Topic: Criminal Law and Civil Liberties

A Case at the Intersection of the Taxing Power and the Second Amendment

Several years ago, Nick Bronsozian was charged with possession of an unregistered machinegun under a tax law statute. The provision in question, 26 U.S.C. § 5861(d), says that in order to have a machinegun registered, a tax must be paid on it. Simple enough, right? Bronsozian didn’t pay his tax. Case closed. That’s what the government argued anyway, but the situation is more complicated than that.

A subsequently enacted law, 18 U.S.C. § 922(o), prevents the government from registering and accepting tax payments on new machineguns. So Bronsozian was charged and convicted of a felony for not paying a tax that the government would not allow him to pay. If that strikes you as odd, it’s probably because you’ve read the Constitution.

Our federal government is one of enumerated and therefore limited powers. When the government passes a law under its taxing power, it must pass a tax. A series of Supreme Court decisions tells us, quite reasonably, that in order for the government to pass a law as a tax, it must actually be a tax, as opposed to a penalty for conduct (recall the debate over Obamacare’s individual mandate/penalty/”tax”). An essential feature of a tax is that it generates revenue, and the tax Bronsozian was convicted of not paying has been forbidden by law from generating any revenue for more than 30 years. Yet the government still wants to lock people in federal prison for failing to pay it.

Bronsozian moved to dismiss his charge, arguing that § 5861(d) was not a constitutional tax, that charging him for nonpayment of a tax that was impossible to pay was a violation of his due-process rights, and other claims. The district court found for the government, citing a flawed circuit precedent that made a 180-degree reversal from established tax law. He is now appealing to the U.S. Court of Appeals for the Ninth Circuit, hoping to set the record straight.

Because the taxing power gives the government the authority to tax, not ban whatever conduct it sees fit, Cato, joined by Firearms Policy Coalition, has filed an amicus brief supporting Bronsozian. We argue that, as the Supreme Court has repeatedly found, that a tax must be a tax. For a government of enumerated powers to function, those powers must be clearly defined. The fact that a case involves guns—even unpopular guns—is not a reason to smudge the taxing power into a grant to do whatever the government wants.

We also point out what we perceive to be a concerning departure from jurisprudence regarding Americans’ rights more broadly. By refusing to present an analysis of why the machineguns are beyond the scope of the Second Amendment, the courts are glazing over an important constitutional question. If a class of arms can be regulated nearly to the point of a categorical ban—which machineguns may well be—the American people deserve to at least know the constitutional justification.

The case is United States v. Bronsozian

U.K.’s “Unexplained Wealth Orders” Give the State Too Much Power

I’ve got a piece in the Washington Examiner this morning on a remarkable new law enforcement tool in Britain:

It’s like, “Your papers, please,” but for things you own.

Authorities in Britain have begun trying out a new police power called unexplained wealth orders under a law that took effect last year. The police go to a court and say you’re living way above any known legitimate income. The judge then signs an order compelling you to show that your possessions (whether a house, fancy car, or jewelry) have been obtained honestly and not with dirty money. In the meantime, the boat or artwork or other assets get frozen, and you can’t sell them until you’ve shown you obtained them innocently.

The kicker: The burden of proof falls on you, not the government. If you don’t prove the funds were clean, Her Majesty may be presumed entitled to keep the goodies….

Related to the flipping of the burden of proof, the law says information dug up via one of the orders can’t then be used in criminal charges against the target.

…advocates want this to be the start of hundreds of seizure actions against other rich foreigners in the British capital.

Some are already calling for bringing a law like this to the United States, and maybe we’re halfway there already. Asset forfeiture laws, blessed by the Supreme Court, already let police seize your property on suspicion of involvement in a crime and make you go to court to get it back. We’ve been chipping away at financial privacy in this country for decades, through Know Your Customer, suspicious-activity reports, and FATCA (expatriate tax) rules.

