Constitution, the Law, and the Courts

October 19, 2020 3:48PM

Sales and Excise Taxes on the Ballot

There have been 20 questions to increase, cut, or limit income taxes on statewide ballots over the past decade, as compiled by Ballotpedia. I examined those ballots here and found that voters favored the small‐​government side 60 percent of the time.

What about sales and excise taxes? In November, Oregon voters will decide on Measure 108, which would increase taxes on cigarettes by $2 per pack. Governor Kate Brown—who received an “F” on this year’s Cato fiscal report—has pushed for the increase.

Cigarettes are a demonized product and the pro‐​tax campaign in Oregon is far out‐​spending the anti‐​tax side, according to Ballotpedia. Nonetheless, voters in many states over the years have rejected cigarette tax increases. In 2007, Oregon voters defeated 59 percent to 41 percent Measure 50 to raise cigarette taxes by 84.5 cents per pack.

In Colorado, voters this November will decide on Proposition EE, which would phase in a cigarette tax increase of $1.80 per pack. The Colorado and Oregon proposals would also increase taxes on vape products.

For the 2010 to 2019 period, Cato intern Hunter Brazal found 55 sales and excise tax questions on statewide ballots, of which 37 were for tax increases and 18 for tax cuts. The questions regarded general sales taxes, tobacco taxes, alcohol taxes, and carbon taxes.

Of the 55 questions, voters took the small‐​government or low‐​tax side 42 times. That 76 percent support for the low‐​tax side was more than the 60 percent for income tax questions.

With both sales and income taxes, the small‐​government side wins most of the time. The bad news is that two‐​thirds of sales and income tax questions on ballots are for increases, not cuts.

Here is a sampling of the 55 statewide votes on sales and excise taxes, with vote percentages from Ballotpedia:

Wins for Smaller Government

  • In 2018, South Dakota Measure 25 would increase cigarette taxes by $1 per pack to fund education. Failed 44.9 to 55.1.
  • In 2018, Colorado Proposition 110 would increase the general sales tax rate from 2.9 percent to 3.52 percent to fund transportation. Failed 40.6 to 59.4.
  • In 2018, Missouri Proposition D would raise the gas tax by 10 cents per gallon to fund transportation. Failed 46.4 to 53.6.
  • In 2018, Washington Initiative 1631 would impose a fee or tax on the sale or use of fuels based on the carbon content with the funds directed to environmental and community programs. Failed 43.4 to 56.6.
  • In 2018, Montana I-185 would increase cigarette taxes by $2 per pack to fund Medicaid. Failed 47.3 to 52.7.
  • In 2016, Washington Initiative 732 would impose a fee or tax on the sale or use of fuels based on the carbon content with the revenue increase offset by cuts to sales and business taxes. Failed 40.8 to 59.2.
  • In 2016, Colorado Amendment 72 would increase taxes on cigarettes by $1.75 per pack to fund health programs. Failed 46.9 to 53.1.
  • In 2016, North Dakota Measure 4 would raise cigarette taxes by $1.76 per pack to fund veterans and health care. Failed 38.3 to 61.7.
  • In 2016, Missouri Amendment 3 would raise cigarette taxes by 60 cents per pack. Failed 40.4 to 59.6. The ballot in 2016 also included Missouri Proposition A to raise cigarette taxes by 23 cents per pack. Failed 44.8 to 55.2.
  • In 2016, Oklahoma Question 779 would increase the sales tax rate from 4.5 percent to 5.5 percent to fund education. Failed 40.6 to 59.4.
  • In 2015, Michigan Proposal 1 would raise gas taxes and sales taxes to fund transportation. Failed 19.9 to 80.1. Despite that overwhelming rejection, the governor and legislature pushed through a large gas tax and vehicle fee increase for transportation later the same year.
  • In 2014, Missouri Amendment 7 would temporarily raise the general sales tax rate by 0.75 percentage points to fund transportation. Failed 40.8 to 59.2.
  • In 2012, Arizona Proposition 204 would renew a 1 percentage point sales tax increase for education. Failed 36.2 to 63.8.
  • In 2012, South Dakota Measure 15 would increase the general sales tax rate from 4 percent to 5 percent to fund education and health care. Failed 43.3 to 56.7.
  • In 2012, California Proposition 29 would increase cigarette taxes by $1 per pack to fund cancer research and other activities. Failed 49.8 to 50.2.
  • In 2010, Massachusetts Question 1 would remove the 6.25 percent sales tax on alcohol sold in liquor stores. Passed 52 to 48.
  • In 2010, Washington Initiative 1107 would end sales taxes on candy and some beverages. Passed 60.4 to 39.6. 

