States constitutions necessitate a uniform exit tax

In addition to the United States Constitution, most state constitutions include some type of tax uniformity clause, which requires that a tax apply uniformly across each taxpayer classification. These uniformity clauses vary considerably across the states, and many apply only to property taxes. Importantly, though, some courts have characterized net income taxes as a type of property tax. If exit taxes proliferate, this characterization could take on additional importance as impacted taxpayers would likely assert uniformity clause challenges. State courts tend to interpret uniformity clauses broadly, and although taxpayers may also raise state and federal Equal Protection Clause challenges, taxpayers are more likely to be successful with a state uniformity challenge to exit taxes. The overarching uniformity and equal protection inquiries are whether the taxing jurisdiction properly determined each taxpayer class, and whether it applies the tax uniformly across that class. In the exit tax context, the taxpayer class would typically consist of individual residents of the state who are changing their residence to another state. Given the theoretical and practical justifications discussed throughout this Article, this taxpayer classification appears proper. The determinative inquiry, then, would be whether the tax applies uniformly across that class. An exit tax that exempts certain taxpayers, provides an income or wealth application threshold, or imposes progressive rates could violate the state uniformity clause if it applied. All these features are likely to be incorporated into an exit tax, so whether the state uniformity clause applies is an important determination. The few states that have broad uniformity clauses may want to design their exit taxes differently to achieve uniformity or limit them to reporting instead of tax imposition. For most states, however, the uniformity clause is unlikely to interfere with an exit tax, particularly if the exit tax regime is incorporated into the state’s existing personal income tax regime.