation of this constitutional provision. The principles governing constitutional interpretation are generally the same as those \u201c \u2018 \u201cwhich control in ascertaining the meaning of all written instruments.\u201d \u2019 \u201d Stephenson, 355 N.C. at 370, 562 S.E.2d at 389 (citation omitted). In determining the will or intent of the people as expressed in the Constitution, \u201c \u2018all cognate provisions are to be brought into view in their entirety and so interpreted as to effectuate the manifest purposes of the instrument.\u2019 \u201d State ex rel. Martin v. Preston, 325 N.C. 438, 449, 385 S.E.2d 473, 478 (1989) (quoting State v. Emery, 224 N.C. 581, 583, 31 S.E.2d 858, 860 (1944)); see also Perry v. Stancil, 237 N.C. 442, 444, 75 S.E.2d 512, 514 (1953) (\u201cConstitutional provisions should be construed in consonance with the objects and purposes in contemplation at the time of their adoption.\u201d). See generally 5A Strong\u2019s North Carolina Index 4th: Constitutional Law \u00a7\u00a7 8-9 (2000).\nIf the meaning of the language of Article I, Section 16 is plain, we must follow it. Martin v. State, 330 N.C. 412, 416, 410 S.E.2d 474, 476 (1991); see also Preston, 325 N.C. at 449, 385 S.E.2d at 479 (\u201cIn interpreting our Constitution^ ] . . . where the meaning is clear from the words used, we will not search for a meaning elsewhere.\u201d). Here, the second sentence of Article I, Section 16 states: \u201cNo law taxing retrospectively sales, purchases, or other acts previously done shall be enacted.\u201d N.C. Const, art. I, \u00a7 16 (emphasis added). While the language is straightforward enough, we cannot in good faith find that the phrase \u201cother acts\u201d is unambiguous on its face and that it unquestionably covers an increase in income tax. Accordingly, we will consider both the context in which this language appears and our precedent. See Preston, 325 N.C. at 449, 385 S.E.2d at 478 (\u201c \u2018The best way to ascertain the meaning of a word or sentence in the Constitution is to read it contextually and to compare it with other words and sentences with which it stands connected.\u2019 \u201d (quoting Emmery, 224 N.C. at 583, 31 S.E.2d at 860)); Elliott v. State Bd. of Equalization, 203 N.C. 749, 753, 166 S.E. 918, 921 (1932) (\u201c[W]e may have recourse to former decisions, among which are several dealing with the subject under consideration.\u201d).\nAs to the phrase \u201cother acts\u201d in the context of Article I, Section 16, while we are not persuaded by plaintiffs\u2019 interpretation of the historical record, we agree with their observation that the phrase \u201cother acts\u201d is broader than the preceding terms in the sentence, \u201csales\u201d and \u201cpurchases.\u201d N.C. Const, art I, \u00a7 16. The drafters did not choose a limiting term, but instead used language that can encompass a range of conduct. See Elliott, 203 N.C. at 753, 166 S.E. at 921 (\u201c[W]e may resort to the natural significance of the words employed and if they embody a definite meaning and involve no absurdity or contradiction we are at liberty to say that the meaning apparent on the face of the instrumerit is the one intended to be conveyed.\u201d). Thus, we are satisfied that the use of the expansive term \u201cother acts\u201d in the Constitution indicates that the drafters intended an inclusive interpretation of the phrase. Accordingly, we believe that the earning of income is such an \u201cother act[]\u201d covered by Article I, Section 16.\nOur contextual interpretation is supported by one of the few other cases from this Court construing the language of Article I, Section 16. In Unemployment Compensation Commission v. Wachovia Bank & Trust Co., we addressed the meaning of \u201cother acts\u201d in the context of the North Carolina Unemployment Compensation Law. 215 N.C. at 499-501, 2 S.E.2d at 598-99; see also Unemployment Compensation Law, ch. 1,1936 N.C. Pub. [Sess.] Laws 1 (Extra Sess. 1936). Ratified by the General Assembly on 16 December 1936, this public law required \u201ccontributions\u201d from employers \u201cwith respect to wages payable for employment\u201d beginning with the 1936 calendar year. Ch. 1, sec. 7.(a), 1936 N.C. Pub. [Sess.] Laws (Extra Sess. 1936) at 8. Employers affected were those that on or subsequent to 1 January 1936, \u201chad in [their] employ one or more individuals performing services for [them] within this State.