Wins for Bigger Government

  • In 2019, Washington Advisory Vote 23 would retain a sales tax on vape products. Passed 66.9 to 33.1.
  • In 2018, Oregon Measure 103 would ban taxes on groceries. Failed 42.7 to 57.3.
  • In 2016, California Proposition 56 would increase cigarette taxes by $2 per pack. Passed 64.4 to 35.6.
  • In 2012, Arkansas Issue 1 would temporarily increase the sales tax rate by 0.5 percentage points to fund transportation. Passed 58.2 to 41.8.
  • In 2010, Massachusetts Question 3 would cut the general sales tax rate from 6.25 percent to 3 percent. Failed 43 to 57.
  • In 2010, Arizona Proposition 100 would temporarily raise the general sales tax rate from 5.6 percent to 6.6 percent. Passed 64.3 to 35.7.

I discuss some of these ballot questions in current and past issues of Cato’s Fiscal Report Card on America’s Governors.

October 16, 2020 1:14PM

Maryland Lawmakers’ Task Force Urges Repeal of Police “Bill of Rights”

A working group of Maryland lawmakers appointed by House of Delegates Speaker Adrienne Jones yesterday recommended that the state repeal its first‐​in‐​the‐​nation Law Enforcement Officers’ Bill of Rights, a law that I and others have inveighed against for years.

As I wrote in 2015:

Maryland was the first state to pass a LEOBR, in 1972, and by now many states have followed, invariably after lobbying from police unions and associations. Often the bills are sponsored by Republicans, who seem to forget their normal skepticism of public employees as an interest group when uniformed services are involved.

Despite minor revisions following the Freddie Gray episode, the Maryland law retains its most objectionable features, as I observed in a piece this summer, including a five‐​business‐​day “get your story straight” period in which a department cannot question officers after an incident; rules prescribing that the process of investigation and discipline be reserved in general to fellow officers; and a lid on the release of information in which the public is legitimately interested.

As lawmakers observed at a late September hearing, repeal would still leave in place numerous other mechanisms by which police officers charged with misconduct could resist investigation and discipline, including state civil service rules, union contract provisions, and Supreme Court doctrines giving public employees constitutional rights to contest some dismissals.

Definitions vary, but per one 2015 roundup, at least a dozen other states as of then had enacted bills similar to Maryland’s into law, including California, Delaware, Florida, Illinois, Kentucky, Louisiana, Minnesota, Nevada, New Mexico, Rhode Island, Virginia, West Virginia, and Wisconsin. All states with such a law, and the equivalent laws sometimes enacted for correctional officers, should follow Maryland’s lead in considering repeal. And the truly terrible idea of making everything worse by imposing LEOBR rules from shore to shore, a perennial measure championed in the U.S. Congress by such as Sens. Mitch McConnell (R‐​Ky.) and Joe Biden (D‐​Del.), should be buried on the ocean floor, never to rise again.

October 14, 2020 3:33PM

King v. Burwell: A Clear Example of Legislating from the Bench

Confirmation hearings for Supreme Court nominee Judge Amy Coney Barrett have renewed interest in the 2015 case King v. Burwell. In 2017, Barrett told NPR that between Chief Justice John Roberts’ majority opinion and Associate Justice Antonin Scalia’s dissent, “The dissent has the better of the legal argument.” Democrats thus fear Barrett will not treat ObamaCare with due reverence when a new constitutional challenge reaches the Court on November 10.

The U.S. Supreme Court - Photo Credit: Claire Anderson

It was unintentionally fitting when, on the third day of hearings, Sen. Amy Klobuchar (D-MN) quoted a 2017 law review article Barrett authored:

There is a risk that a faction can run away with the legislative process, but there is also a risk that a faction will conscript courts into helping them win battles they have already lost, fair and square.

