July 22, 2020 3:48PM

You Should Be Able to Challenge the IRS in Court

Although the Internal Revenue Service is responsible for collecting taxes, the power to write tax law is a legislative one, held by Congress. In certain cases, however, Congress has delegated to the IRS limited authority to fill in the gaps of tax laws through regulation. The Administrative Procedure Act (APA) lays out the processes that agencies like the IRS must follow when promulgating regulations, such as allowing for a period of public comment on proposed regulations. Unfortunately, the IRS has habitually refused to comply with the APA absent the intervention of the courts. The APA provides a remedy for such situations: pre‐​enforcement judicial review. This process allows an individual or entity to challenge the validity of a regulation that could affect it in court without having to first violate the regulation and risk the often severe consequences that would follow.

CIC Services, which advises taxpayers on certain types of complex transactions, is using pre‐​enforcement judicial review to challenge the validity of an IRS reporting requirement that it claims is invalid because the IRS evaded the regulatory procedures required by the APA. In response, the IRS invoked the Tax Anti‐​Injunction Act (AIA) to block the challenge and prevent CIC’s legal arguments from even being heard.

The AIA prohibits challenges to a tax before the tax has been collected. In most instances, a person challenging a tax assessment must first pay the tax and then file a claim for a refund. But CIC’s challenge is not to any tax but to the validity of the regulatory rule (and burden) passed by the IRS.

The IRS narrowly prevailed before the U.S. Court of Appeals for the Sixth Circuit when two of the three judges on the panel held that the penalty triggered by failing to follow the new reporting requirement was itself a tax, thus subjecting the lawsuit to the AIA. In doing so, the court widened an existing circuit split. (Cato had filed an earlier brief in support of a petition seeking review of a similar D.C. Circuit case, but the Supreme Court declined to take it up). Under the Sixth Circuit’s reasoning, the only recourse against defective Treasury regulations is to purposely violate the regulation and incur penalties and interest while waiting for a subsequent enforcement proceeding in which the regulation’s validity can be challenged.

CIC petitioned the Supreme Court to review that ruling, supported by a Cato brief, and the Supreme Court agreed to hear the case. Cato has now joined the National Federation of Independent Business and five other organizations in filing an amicus brief supporting CIC on the merits. We argue that an examination of existing exceptions to the AIA support the conclusion that the statute focuses on lawsuits that restrain assessment or collection, not pre‐​enforcement challenges. With the context provided by these built‐​in exceptions, the AIA looks less like one intended to pre‐​empt all suits affecting taxation and more like one that can exist comfortably alongside the APA and challenges to the validity of agency rulemaking.

Moreover, the Sixth Circuit’s interpretation creates an unnecessary conflict between the AIA and the APA. The APA contains a “strong presumption” of judicial review prior to enforcement of substantive regulations like the one at issue here. Congress intended that all agencies’ substantive regulations would be subject to such review under the APA, and it certainly didn’t intend for the IRS to be almost immune from accountability before federal courts. People have a right to be sure of a regulation’s meaning before engaging in costly compliance efforts, and that’s exactly what pre‐​enforcement judicial review provides.

The APA contains stringent procedural requirements for how regulations are to be promulgated. The IRS frequently ignores these requirements and must be reined in. The Supreme Court should hold that the AIA doesn’t deny CIC the right to its day in court.

July 22, 2020 1:43PM

Federal Cops Without Badges, Coming Soon To a City Near You?

The federal Department of Homeland Security has sent Border Patrol agents to act as police in Portland, Oregon in recent days. By what authority? And have its agents behaved there in a way consistent with the law, the Constitution, and good police practice? I took a first look at those questions in a Monday piece at The Bulwark. Since then the situation has changed, and not for the better. [see update below — W.O.]

When I wrote, DHS was being careful to ground its actions in one of the narrowest and most widely accepted of the federal government’s law enforcement powers, that of defending its own installations from attack. (The Portland federal courthouse has come under recurring nightly siege for weeks, which has included arson attempts and physical assaults on officers.) This week, however, President Trump suggested that he would also send federal law enforcers into “Chicago, Detroit, Philadelphia” and other cities.

This is plainly a pivot into something else. Have you seen reports that courthouses or other federal property are under siege in most of these cities? I haven’t. In some of them, it has been weeks since the last widespread public unrest related to the George Floyd protests. Some of the cities are indeed known for alarming rates of homicide and gang violence, but those do not constitute an imminent threat to federal buildings, let alone some sort of Whiskey Rebellion‐​style insurrection against the feds’ political authority. As has been widely discussed in recent weeks, Trump could assert the authority to deploy actual military units to riot zones were he to invoke something called the Insurrection Act of 1807, but such an invocation would be deeply controversial, and almost ludicrous in the case of cities where there is plainly no insurrection going on.

If Trump follows through, and the administration begins to insert itself more broadly into local policing, expect it to seek out untested and unfamiliar legal authorities as justification. (For an example of how this worked in last month’s Washington, D.C. protests, involving a stretchy and loophole‐​ish excuse for putting state national guard units under federal direction, check out this Lawfare piece by Steve Vladeck).