\u201d Id., sec. 19(e) at 24. In addition, employers were subject to the tax if \u201cin each of twenty different weeks within either the current or the preceding calendar year... [they] had in employment, eight or more individuals.\u201d Id., sec. 19(f) at 25.\nThe defendant bank argued that the tax was unconstitutionally retrospective because the public law, while not ratified until 16 December 1936, required that each employer make contributions for all of 1936. Unemployment Comp. Comm\u2019n, 215 N.C. at 499-500, 2 S.E.2d at 598. Although we agreed with the defendant\u2019s argument, Unemployment Compensation Commission is now particularly pertinent because of the nature of the arguments made to us in that case.\nThe defendant in Unemployment Compensation Commission maintained that the public law then at issue, the Unemployment Compensation Law, impermissibly imposed a retrospective tax on \u201cother acts previously done.\u201d In response, the plaintiff state agency argued in its brief to this Court that, in construing the predecessor to Article I, Section 16, \u201c[u]nder the rule of statutory construction, EJUSDEM GENERIS, where general words follow the enumeration of particular classes of persons or things, the general words will be construed as applicable to persons and things of the same general nature or class as those specifically enumerated\u201d and therefore the term \u201cacts\u201d had a meaning that conformed to the definitions of \u201csales\u201d and \u201cpurchases.\u201d Based on this canon, the plaintiff contended that the tax in question was not imposed on an \u201cother act[]\u201d and accordingly that language in Article I, Section 32 did not even apply to the public law.\nDefendants here similarly argue that, under the doctrine of ejusdem generis, the term \u201cother acts\u201d should be read restrictively because it appears in a series with the terms \u201csales\u201d and \u201cpurchases\u201d and therefore is not applicable to a tax on income. In the following discussion, we assume without deciding that the canon of ejusdem generis extends to constitutional interpretation. See Baker v. Martin, 330 N.C. 331, 337, 410 S.E.2d 887, 891 (1991).\nWe apparently concluded that the canon was not applicable in Unemployment Compensation Commission because the doctrine is not mentioned in the opinion. Instead, we held in that case that Article I, Section 32 applied to the public law in question, observing that the required \u201ccontributions [were] in the nature of a tax... based upon the act of contracting for employment and the payment of wages for services rendered.\u201d Unemployment Comp. Comm\u2019n, 215 N.C. at 501, 2 S.E.2d at 599. Moreover:\n[T]he requirement that employers make contributions \u201cin respect to employment\u201d is in effect a tax upon an act or acts. If it be considered a tax upon the maintenance of the status of an employer, even then it is essentially a tax upon an act. To maintain the status of an employer one must employ and pay wages.\nId. (emphases added). Thus, in 1939, we declined the express opportunity to limit the phrase \u201cother acts\u201d as similarly proposed here by defendants. We will follow our lead from that case and conclude that if \u201cthe maintenance of the status of an employer\u201d constitutes an act that falls within the scope of Article I, Section 16, the term \u201cother acts\u201d applies equally to income-producing activities.\nIn sum, the Constitution should be given an interpretation \u201cbased upon broad and liberal principles designed to ascertain the purpose and scope of its provisions.\u201d Elliott, 203 N.C. at 753, 166 S.E. at 920-21; see also Perry, 237 N.C. at 444, 75 S.E.2d at 514. Accordingly, consistent both with the intent of the drafters and with our own precedent, we hold that the imposition of a tax on income is a tax on an \u201cother act[]\u201d under Article I, Section 16.\nWe next address whether Session Law 2001-424 impermissibly enacted a law \u201ctaxing retrospectively.\u201d N.C. Const. art. I, \u00a7 16. Plaintiffs point out that Section 34.18.(b) of Session Law 2001-424 states that the \u201csection becomes effective for taxable years beginning on or after January 1, 2001, and expires for taxable years beginning on or after January 1, 2004.\u201d Ch. 424, sec. 34.18.(b), 2001 N.C. Sess. Laws at 2110. Plaintiffs contend that for the nine months between the beginning of 2001 and the enactment of the statute on 26 September 2001, they paid the then-required 7.75 percent \u201ctax on income from their sales and purchases of capital assets and on their income earned from labor,\u201d but that the higher tax rate in \u201cSession Law 2001-424 imposed a new duty on taxpayers with respect to these past transactions.