Iowa was looking to increase tax revenues Racetrack and rive

Iowa was looking to increase tax revenues. Racetrack and riverboat gambling establishment were subject to a maximum tax rate of 12 percent, until Iowa legislature passed a law last year that raises the allowable maximum tax rate on racetrack gambling to 42 percent. Racetrack gambling establishments assert that the new statute violates their equal protection rights. Are they correct? Why?

Solution

The Equal Protection Right Principle is a constitutional guarantee established in the Fourteenth Amendment in order to protect civil rights of excluded groups after the Civil War.

The jurists have comprehended this principle under the called \"14th Amendment Rational Basis Scrutiny\" that aim to guarantee equal treatment to people at \"similarly circumstanced\".

In taxation issues, the criterion is when there is a rational relationship between the disparity of treatment and some legitimate governmental purpose, the treatment is not a constitutional order violation.

The Iowa state must prove that there is a legitimate purpose to increase tax revenue and provide a solid argument to increasing those through Racetrack Gambling Establishments.

An argument could be the profit margin of these establishments, which could be significantly higher that other businesses. Also It could argue that Racetrack Gambling Establishments are socially toxics and to decrease their abuse, the state put a taxation to protect the people.