Ironically — though recent enactments by Parliament may be changing this, too — Britain’s own peripheral territories and dependencies, including the Channel Islands, British Virgin Islands, Cayman Islands, etc. have long made a good business out of furnishing the rest of the world with the means of financial privacy.

The reversal of the presumption of innocence troubles many Britons, too. For the moment, use of the orders is limited to a few elite law enforcement agencies. One of those agencies, however, is Her Majesty’s Revenue and Customs — the tax collectors. It’s not wrong to worry about where this idea is headed.

Whole thing here.

Ban the Box and Statistical Discrimination

With 25 percent of the world’s prison population, the U.S. has the highest incarceration rate of any country in the world. Over 600,000 people are released from American prisons each year and, sadly, about two-thirds of them will be rearrested within three years. Creating opportunities for people released from prison to reintegrate into society has rightly become a key focus of criminal justice reformers.

In recent years, “Ban The Box” policies and legislation, which require companies to delay asking whether job applicants have a criminal record until later in the hiring process, have become a popular policy response to the reintegration problem. The reasoning in support of BTB is well-intentioned: make sure that employers evaluate candidates and their skills carefully rather than arbitrarily eliminating a whole class of applicants, ex-cons, at the early stages of the hiring process. But evaluations of BTB policies have concluded that the effect is to reduce minority employment rather than induce firms to engage in a costly search and interview effort.

Despite the negative academic evidence, BTB laws continue to have support. Last week, Maryland Governor Larry Hogan vetoed a bill that would have prohibited Maryland employers from asking applicants about their criminal history until the first in-person interview. Writing in the Washington Post, Representative David Trone contended that Gov. Hogan was wrong to veto the bill, and endorsed a bill sponsored by fellow Maryland Representative Elijah Cummings, which would ban the box for federal jobs (an Obama-era regulation has already banned the box for federal government jobs, but this bill would apply the rule to federal contractors as well). Part of Hogan’s justification for his veto is that the law would have imposed a new costly and time-consuming regulation on Maryland businesses, which is true. But more importantly, the unintended consequences of BTB rules mean both the Maryland bill and the Cummings legislation would hurt the intended beneficiaries.

In a working paper I reviewed in the fall 2016 issue of Regulation, Amanda Agan and Sonja Starr showed that BTB increases statistical discrimination. Unable to ask whether an applicant has a criminal record, employers unfortunately use race as a proxy leading to discrimination, particularly against young black men. The authors sent 15,000 fictitious online job applications to employers in New Jersey and New York City and found that before BTB white applicants received 7 percent more callbacks than black applicants. After BTB white applicants received 45 percent more callbacks.

Economists Jennifer Doleac and Benjamin Hansen found similar results when looking at individual-level data from the Current Population Survey and exploiting variation in when BTB laws were adopted by state and local jurisdictions. The authors found that young, low-skilled black men are 3.4 percentage points less likely to be employed after BTB laws take effect.

Along with race, BTB leads employers to rely on other factors to eliminate those who have been incarcerated. For example, research has shown that occupational licenses, which often require criminal background checks, offer a way for African-American men without a criminal record to signal their non-felony status. But the negative impacts of licensing as a barrier to entry outweigh these benefits. The best policy to assist people with criminal records to find employment is to eliminate licensure as well as BTB laws.

Many large corporations, including Walmart, Target, and Koch Industries, have already voluntarily banned the box. Such voluntary action has different effects than mandates. Voluntary adoption is consistent with firms engaging in extra effort to reintegrate ex-prisoners into the labor force. 

The intentions of BTB supporters are laudable. When adopted voluntarily by firms, BTB signals a commitment by the firm to take the employment of ex-convicts seriously. But when mandated by government BTB laws induce firms to engage in statistical discrimination that negatively affects the employment prospects of minorities.

Written with research assistance from David Kemp.

What Will the E-Verify Program Be Used to Surveil Next?