Klobuchar claimed the quote describes the upcoming ObamaCare challenge. But it is a better description of King, in which the Obama administration and its supporters pressured six Supreme Court justices to grant them a policy victory they lost fair and square in the political arena.

King concerned whether the ACA authorizes the executive to subsidize health insurance premiums and enforce the individual and employer mandates in states that do not establish a health insurance Exchange. The ACA clearly and consistently authorizes such subsidies (nominally, tax credits), and the mandate penalties they trigger, if a taxpayer enrolls in a qualified health plan “through an Exchange established by the State.” The law directs the federal government to establish Exchanges in states that do not establish one themselves. But nowhere does it authorize subsidies in federally established Exchanges. In effect, the ACA thus empowers states to block the subsidies, the employer mandate, and in many cases the individual mandate simply by not establishing an Exchange.

Not only is that what the ACA says–which is the real test of congressional intent–but all available contemporaneous evidence also shows that is in fact what congressional Democrats understood the law would do. It isn’t even a close call. Even the Obama administration’s most ardent defender acknowledged the ACA “clearly say[s]” subsidies are available only in states that establish an Exchange. During litigation, the Obama administration and congressional Democrats admitted that Senate Democrats wanted to withhold premium subsidies in states that failed to implement the federal regulatory scheme. House Democrats literally complained that the ACA would give states so much power to block its subsidies that “millions of people will be left no better off than before Congress acted.” NPR reported many House Democrats from Texas “worry that because leaders in their state oppose the health bill, they won’t bother to create an exchange, leaving uninsured state residents with no way to benefit from the new law.” What Jonathan Adler and I wrote in 2015 remains true: “to this day, neither the government, nor the Supreme Court, nor anyone else has identified even a single contemporaneous statement of any kind asserting that the ACA authorizes, or that its supporters intended for it to authorize, tax credits in federal exchanges.” Not a single ACA supporter claimed anything different until after critics began to take notice of the powers that this feature gave states to block the law.

If the ACA were not a high‐​stakes, highly controversial law—if it were not the culmination of decades of left‐​of‐​center political activism, or a president’s signature accomplishment, or the event that supposedly gave the United States membership in the club of civilized nations—career executive branch officials would have just implemented the statute as written, and left it to Congress to make any necessary changes.

Yet after Democrats took a “shellacking“ in the 2010 elections—public opposition to the ACA gave Republicans control of the U.S. House of Representatives and three‐​fifths of state legislative chambers, which ultimately led to some 38 states not establishing Exchanges—the Obama administration feared that this feature would give the American people a little too much input into the ACA’s survival. It subsequently announced it would dispense those subsidies and impose those penalties in every state, regardless of what the ACA clearly says.

That decision subjected tens of millions of Americans to taxes from which Congress expressly exempted them, and led multiple states, employers, and individuals to file four separate legal challenges. Plaintiffs in these cases secured victories at both the district‐ and appellate‐​court levels. A circuit split led the Supreme Court to grant certiorari.

On June 25, 2015, after the Obama administration and its allies spent months working the ref, six Supreme Court justices let the administration get away with it. Chief Justice Roberts acknowledged that “the most natural reading of the pertinent statutory phrase” is that the administration could implement the disputed taxes and subsidies only in states that establish Exchanges. He acknowledged his ruling flatly contradicted the words Congress used to speak directly to the question before the Court. Yet he and five justices blessed the administration’s extra‐​statutory (and therefore unconstitutional) taxes and spending. Jonathan Adler and I wrote this detailed critique of Roberts’ opinion. Here’s a summary I wrote later in 2015:

In King v. Burwell, six Supreme Court justices commanded the IRS to do what all nine justices agreed is the opposite of what Congress wrote into law…Specifically, the King majority commanded the IRS to subject some 70 million Americans to taxes from which Congress expressly exempted them, and to dispense tens of billions of dollars that all nine justices agreed Congress expressly forbade the agency to spend. Finally, the King majority disempowered states by depriving them of the power to block those taxes and subsidies—a power that all nine justices agreed Congress granted them—and disenfranchised millions of voters who elected the state officials who exercised those powers…

The six‐​justice majority, and the three dissenting justices explicitly agreed on the following points:

  • The ACA plainly authorizes premium‐​assistance tax credits (hereafter, premium subsidies) only, as the operative text says, “through an Exchange established by the State”;
  • Congress expressly defined “State” in a manner “that does not include the Federal Government”; and
  • When the Obama administration chose nevertheless to offer premium subsidies in the 38 states with Exchanges established by the federal government, it had the effect of expanding the reach of the ACA’s individual and employer mandates to millions of Americans…whom “the most natural reading” of the operative text exempted from those taxes.