In the mean time, the hands‐​on problems of the Portland deployment are coming into sharper focus. DHS is taking the defiant position that its agents will not wear badges with their own names, period — it says they’ll instead wear numerical “identifiers,” so at least it will have a hope of knowing which ones misbehaved. Its camouflage‐​wearing agents are clothed with enough ambiguity — bearing hard‐​to‐​spot agency patches, for example, together with generic “POLICE” rectangles — to threaten confusion over whether they are indeed genuine Federales or just rowdy freelancers making believe.

As for the arrests of persons bundled into vans, DHS has already essentially conceded that one was a case of mistaken identity, while another, analyzed here by Harvard Law criminal procedure specialist Andrew Crespo, appears to have lacked the probable cause required under constitutional standards. It’s hard to picture a defense of the federal agents’ conduct in the latter case that does not come back to the excuse that they were put on the street with training too skimpy for them to grasp the constitutional standards that apply to arrest.

That’s not a defense we should find satisfactory — especially if this federal policing campaign is to roll out to more cities.

UPDATE: Wednesday afternoon, after the above appeared, President Trump held a press conference announcing that he was assigning “surge” federal law enforcement to Chicago and Albuquerque, modeled after a pilot effort in Kansas City. From the initial coverage, my quick reading is that despite the talk of Portland Everywhere, this may be a pivot to a much less provocative (if still objectionable) kind of federal role. In particular, the U.S. Attorney in Kansas City said the federal participants “won’t be patrolling the streets,” “won’t replace or usurp the authority of local officers,” and, should they participate in arrests, to quote AP, “will be clearly identifiable when making arrests, unlike what has been seen in Portland.” Moreover, they appear in each case to have negotiated cooperation agreements with the cities involved — the feds are sweetening that with money. I see much talk of using the federal presence against gang shooters, rather than against demonstrating mobs, statue‐​topplers, etc.

In other words, it looks at a glance not like a roll‐​out of the Portland adventure but like a separate “crime wave surge assistance” program that would be new in almost no way — the feds already cooperate with cities on a lot of this — and would mostly involve FBI, DEA, and other conventional federal law enforcers rather than repurposed Border Patrol agents and the like. There is talk of deferring to local priorities, and no talk of getting anywhere near street policing or crowd control, while the numbers of feds involved are too small to suggest a big role in that anyway. In short, sound and flash but not actually a major assertion of new federal policing power as had been feared.

It is worth remembering, however, that just as this administration has sometimes followed highly aggressive announcements with relatively innocuous policy rollouts, so it has also sometimes done the reverse. And note that (in common with earlier administrations) this one continues to neglect to distinguish the constitutional distinction between its role in fighting federal crimes from a wider and more constitutionally irregular ambition of fighting local violence prosecuted under state law. “Indeed,” as Chief Justice Rehnquist wrote for the U.S. Supreme Court in U.S. v. Morrison (2000), “we can think of no better example of the police power, which the Founders denied the National Government and reposed in the States, than the suppression of violent crime and vindication of its victims.”

July 22, 2020 1:39PM

Why Not More Permanent Private School Closures?

When the COVID-19 lockdown began in earnest in late March, I started fearing doom for private schools. The economic consequences of near‐​total lockdown seemed likely to be devastating, in‐​turn clobbering private schools that, unlike public schools, do not have a claim on taxpayer money, and would see charitable dollars and the ability of families to pay dwindle. I thought we could potentially see shutterings reach the thousand mark. But with “only” 107 institutions on our tracker of private schools that will permanently close at least in part due to the COVID-19 financial situation, we are far shy of the worst‐​case scenario. Why?

Permanent private school closures

I offer the following four possibilities, but would be interested to hear others:

  1. Too Early: Many schools may still be finalizing enrollment and revenue numbers for the coming school year, which may be especially in flux this summer as plans for public schools continue to evolve: all in‐​person, online, hybrid? It might be the case that the numbers I feared are coming, just not quite as quickly.
  2. Gaining Students: Related to uncertain numbers, we are seeing at least anecdotal evidence of increasing interest in private schools as public schools lean toward all online education, at least to start the school year. Maybe the potential loss of some students due to decreased ability to pay is being offset, or more than offset, by an influx of new students.
  3. Off the Radar: Our tracker may simply be missing closures. We discover closures primarily through media reports, though people are welcome to email nmccluskey@​cato.​org with announcements, and some folks have. It is possible that some closures, especially of smaller private schools, do not generate media reports. Perhaps one reason Roman Catholic schools make up such a large share of our closure list—about 84 percent—is that they tend to be part of dioceses, which are relatively large organizations likely to have press offices and to make announcements regarding multiple schools. Smaller, more independent schools may just inform families that they are going out of business.
  4. Paycheck Protection Program: This program, passed early in the federal coronavirus response, made up to $659 billion available to small businesses, including nonprofits, in the form of forgivable loans. The goal was to help recipients retain employees as well as handle expenses related to buildings. Many churches and independent private schools applied—including some wealthy ones—which may have helped to stave off insolvency for schools on the brink.