E-Verify is the federal government’s attempt to create an electronic national identification system. It is capable of checking government databases to verify information—often including a photo—on every U.S. resident. Right now, the system monitors only employment and is only mandatory in some states, ostensibly to deter illegal immigration, but nothing would prevent lawmakers from expanding E-Verify to monitor identity or legal status in any other domain and restrict access based on other criteria they want.

Numerous federal, state, and local laws already require people to identify themselves or prove their immigration status, and lawmakers continue to propose many additional laws. The more areas that E-Verify is used to monitor, the more it will create a digital record of Americans’ lives—a record that lawmakers can draw upon to add further requirements for access to jobs, health care, banks, gun sales, housing, and much else.

Once E-Verify becomes fully mandatory for employment nationwide, proponents will seek to use it to enforce other laws. In 2015, the GOP-controlled House Judiciary Committee even voted down an amendment to a mandatory E-Verify bill that would have banned using E-Verify for purposes other than employment. This is a harbinger that the E-Verify system, if mandated federally, could be used to monitor much more than just American’s employment choices. Congress would need only make a few tweaks to the system to make it serviceable for other goals beyond jobs.

Here are a few likely targets:

1. Gun sales: The Brady Handgun Violence Prevention Act (18 U.S. Code § 922(d)(5) and (g)(5)) explicitly makes it unlawful for:

any person to sell or otherwise dispose of any firearm or ammunition to any person knowing or having reasonable cause to believe that such person … who, being an alien— (A) is illegally or unlawfully in the United States; or (B) except as provided in subsection (y)(2), has been admitted to the United States under a nonimmigrant visa.

Unlike the criminal background check system for guns which destroys the electronic record of the sale daily, E-Verify maintains records for 10 years. Once E-Verify screens gun purchases, the federal government would have a full electronic registry of all gun purchases. To do this, a future Congress would only need to enact a statute requiring the Department of Homeland Security to make the system available to verify legal status information (rather than just employment authorization) for gun sales. 

2. Transportation: Section 274 of the Immigration and Nationality Act (8 U.S.C. 1324(a)(1)(A)(ii)) criminalizes anyone who “knowing or in reckless disregard of the fact that an alien has come to, entered, or remains in the United States in violation of law, transports, or moves or attempts to transport or move such alien within the United States.” While courts have not enforced this requirement against routine transportation activities, requiring airlines, buses, trains, or other transportation businesses to use E-Verify would be a logical (while burdensome) means to enforce this provision.

3. Driver’s licenses: Section 202(c)(2) REAL ID Act of 2005 requires that states verify that the applicant has some form of legal status. State IDs not meeting this requirement will not be valid for any federal purposes, including air travel. In addition, 38 states separately ban illegal immigrants from receiving driver’s licenses and even those who do permit driver’s licenses specifically identify the license as not valid for federal identification purposes.

4. Bank accounts: Federal law doesn’t require banks to verify someone’s immigration status to open an account, but the USA Patriot Act does require them to “verify the identity of each customer, to the extent reasonable and practicable, within a reasonable time before or after account opening” and “making and maintaining a record of all information obtained relating to customer identity and verification.” Again, E-Verify already purports to verify identity before confirming someone’s employment authorization, so this use would be a fairly straightforward application of the E-Verify system.

5. Apartment rentals: Though courts prevented their implementation on the grounds that federal law “preempted” them, the state of Alabama as well as the cities of Hazleton, Pennsylvania, Fremont, Nebraska, and Farmers Branch, Texas enacted laws that would have made it explicitly illegal for landlords to rent to illegal immigrants. Tennessee is currently considering a similar state-wide statute. Congress has already enacted a statute (8 U.S.C. 1324(a)(1)(iii)) that criminalizes anyone who “attempts to conceal, harbor, or shield from detection, [an illegal] alien in any place, including any building.” However, courts have interpreted this narrowly to require more than simply renting an apartment, but a future Congress would simply need to clarify that someone who failed to use E-Verify to verify legal status would be guilty of harboring.