Moreover, all nine justices implicitly agreed there is no indication Congress intended anything other than what the operative text says.

King enabled an even greater power grab than the Court knew. The ACA conditions the taxes and subsidies in question not only on states establishing Exchanges, but also on states implementing a reinsurance program, a risk‐​adjustment program, and other elements of the Act’s regulatory scheme. Not a single state even tried to implement all of those aspects of the law–which means the federal government has no statutory authority to implement those taxes and subsidies in any state. As I wrote in 2015:

Had the justices simply upheld the ACA as Congress wrote it, they would have immediately freed 70 million Americans in 34 states from unauthorized taxes, and enabled 30 million Americans in the remaining 16 states (California, New York, etc.) to sue for similar relief — if Congress didn’t provide relief first, which is both likely and how democracy is supposed to work. Instead, the Court allowed the IRS to continue implementing a nationwide system of taxes and entitlements in direct conflict with the words Congress chose to govern the question presented.

To reach the policy outcome it desired, the King Court abandoned the usual rules. Yale law professor Abbe Gluck explains the Court “adopted essentially the opposite” approach from what it had in previous statutory‐​interpretation cases. As attorney Dan McLaughlin observes:

In 2018, the Court, when presented with almost exactly the same issue in a less‐​controversial area of the law, unanimously refused to even so much as cite King as a precedent (even when lower courts in the case had followed it), and reached a directly opposite conclusion.

McLaughlin further notes that the five remaining justices in the King majority abandoned their own reasoning again in a case the Court decided in 2020. The King five all signed on to the following language, which flatly contradicts their reasoning in King:

Those who adopted the [statute] might not have anticipated their work would lead to this particular result. Likely, they weren’t thinking about many of the Act’s consequences that have become apparent over the years…But the limits of the drafters’ imagination supply no reason to ignore the law’s demands. When the express terms of a statute give us one answer and extratextual considerations suggest another, it’s no contest. Only the written word is the law, and all persons are entitled to its benefit.

“In other words,” McLaughlin concludes, “none of the justices who signed onto the King decision actually believed in it.”

Supporters like to say that King upheld the ACA. On the contrary, King tossed out the ACA in favor of something that ACA supporters wish they could have gotten through Congress but couldn’t. It is one of countless unconstitutional executive and judicial revisions that have transformed the statute Congress passed into a law no Congress ever enacted or could have enacted. To defend King v. Burwell is to abandon the ACA in favor of “ObamaCare.”

Thus King v. Burwell is a ruling at war with the idea of law itself. It is a real‐​life example of elites rejecting the idea that the consent of the people should constrain their ability to wield power over the people. It allowed the executive and judicial branches to impose taxes and disburse subsidies that no Congress ever authorized—or could have authorized. It disrespects not only the ACA, but the Constitution, every level of our democracy, the American people, and the idea of law itself. No judicial nominee should ever defend or hesitate to criticize it.

October 14, 2020 3:13PM

Judge Barrett’s Record On Civil Procedure—And On Employment Law

Attorney James Wagstaffe writes for Law360 about Judge Amy Coney Barrett’s surprisingly extensive rulings on issues of civil procedure. A couple of big themes:

On personal jurisdiction, like her mentor Antonin Scalia, Barrett is right in line with the (to me, welcome) modern developments in which the high court has pushed back against state courts’ assertion of “long‐​arm” power over out‐​of‐​state defendants. For example, “Judge Barrett regularly cites Walden v. Fiore, where the Supreme Court, in an opinion authored by Justice Clarence Thomas, held that it is the contacts of the defendant — not the plaintiff — that determine the existence of personal jurisdiction.” (The Court was unanimous in that ruling.) While state courts can properly take jurisdiction over an out‐​of‐​state enterprise that has directly targeted the state for substantial business activity, it will not do to identify just any old way, no matter how incidental or indirect, by which the business has had an effect on or benefited from the state’s market. (More: James Beck takes issue with a decision that Barrett joined but did not write, in Mussat v. IQVIA, Inc., on the topic of personal jurisdiction in class actions).