\u201d Defendants respond that the law operated prospectively because the taxable period had not closed as of the date of enactment and therefore the taxpayers\u2019 \u201cnet income\u201d did not yet exist.\n\u201cThe power to tax is the highest and most essential power of the government, and is an attribute of sovereignty, and absolutely necessary to its existence.\u201d New Hanover Cty. v. Whiteman, 190 N.C. 332, 334, 129 S.E. 808, 809 (1925); see also Pullen v. Comm\u2019rs of Wake Cty., 66 N.C. 361, 362 (1872). Article V, Section 2 of the North Carolina Constitution addresses state and local taxation. The income tax provision, found in subsection (6), limits the rate of tax on incomes to a maximum of ten percent and provides that \u201cthere shall be allowed personal exemptions and deductions so that only net incomes are taxed.\u201d N.C. Const. art. V, \u00a7 2(6) (emphasis added).\nSection 105-134.2 of the North Carolina General Statutes imposes the individual income tax authorized by the Constitution and sets out the applicable percentages of the taxpayer\u2019s North Carolina taxable income to be used in computing the tax. N.C.G.S. \u00a7 105-134.2 (2005). Section 34.18.(a) of Session Law 2001-424 rewrote a substantial portion of N.C.G.S. \u00a7 105-134.2(a) by substituting tables that reflected a new upper income tax bracket and marginal rate increase. Ch. 424, sec. 34.18.(a), 2001 N.C. Sess. Laws at 2108-10. Otherwise, relevant portions and language of the Individual Income Tax Act generally remained the same and continue in force. Compare N.C.G.S. \u00a7\u00a7 105-134 to -134.7 (2001) (superseded) with N.C.G.S. \u00a7\u00a7 105-134 to -134.7 (2005).\nThe State individual income tax \u201cis imposed upon the North Carolina taxable income of every individual\u201d and is \u201clevied, collected, and paid annually.\u201d N.C.G.S. \u00a7 105-134.2(a). According to N.C.G.S. \u00a7 105-134.1(16), the definition of \u201ctaxable income\u201d is found in section 63 of the Internal Revenue Code (\u201cthe Code\u201d). In general, the Code defines taxable income as \u201cgross income minus the deductions allowed by [that] chapter,\u201d I.R.C. \u00a7 63(a) (2000), or, for the \u201cindividual who does not elect to itemize his deductions for the taxable year, . . . [as] adjusted gross income, minus . . . the standard deduction . . . and . . . the deduction for personal exemptions,\u201d id. \u00a7 63(b) (2000); see also id. \u00a7 61 (2000) (defining \u201cgross income\u201d); id. \u00a7 62 (2000) (defining \u201cadjusted gross income\u201d). A resident taxpayer\u2019s \u201cNorth Carolina taxable income\u201d is one\u2019s federal taxable income determined under the Code as adjusted by N.C.G.S. \u00a7\u00a7 105-134.6 and 105-134.7. See N.C.G.S. \u00a7 105-134.5 (2005) (\u201cNorth Carolina taxable income defined.\u201d).\nNorth Carolina taxable income is calculated \u201con the basis of the taxable year used in computing the taxpayer\u2019s income tax liability under the Code.\u201d Id. \u00a7 105-134.4 (2005) (emphasis added); see also id. \u00a7 105-134.1(17) (2005) (defining \u201ctaxable year\u201d as provided in section 441(b) of the Code); id. \u00a7 105-134.3 (2005) (stating that except as provided in Article 4A, the income tax imposed \u201cshall be assessed, collected, and paid in the taxable year following the taxable year for which the assessment is made\u201d). Section 441(b) of the Code indicates that the term \u201ctaxable year\u201d can assume several meanings, including, inter alia, \u201cthe taxpayer\u2019s annual accounting period\u201d if the period is either a calendar or fiscal year, or \u201cthe calendar year\u201d if subsection (g) applies to the taxpayer. I.R.C. \u00a7 441(b) (2000). See generally Boris I. Bittker et al., Federal Income Taxation of Individuals \u00b6 39.01[l]-[2], at 39-3 to -5 (3d ed. 2002) (introducing the basic principles of tax accounting methods and discussing the \u201ctaxable year\u201d). These statutes demonstrate that the concepts of \u201cincome\u201d and \u201ctaxable year\u201d are intertwined and that income is determined and the North Carolina tax thereon is imposed on an annual basis. See N.C.G.S. \u00a7 105-134 (2005) (\u201cThe general purpose of this Part is to impose a tax for the use of the State government upon the taxable income collectible annually . . . .