6. Access to certain buildings: The Legal Workforce Act, which House Republicans have repeatedly passed out of the Judiciary Committee, would authorize owners or operators of “critical infrastructure” to use E-Verify “to the extent the Secretary determines that such use will assist in the protection of the critical infrastructure.”  Federal law defines critical infrastructure to include “systems and assets, whether physical or virtual, so vital to the United States that the incapacity or destruction of such systems and assets would have a debilitating impact on security…”

Ultimately, E-Verify doesn’t identify illegal immigrants very well at all, and its errors already harmed hundreds of thousands of legal workers attempting to obtain jobs. But the problem with E-Verify is more fundamental. It is the first-step toward a permission-slip society. Creating the infrastructure that is capable of not only monitoring but instantly restricting access to all manner of private activities will hand the government power to control the lives of Americans in ways otherwise unimaginable.

Once E-Verify use becomes ubiquitous, the federal government (and perhaps state and local governments as well) would have the power to shut down people’s lives overnight for almost any reason. A flip of switch could stop their access to jobs, housing, bank accounts, driver’s licenses, and transportation. No free society should stand for such control.

Free Speech and Identity Politics

I think Arnold Kling is one of the most insightful bloggers around so I am pleased that he likes my latest Cato policy analysis. He remarks:

My worry is that American culture no longer supports free speech…But hurting someone’s feelings should not count as direct harm. Racist remarks or Holocaust denial may be uncouth, but in a culture of free speech they should be permitted.

I agree with Kling about extreme speech. I am not sure that the culture for free speech has changed all that much. We first learned in the 1950s that while Americans overwhelmingly supported the First Amendment in the abstract, majorities or significant minorities often opposed freedom of speech in concrete cases (like letting unpopular minorities speak). But beyond America’s general culture of free speech, things have changed. In the past elites supported free speech. Now I wonder if they do.

Some attribute the problems of free speech (especially among elites) to the rise of identity politics. In his excellent book Identity, Francis Fukuyama sees identity politics as the demand for public recognition of the dignity of each person’s inner self. That inner self should be authentic rather than imposed by society. Authenticity in turn implies connections to a group and to history. Speech that offends this dignity of the inner self contravenes identity politics.

Progress Toward Fuller Marijuana Legalization?

The fight for marijuana legalization received a boost yesterday as the House Appropriations Committee released a draft bill for fiscal year 2020 Financial Services and General Government funding that includes provisions to protect financial services providers who do business with the marijuana industry.

The key provision of the legislation is Section 633 which states:

“None of the funds made available in this Act may be used to penalize a financial institution solely because the institution provides financial services to an entity that is a manufacturer, a producer, or a person that participates in any business or organized activity that involves handling marijuana, marijuana products, or marijuana proceeds, and engages in such activity pursuant to a law established by a State, political subdivision of a State, or Indian Tribe: Provided, That the term ‘‘State’’ means each of the several States, the District of Columbia, and any territory or possession of the United States.”

The legislation also removes an existing appropriations rider which has blocked the District of Columbia from using local revenues to regulate the production and sale of marijuana, which was legalized by voters in a 2014 ballot measure.

The victory for marijuana advocates is not total, however. Forbes reports:

“The provision only applies to spending legislation covering the Treasury Department, however, and thus would not shield banks from any enforcement activities carried out by the Justice Department, which is funded under a separate bill. It is also attached to the annual appropriations process, meaning it would have to be proactively renewed year after year if it is enacted.”

While it may be premature to celebrate the inclusion of this pro-marijuana language in Treasury funding, positive steps continue to be made in the push for legalization.



Research assistant Erin Partin co-authored this blog post.

Shallow Fakes

We live in a Manichean political world where every person and institution is said to be either good or evil. Facebook used to be in the good column; since November 2016, they are listed among the evil ones, oddly by both left and right. The truth: Facebook is a tremendously successful and innovative business that nevertheless makes mistakes. But beyond making its users happy, Facebook also does good. By defending free speech, for example, at a difficult time.