On the kind of injury needed to confer standing to sue, Barrett has vigorously applied the Supreme Court’s influential 2016 decision in Spokeo v. Robins, which required as a prerequisite to sue that a plaintiff have suffered an actual concrete and particularized injury from the defendant’s conduct, as opposed to, say, tripping it up for some regulatory infraction that occasioned no such injury. The lack of such harm, in fact, deprives the court of jurisdiction altogether over the matter. In one of numerous injury‐​standing cases, she ruled that a “blind plaintiff in an Americans with Disabilities Act case, Carello v. Aurora Policemen Credit Union, suing a credit union for not having a text‐​aloud reader lacked standing since he was ineligible for membership” in the organization he had sued.

Read the whole piece here. Meanwhile, I’ve got a new piece in The Dispatch on Barrett’s record in workplace and employment discrimination cases:

According to Sens. Sherrod Brown (D‐​Ohio) and Sen. Elizabeth Warren (D‐​Massachusetts), Supreme Court nominee Amy Coney Barrett is “anti‐​worker”.…

As a libertarian, it wouldn’t bother me if Barrett were an ardent advocate of freedom of contract and property rights.. … [In fact, however,] Barrett has hewn carefully to the precedent and guidance handed down by the U.S. Supreme Court, just as you’d expect from an accomplished appeals court judge…

But that’s how it tends to go when pressure‐​group ideologues compile tidy checklists of cases meant to provide ammunition against judicial nominees. Much, even most of the day‐​to‐​day work of judges consists of relatively routine and technical issues in which emotion plays little role. The role of groups like Alliance for Justice is to jam this work into a “which side are you on” framework based on the notion that the only thing of interest in a case is which side won.

Speaking of those tidy checklists, Ken White deftly dissects one such story making the rounds, about how Barrett (along with every other judge to rule on the case) wouldn’t let an Illinois highway worker sue even though a racial epithet had been directed at him. In doing so, she applied, as the law directed, the Supreme Court’s formula spelling out the requirements of a hostile environment claim. Ken White concludes: “There are plenty of reasons to oppose Barrett without lying or misinforming people about the law.”

October 13, 2020 5:29PM

Jurisprudence Questions for Judicial Nominees That Are Actually Interesting

So far, the Amy Coney Barrett confirmation hearings are proceeding in the way most people probably expected. Judge Barrett is confidently and calmly discussing her approach to judging, ably explaining past comments and decisions, and -- in accordance with the long-standing practice of prior nominees -- refusing to give commitments or comments about particular issues or cases. And the Senators are largely using the hearing to make political speeches. Democrats have mostly made policy arguments in support of the Affordable Care Act, criticized President Trump, and asked case-specific questions they knew Judge Barrett would never answer. Republicans, in turn, have asserted that religious liberty is important and asked fairly banal questions that mostly amount to "Judge Barrett, do you agree judges should interpret the law as written, or should they ignore the law and impose their own policy preferences?"

Given this state of affairs, I tend to agree with my colleague Ilya Shapiro that confirmation hearings no longer serve any valuable purpose, and they should probably be abandoned. While these hearings haven't been as bad as they could have been -- Democrats have, to their credit, mostly avoided character-driven attacks on Judge Barrett's faith -- they're not providing any useful information we didn't already know. And given the case- and issue-specific questions that dominate these hearings, I imagine they undermine judicial independence itself, by exacerbating the misperception that judges simply decide cases based on results they like.

This is unfortunate, however, because despite the caricatured nature of the questions both Republicans and Democrats tend to ask, there actually are interesting, challenging questions about judicial philosophy we could be exploring in these hearings. Judge Barrett has given a pretty standard defense of textualism, originalism, and the more general principle that judges should say what the law is, not what it should be. And Senate Democrats, by focusing nearly all their questions on policy arguments for case-specific outcomes, seem to be trying to do everything within their power to convince people that they actually do just want judges to be "super legislators," as it were.