\u201d); id. \u00a7 105-134.2(a) (\u201cThe tax shall be levied, collected, and paid annually ....\u201d).\nCiting portions of Articles 4 (\u201cIncome Tax\u201d) and 4A (\u201cWithholding; Estimated Income Tax for Individuals\u201d) in The Revenue Act, plaintiffs argue that income taxes are not paid annually upon the filing of the April 15 tax return. See id. \u00a7\u00a7 105-133 to -163.24 (2005). Plaintiffs instead point out that many taxpayers either have taxes withheld from their wages or make estimated quarterly payments and often overpay so that they are due a refund when they file their April 15 tax returns. Plaintiffs contend that these and other similarly situated taxpayers are paying their income taxes \u00e1s the income is earned. Consequently, according to plaintiffs, the tax in question is retrospective because it increases the tax on income that has already been earned and for which the tax was due when earned.\nHowever, a close reading of Article 4A reveals that a taxpayer\u2019s final income tax liability is not fixed until the taxpayer\u2019s annual income is determined. For example, while N.C.G.S. \u00a7 105-163.2(a) mandates that employers withhold \u201cfrom the wages of each employee the State income taxes payable by the employee on the wages,\u201d the amount withheld by the employer is an \u201capproximat[ion] [of] the employee\u2019s income tax liability under Article 4.\u201d Id. \u00a7 105-163.2(a). In addition, this statute advises employers how to calculate \u201can employee\u2019s anticipated income tax liability.\u201d Id. (emphasis added). We do not necessarily disagree with plaintiffs\u2019 labeling of such withholding and estimated tax provisions as \u201cpay-as-you-go\u201d tax collection, but this characterization does not trump the language of either our prior opinions or the pertinent statutes in Chapter 105, Article 4, Part 2 of the North Carolina General Statutes. See N.C.G.S. \u00a7 105-163.24 (requiring that Article 4A \u201cbe liberally construed in pari materia with Article 4\u201d). As we previously observed:\nThe withholding of taxes by the employer is based on an estimate of the employee\u2019s ultimate tax liability; an employee\u2019s tax liability is not established until the employee files a tax return for the particular tax year. The actual tax liability may vary depending on numerous factors, such as, the amount of any itemized deductions, the number of the taxpayer\u2019s dependents, and the amount of any other income.\nEvans v. AT&T Techs., Inc., 332 N.C. 78, 89, 418 S.E.2d 503, 510 (1992) (emphasis added). While we acknowledge that this statement was made in the context of a discussion of deductions and credits allowed to employers for payments to injured employees and that the issue of when income taxes are due was not then before us, the quoted language is consistent with our holding that a taxpayer\u2019s North Carolina taxable income and ultimate tax liability or overpayment are indeterminate until the close of the taxable year.\nAccordingly, we agree with defendants that Session Law 2001-424 as codified in N.C.G.S. \u00a7 105-134.2(a) does not tax plaintiffs retrospectively. The subject of the enacted tax is the \u201cNorth Carolina taxable income\u201d of the individual taxpayer which, by statutory definition, is computed \u201con the basis of the taxable year.\u201d N.C.G.S. \u00a7 105-134.4. Regardless of whether one\u2019s taxable year pursuant to section 441(b) of the Code is determined by the taxpayer\u2019s annual accounting period or by the calendar year, a citizen\u2019s taxable income and corresponding tax liability or overpayment are not fixed until the close of that year. See United States v. Consol. Edison Co. of N. Y., 366 U.S. 380, 384, 6 L. Ed. 2d 356, 360 (1961) (\u201cIt is settled that each \u2018taxable year\u2019 must be treated as a separate unit, and all items of gross income and deduction must be reflected in terms of their posture at the close of such year.\u201d (emphasis added)), superseded by statute on other grounds as stated in Consol. Freightways, Inc. v. Comm\u2019r, 708 F.2d 1385, 1392 (9th Cir. 1983). Because plaintiffs\u2019 taxable income was not fixed at the date of enactment, the midyear tax rate increase implemented by Session Law 2001-424 was not levied until the conclusion of the taxable year. Consequently, the tax at issue operated prospectively from the date of enactment and does not violate Article I, Section 16 of the North Carolina Constitution.