People often credit former President Ronald Reagan with saying “If you want less of something, tax it.”

To the extent the adage holds true, North Carolinians should be concerned about a recent dissenting opinion from the N.C. Supreme Court. It spells out the details of a new court-endorsed “success tax.”

In a 4-3 split decision, the state’s highest court ruled in favor of government officials fighting supermarket chain Harris Teeter. The dispute focused on the tax value of equipment in six Mecklenburg County Harris Teeter stores. The difference of opinion between the government and the company was substantial: roughly $8 million.

The Supreme Court’s four Democrats sided with the government. The three Republican justices sided with the business.

“A tax is a fine for doing well; a fine is a tax for doing wrong.” That quip from Mark Twain opens Justice Tamara Barringer’s eight-page dissent.

“In this matter, the North Carolina Property Tax Commission without any statutory or pertinent legal authority, and perhaps inadvertently but nonetheless inexorably, effectively imposes a ‘success tax’ under which the taxpayer’s economic success relative to applicable industry standards subjects it to higher business personal property valuations and thus higher property tax liabilities,” Barringer writes. “This is not sound tax policy nor law.”

The ruling against Harris Teeter goes against core principles of taxation. “It conflicts with the uniform appraisal standard established by our constitution and by statute requiring that all personal property ‘shall as far as practicable be appraised or valued at its true value in money,’” Barringer explains. “The profitability or revenue production of a successful taxpayer should not and, under constitutional and statutory principles, cannot impose higher valuation and property tax payments vis-à-vis a less successful taxpayer.”

Relevant factors within the grocery industry help account for Harris Teeter’s argument for a lower tax value. The company says much of its taxed equipment is obsolete. “Essentially, the taxpayer’s position and testimony of its expert were that true value in money is the actual market value for the used property,” Barringer wrote. That market value is lower than the government contends because of “the economic factors of high supply from store closures, mergers, and remodeling and minimal demand due to fewer store openings.”

The government’s expert took a different approach. “Because he found that the rate of return for the subject property exceeded the standard for the industry, he concluded that the subject property did not exhibit economic obsolescence,” Barringer writes.

But the justice notes a key problem with the government’s conclusion. “[A]llowing or disallowing an adjustment to a cost approach valuation on account of the rate of return for personal property conflicts with the design of a uniform appraisal standard,” Barringer writes. A uniform standard requires “all personal property” to be appraised at its true value.

Under the government’s standard, a taxpayer’s “relative economic success” helps determine whether it can claim the economic impact of its obsolete property.

A proper tax valuation “does not consider who owns the property.” “[E]conomic obsolescence is unrelated to who owns the property, and logically, the amount of revenue or net profits generated by the owner of that property is not determinative of economic obsolescence,” Barringer writes.

“Therefore, the fact that a specific taxpayer’s rate of return on the subject property exceeds industry standards does not refute the existence of economic obsolescence, and certainly does not justify per se higher ‘true values.’”

Barringer chides her Democratic colleagues for overlooking “this fundamental error of law.” Because Democrats hold the current state Supreme Court majority, their votes against Harris Teeter guarantee a higher tax bill than a less successful company would have faced.

After opening her opinion with a quote from Mark Twain, Barringer turns to another incisive commentor: former federal Judge Learned Hand. “Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes,” Hand wrote in the 1930s.

After World War II, Hand revisited the same idea. “Over and over again, courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible,” Hand wrote in a case called Commissioner of Internal Revenue v. Newman. “Everybody does so, rich or poor; and all do right, for nobody owes any public duty to pay more than the law demands: taxes are enforced exactions, not voluntary contributions. To demand more in the name of morals is mere cant.”

Closing with those words, Barringer explains why she and her Republican colleagues could not endorse an effective court-endorsed tax on economic success.

Mitch Kokai is senior political analyst for the John Locke Foundation.