But the reality is, at least at the level of generality that's been discussed so far, Judge Barrett's jurisprudence is typical not just for Republican nominees, but for the entire federal judiciary. It was, after all, Justice Kagan who famously said in 2015 "we're all textualists now," and who said at her confirmation hearing that, with respect to the nature of deciding cases, "it's law all the way down." Basically all judges agree the job of judging is to apply the law as it exists, not to impose their own value judgments, and basically all judges agree the words of legal texts, whether statutory or constitutional, should be interpreted as written, and given their ordinary meaning as it would have been understood by the people that passed it. While these ideas might once have been controversial in the judiciary, this just isn't where the interesting, challenging disagreements among judges actually are today.

So, it's discouraging that Democrats keep asking judicial nominees about case-specific policy issues, but it's also pretty cringey to hear Republicans talk as if judges appointed by Democrats actually embrace the idea that they should be "super legislators," or that simply being a textualist and originalist is enough to resolve difficult legal questions. As it turns out, judges can agree on abstract jurisprudential theories and nevertheless disagree on how to apply them in particular cases. Why? What explains those differences? What makes a case difficult, even for a textualist and originalist? Why are there certain areas where judicial decisions seem to overlap with political disagreements?

Read the rest of this post »
October 12, 2020 4:42PM

Treehouse Terror

They’ve caught all the thieves and rapists in Fairfax County, Virginia, and now it’s full steam ahead against the other big menace to suburban tranquility: 9‐​year‐​old girls and their treehouses.

The Annandale blog reports that Erwan Dapoigny built a treehouse in May for his daughter Ana’s ninth birthday. But Ana and her friends were having so much fun they were terrorizing the entire neighborhood. The government had to put a stop to it. Fairfax County sent the family “a letter saying they need to pay a $913 fee and get special approval to keep the treehouse – or they will have to tear it down in 30 days.”

The Wakefield Weekly says that Fairfax demanded the family either “remove the treehouse within 30 days, relocate it to the back yard, or apply for and obtain a special permit. Failure to comply, it says, could result in court‐​ordered sanctions or civil penalties—$200 for the first citation and $500 for subsequent citations.

But Ana is in a commanding position atop her fortress and fighting back. She has launched a Change​.org counterattack, so this battle may have just begun.

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October 11, 2020 12:37PM

You Shouldn’t Get Sued for Petitioning the Government

It is the right of all citizens to petition the government without fear of punishment or retaliation. This is not only an essential individual right, but often necessary for the government to remain informed and make better decisions. Yet, when Maggie Hurchalla reached out to her county commissioners about a development plan and expressed her environmental concerns about the project, she was hit with a lawsuit.

Ms. Hurchalla is an environmental activist in Florida. She heard that the Lake Point development project may not be meeting environmental standards and emailed the county commission responsible for supervising the project. The county had already heard similar concerns and had initiated an investigation, which ultimately ended the project. In response, Lake Point sued everyone. The developer sued the county for stopping the development and Ms. Hurchalla for “tortious interference” in its business. The suit dragged on for years in Florida courts, culminating in a multimillion‐​dollar judgment against Ms. Hurchalla.

The case should not have gotten that far. This was a Strategic Lawsuit Against Public Participation (SLAPP) suit. Under the First Amendment, citizens have a right to petition the government for redress of grievances without fear of retaliation. The petitioning action does not need to be accurate, articulate or relevant. Private parties, however, often have vested interest in certain speech not being heard. SLAPP suits are tools that use the power of the courts to discourage speech.

Courts have mechanisms for throwing out frivolous claims, but SLAPP suits are often disguised as serious claims and evade these procedures. Win or lose, SLAPP suits often drag on, exhausting the bank accounts of private citizens and provoking the stress of a potential disastrous judgment. For this reason, many states have developed anti‐​SLAPP statutes that allow courts to stop these suits in their infancy, but they’re not failsafe, as with this case.

Having exhausted her appeals in the Florida courts, Ms. Hurchalla has now filed a petition to have her case heard by the U.S. Supreme Court. Cato has now joined the Protect the Protest Task Force and Institute for Justice on an amicus brief supporting her petition. We argue that the Court should apply a line of cases, developed in other business law SLAPP contexts, to SLAPP suits based on “tortious interference”—and that Lake point used the power of the court to discourage speech to government officials in violation of the First Amendment.

The Supreme Court will decide later this fall whether to take up Hurchalla v. Lake Point Phase I, LLC.