\nBased on the foregoing, the opinion of the Court of Appeals affirming the trial court\u2019s grant of defendants\u2019 motion to dismiss is affirmed as modified.\nMODIFIED AND AFFIRMED.\n. Rodman later served as an Associate Justice on this Court and authored at least two opinions concerning taxation. See Young v. Town of Henderson, 76 N.C. 420 (1877); Pullen v. Comm\u2019rs of Wake Cty., 66 N.C. 361 (1872).\n. Plaintiffs\u2019 complaint included as exhibits copies of Rodman\u2019s papers. Later, with plaintiffs\u2019 consent, the trial court struck portions of these exhibits. Plaintiffs cite us to these exhibits in their brief and arguments. Because our review of the issue of constitutional interpretation at bar is de novo, see Piedmont Triad Airport Auth. v. Urbine, 354 N.C. 336, 338, 554 S.E.2d 331, 332 (2001), cert. denied, 535 U.S. 971, 152 L. Ed. 2d 381 (2002), we will review all parts of the record that might assist our analysis.", "type": "majority", "author": "EDMUNDS, Justice." }, { "text": "Justice BRADY,\nconcurring in part and dissenting in part.\nWhile I fully concur with the majority\u2019s conclusion that income taxation is encompassed by Article I, Section 16 of the North Carolina Constitution, I am compelled to dissent as to the majority\u2019s determination that the tax increase at issue is not retrospective. The majority holds a tax rate increase on previously completed income-producing acts is a prospective tax. The necessary conclusion which emanates from the majority\u2019s opinion is that the act of earning income does not occur until the end of the taxable year. This result defies logic.\nAn \u201cact\u201d is defined as \u201ca thing done or being done.\u201d Webster\u2019s Third New International Dictionary 20 (16th ed. 1971). The definition of \u201cretrospective\u201d is \u201ccontemplative of or relative to past events.\u201d Id. at 1941. Thus, to retrospectively tax an act means to tax a completed \u201cthing\u201d done in the past. The plain language of Article I, Section 16 prohibits the subsequent taxation of completed acts which either produce some sort of profit or entitle an individual to the receipt of income.\nIt is instructive to note the provision prohibiting retrospective taxation appears in the same section as the North Carolina constitutional prohibition against the enactment of ex post facto laws. While it is clear the prohibition on ex post facto laws applies only to criminal law, and not to civil laws, the concept behind the ban on both retrospective taxation and ex post facto criminal laws is strikingly similar. As a preeminent North Carolina constitutional law scholar has noted: \u201cThe rationale [for the Article I, Section 16 prohibition on retrospective taxation] would seem to be similar to that for the ban on retrospective criminal laws. To the extent one could have avoided the event that is taxed, it is unjust not to give the taxpayer the chance.\u201d John V. Orth, The North Carolina State Constitution with History and Commentary 53 (1995). Following this analysis, it would seem \u201cunjust not to give the taxpayer the chance\u201d to avoid an income-producing activity before imposing an increased tax on that activity. Id. Unless the majority has access to H.G. Wells\u2019s time machine, the acts performed by plaintiffs before the passage of this tax rate increase cannot be undone. Adherence to Article I, Section 16 allows the citizen to plan his or her dealings based upon the tax structure as it exists at the time the income-producing act is performed. An arbitrary definition of \u201cearning income\u201d created for administrative convenience robs the citizen of the opportunity to plan and shackles the taxpayer with an increased financial burden. I cannot turn a blind eye, as the majority does, to the lengthy nine month period covering this retrospective tax rate increase, which blatantly ignores the people\u2019s expectation of stable and predictable taxation.\nThis Court\u2019s precedent surrounding Article I, Section 16 strongly supports the proposition that this provision\u2019s purpose is to prohibit the retrospective taxation of finite acts \u2014 epitomized by mercantile activities. One need look no further than the origin of the Article I, Section 16 prohibition on retrospective taxation to understand which activities the drafters meant to protect through this constitutional provision. Article I, Section 16 was amended in direct response to State v. Bell, 61 N.C. 78, 61 N.C. (Phil.) 76 (1867). In Bell, the Court was compelled to hold a retrospective tax on merchant activity constitutionally permissible because the Court found nothing in the North Carolina Constitution to prevent such legislation. Id. at 82-86, 61 N.C. (Phil.) at 81-86.