The case may be familiar to you. (The fact that the case is likely familiar to you is important as we shall see). Recently, someone created a distorted video of House leader Nancy Pelosi (D-CA). Many thought the distortions suggested Pelosi was drunk. She was not. The video warped her image for political purposes (or perhaps, just for fun). More bluntly, the speech in question – the edited video – was a lie.

The question is not whether political speakers lie. They do and always have. Of course, everyone believes their team upholds truth while the other team lies. As Morrisey sang, “Everyone lies, nobody minds.” Well, everyone minds the other team’s lies and somehow ignores their own.

Political speech comprises lies, truth, and much uncertainty. Who should decide which speech falls into which category? Not the elected officials and unelected bureaucrats we call “the government.” The First Amendment and the courts preclude the government from determining truth (and lies). Elected officials want to be popular and win re-election; speech critical of them works against attaining those goals. Elected officials tend to see such criticism as “lies.” I would if I were an elected official. So would you. The incentives are terrible. Censorship would be a natural response. Hence we have a First Amendment, an unnatural state-of-affairs undergirded in the United States by fifty years of tradition, that is, of judicial doctrine.

So who separates truth and lies (and the in-between) in our unnatural state of free speech? Listeners, citizens, and voters. That’s our democratic faith, or our liberal faith, or whatever you want to call it. It’s a real source of national pride, our unnatural state of speaking freely. It’s a foundation of any American nationalism worth honoring.

But people do lie, and the lies can have terrible consequences.  True enough. But our liberal faith and our unnatural state have an answer to lies: more speech. Consider the Pelosi incident. More speech revealed the lie in the video almost immediately. It is true that humans are lazy or uninterested and ignore the revelations of “more speech.” Or they seek only information that confirms their hatred and prejudices. In other words, listeners, citizens and voters often fail to live up to the demands of our liberal democratic faith. To remedy that failure shall we thus turn to “truth seeking” politicians who are too often thin-skinned and ambitious?

With social media we have a third player involved, the companies (above all, Facebook) that own and oversee these platforms for speech. The companies have a right to, and sometimes do, suppress speech on their platforms. The answer to their mistakes in this regard is…more speech. But the companies also rise to the occasion at times by defending our democratic faith in free speech. In the wake of the Pelosi incident, Facebook decided to leave the Pelosi video up on its platform. Monika Bickert, their head of content moderation at Facebook, affirmed that those who heard and saw the video should decide its truth or falsity. The alternative would have been Facebook taking down the video in the name of truth (and against lies). There are many problems with that alternative, not least Facebook would find itself fighting with, or subordinate to powerful politicians like Ms. Pelosi. So the company left the ultimate judgment to citizens and voters. They followed, in short, the American way.

But many people apparently do not like leaving judgments about truth to “more speech” and to Americans. Bickert was pilloried. For her part, Ms. Pelosi said Facebook acted as “willing enablers of the Russian interference in [the 2016] election.” To be blunt again, she accused Facebook of treason.

But Monika Bickert was the real American here, at least judging by our long tradition of free speech and respect for the intelligence of citizens and voters. That tradition is under fire. Perhaps it always has been. But we might wonder if our political class is abandoning freedom of speech.

Many on the right have decided that Carl Schmitt is correct when he wrote “politics is constituted by the distinction between friends and enemies.” The tech firms are perfect “enemies” for the populist right: filled with “woke” young people, located in California, and using technology few understand. The left has been abandoning free speech for a long time because “the corporations started winning” First Amendment cases. They also often judge constitutional rules by their effects on friends and enemies. In the name of that harsh doctrine, both right and left are abandoning the older faith that Americans have the right and the ability to discern truth from lies.

But there are still genuine conservatives and real liberals out there who believe in free speech. Last week Facebook paid a hefty price to be their friend.

This piece also appears at Tech Dirt.