In 2011, members of Congress began criticizing a proposed IRS rule implementing ObamaCare’s health insurance tax credits. They claimed that the proposed rule violated the clear language of the Patient Protection and Affordable Care Act, as well as congressional intent, by issuing those tax credits in states that declined to establish a health insurance “exchange.” In effect, they claimed the proposed rule would result in the federal government taxing, borrowing, and spending hundreds of billions of dollars without congressional authorization. 

At the time, then–IRS commissioner Douglas Shulman leapt to his agency’s defense. He wrote that various provisions of the statute “support” the rule. He wrote that the “relevant” legislative history doesn’t show that Congress didn’t want the IRS to tax, borrow, and spend those hundreds of billions of dollars. He wrote that the proposed rule is “consistent with the language, purpose, and structure” of the law. The only thing he didn’t do was cite a provision of the law authorizing the rule, or even creating any ambiguity about the rule’s illegality.

The IRS finalized that illegal rule in May 2012. You can read all about it in my article with Jonathan Adler, “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA.”

It is worth noting that Shulman also leapt to the IRS’s defense against another charge that the agency was abusing its power. In 2012, conservative groups complained that the IRS was targeting them for audits. Shulman issued a forceful and categorical denial:

IRS Commissioner Douglas Shulman told Congress in March 2012 that the IRS was not targeting groups based on their political views.

“There’s absolutely no targeting. This is the kind of back and forth that happens to people” who apply for tax-exempt status, Shulman told a House Ways and Means subcommittee.

Shulman was wrong. Today, the IRS admitted it has been targeting conservative groups for audits. 

Perhaps some Friday afternoon hence we will be treated to an IRS admission that their tax-credit rule violates the Administrative Procedures Act and the PPACA, as two lawsuits now allege. I won’t hold my breath.

From the Associated Press:

WASHINGTON (AP) — The Internal Revenue Service is apologizing for inappropriately flagging conservative political groups for additional reviews during the 2012 election to see if they were violating their tax-exempt status.

Lois Lerner, who heads the IRS unit that oversees tax-exempt groups, said organizations that included the words “tea party” or “patriot” in their applications for tax-exempt status were singled out for additional reviews.

Lerner said the practice, initiated by low-level workers in Cincinnati, was wrong and she apologized while speaking at a conference in Washington.

Many conservative groups complained during the election that they were being harassed by the IRS. They said the agency asked them an inordinate number of questions to justify their tax-exempt status.

Certain tax-exempt charitable groups can conduct political activities but it cannot be their primary activity.

Let’s all recall what President Obama told Ohio State University graduates just days ago:

Unfortunately, you’ve grown up hearing voices that incessantly warn of government as nothing more than some separate, sinister entity that’s at the root of all our problems. Some of these same voices also do their best to gum up the works. They’ll warn that tyranny [is] always lurking just around the corner. You should reject these voices. Because what they suggest is that our brave, and creative, and unique experiment in self-rule is somehow just a sham with which we can’t be trusted.

We have never been a people who place all our faith in government to solve our problems. We shouldn’t want to. But we don’t think the government is the source of all our problems, either. Because we understand that this democracy is ours. And as citizens, we understand that it’s not about what America can do for us, it’s about what can be done by us, together, through the hard and frustrating but absolutely necessary work of self-government.

“Government is simply the name we give to the things we choose to do together,” says Barney Frank. Like persecute our political enemies.

Some of the biggest Environmental Protection Agency abuses of property rights (see last term’s Sackett case and this term’s Koontz case) stem from expansive interpretations of the Clean Water Act. The EPA imposes huge costs on people who want to do anything on their property, claiming the agency has the authority to regulate “wetlands.” The agency is only supposed to have authority to regulate discharges to “navigable” waters, but the jurisprudence here is so confused that it’s become an area ripe for federal overreach. This week a group of Republican senators (Rand Paul, Mike Lee, Marco Rubio, David Vitter, and Mitch McConnell) introduced a bill that’s an excellent step to addressing the federal government’s endemic property rights violations. The Defense of Environment and Property Act of 2013 does a number of very good things:

1. Narrows the definition of “navigable waters” to waters that are “navigable-in-fact” or “permanent, standing, or continuously flowing bodies of water … that are connected to waters that are navigable-in-fact,” with explicit exclusions for such things as rainfall drainage channels and wetlands without a continuous connection to “waters of the United States”;


2. Directs that the EPA and Army Corps of Engineers shall not impinge on the primary power of states over land and water use;


3. Gives landowners judicial review in federal court within 30 days of any claim of federal authority over their land or water resources;


4. Makes clear that ground water is state, not federal water;


5. Eliminates the so-called “signficant nexus test” that the EPA often uses to assert jurisdiction over otherwise non-federal lands;


6. Strikes down various regulations and agency guidances;


7. Requires a landowner’s consent before federal agents can enter his property to collect information regarding navigable waters;


8. Defines as a regulatory taking any loss of value of land due to navigable-water-related regulation and compensates the landowner twice the value of that loss.

Unlike most legislation before Congress, this bill would help a lot of people very quickly in a very direct way. I hope Congress acts on it.