\nThe finite merchant activities in Bell which prompted the amendment were very similar to those activities being retrospectively taxed in Young v. Town of Henderson, 76 N.C. 420, 423-24 (1877). Yet, the outcome was very different in Young. The Court, applying the then new Article I, Section 16 prohibition on retrospective taxation for the first time, found the retrospective taxation of the finite merchant activities to be unconstitutional. Id. at 424. We can confidently rely, from this Court\u2019s precedent interpreting Article I, Section 16, that merchant-like activities, which are complete the moment they occur, cannot be retrospectively taxed.\nThe earning of income is very similar to the merchant activities subjected to what is now unconstitutional retrospective taxation as addressed in Bell and Young. North Carolinians are all merchants of their labor, and therefore the completion of a commercial mercantile transaction is essentially the same as the completion of one month, one day, or one hour of an individual\u2019s toil and labor. Whether a merchant sells a product or an individual supplies eight hours of manual labor, an act has been completed. In both cases someone is entitled to, if not immediately presented with, some sort of compensation and incurs a corresponding tax obligation. The retrospective tax rate increase on completed income-producing activities, like the retrospective taxation of completed merchant transactions, violates Article I, Section 16.\nIn this regard, it seems illogical to cast aside the true definition of an income-producing act in favor of the General Assembly\u2019s annual perspective on income-producing activities, as the majority does today. Were the General Assembly to tax income on a twelve year basis, would the public be subject to new taxes on income-producing acts that were completed nine years ago? In the simplest terms, the majority condones the General Assembly\u2019s unconstitutional increase of the tax rate on income-producing activities up to nine months after completion of the activities subject to taxation. Simply because the State chooses to tax income on an annual basis does not negate the fact that income is truly earned moment by moment. I do not believe the General Assembly\u2019s use of the word \u201cannual\u201d with regards to taxing income magically relieves the Assembly of its constitutional duty to refrain from retrospectively taxing acts. I respectfully dissent.", "type": "concurring-in-part-and-dissenting-in-part", "author": "Justice BRADY," } ], "attorneys": [ "Boyce & Isley, PLLC, by G. Eugene Boyce and Philip R. Isley, for plaintiff-appellants.", "Roy Cooper, Attorney General, by Kay Linn Miller Hobart, Special Deputy Attorney General, for defendant-appellees." ], "corrections": "", "head_matter": "DIANA L. COLEY, GERALD L. BASS, JOHN WALTER BRYANT, RONALD C. DILTHEY, and All Other Taxpayers Similarly Situated v. STATE OF NORTH CAROLINA and NORRIS TOLSON, Secretary of Revenue\nNo. 607A05\n(Filed 30 June 2006)\nTaxation\u2014 mid-year income tax change \u2014 other act \u2014 not \u2022 retrospective\nThe imposition of a tax on income is a tax on an \u201cother act\u201d under Article I, Section 16 of the North Carolina Constitution, which forbids the retrospective taxation of sales, purchases, or other acts previously done. However, the mid-year income tax increase at issue here is not retrospective because plaintiffs\u2019 taxable income was not fixed until the end of the tax year, so that the tax operated prospectively from the date of enactment.\nJustice Brady concurring in part and dissenting in part.\nAppeal pursuant to N.C.G.S. \u00a7 7A-30(2) from the decision of a divided panel of the Court of Appeals, 173 N.C. App. 481, 620 S.E.2d 25 (2005), affirming an order and judgment allowing defendants\u2019 motion to dismiss entered 6 August 2004 by Judge Henry V. Barnette, Jr. in Superior Court, Wake County. Heard in the Supreme Court 13 March 2006.\nBoyce & Isley, PLLC, by G. Eugene Boyce and Philip R. Isley, for plaintiff-appellants.\nRoy Cooper, Attorney General, by Kay Linn Miller Hobart, Special Deputy Attorney General, for defendant-appellees." }, "file_name": "0493-01", "first_page_order": 565, "last_page_order": 578 }