We need myriad options for families and teachers who are facing diverse health and educational priorities, which makes the lower‐​then‐​expected private school closure numbers a welcome bit of news. But we are far from out of the proverbial woods for private schools, and the right thing to do has always been to have money follow students, not fund government schools. COVID-19 only makes that policy change even more urgent.

July 22, 2020 11:04AM

Are the Ups and Downs of COVID-19 Cases Due to Politicians?

Many news reports purporting to explain the ups and downs of COVID-19 cases in nations or states implicitly assume the epidemic is entirely under human control. Infections therefore rise when politicians and people behave badly, in this view, and infections fall when politicians get tougher and/​or people get smarter.

“Western Europe Avoids New Surge,” claims The Wall Street Journal, “largely because of marked changed in social behavior across much Europe, following widespread efforts of policy makers to follow drill the public to follow a simple three‐​pronged approach: Keep a distance where possible, enhance hygiene, and wear a mask when necessary.”

Europe COVID Curves

The accompanying graph shows huge spikes in “confirmed cases” in Italy, Spain, Germany and France – all peaking at 4500 to 8000 per day over 7‐​day periods from March 26 to April 6 but later falling to 201–773 by July 13.

If wise advice from policy makers to a well‐​drilled public got the number of confirmed cases to come down in synch in four countries, what caused their huge surge in March and April? And why did all four countries start reopening in early May (about the same time as Florida or Arizona)? If social distance, hygiene and masks could thwart a raging epidemic, why didn’t all those things plus tight lockdowns do little or nothing to prevent Europe’s and New York’s surging cases and deaths in March and April?

Some U.S. States like New York and New Jersey have been through steeply rising and falling epidemic curves just as Italy and Spain have, whether measured by per capita cases or deaths. Other states like Texas, Florida, California and Arizona, by contrast, flattened their curves for months — even at the April peak. The second graph shows daily COVID-19 deaths per million residents (though the New York Times daily update uses deaths per 100,000).

By July 20, New York had experienced 166 coronavirus deaths for every 100,000 residents and New Jersey 177, but Florida had only 24 deaths per 100,000 by then and Texas had 14. Deaths are tiny fraction of confirmed cases and the CDC director estimates that confirmed cases count only 10% of all those infected, including mild cases cured at home. States with steep curves and very high death rates obviously had a huge number of people infected who have now recovered are likely to be at least as immune as if they had been vaccinated.

New York and New Jersey do not have fewer new cases than Florida and Texas today because they have been better‐​drilled about distance, hygiene or masks, but because they have many thousands more residents who have, in effect, already been vaccinated by the having survived the disease.

Daily Deaths per Million

SARS‐​CoV‐​2 is now much less contagious in places like Milan Italy or Queens New York that have already experienced a huge surge because many of their residents have survived mild or serious infections and developed T‐​cell or antibody resistance to the virus. This reduces the risk of contagion (the effective reproduction rate) in the same way that having many of your neighbors vaccinated would reduce everyone’s risk, even if most others have not been vaccinated.

Countries and states that have not previously been through a big upward spike of cases and deaths are now relatively more vulnerable. To contrast old hot spots with new ones and then conclude that new outbreaks in new places must be the fault of inferior politicians or careless people in the newest hot spots is scientifically illiterate. And it detracts from serious examination of real problems and real solutions. 

July 22, 2020 10:01AM

New Poll: 62% Say the Political Climate Prevents Them from Sharing Political Views

50% of strong liberals support firing Trump donors, 36% of strong conservatives support firing Biden donors; 32% are worried about missing out on job opportunities because of their political opinions

62% agree "the political climate these days prevents me from saying things I believe because others might find them offensive"

A new Cato Institute/​YouGov national survey of 2,000 Americans finds that 62% of Americans say the political climate these days prevents them from saying things they believe because others might find them offensive. This is up from 2017 when 58% agreed with this statement. Majorities of Democrats (52%), independents (59%) and Republicans (77%) all agree they have political opinions they are afraid to share.­­

Strong liberals stand out, however, as the only political group who feel they can express themselves: 58% of staunch liberals feel they can say what they believe.

Centrist liberals feel differently, with 52% who feel they have to self‐​censor, as do 64% of moderates, and 77% of conservatives. This demonstrates that political expression is an issue that divides the Democratic coalition between centrist Democrats and their left flank.

Read the full survey report and results here.

Staunch Liberals Stand Out as Only Group Who Feels They Can Share their Political Opinions

What’s changed? In 2017 most centrist liberals felt confident (54%) they could express their views. However today, slightly less than half (48%) feel the same. The share who feel they cannot be open increased 7 points from 45% in 2017 to 52% today. In fact, there have been shifts across the board, where more people among all political groups feel they are walking on eggshells.

More Americans Have Opinions They’re Afraid to Share in 2020 than in 2017

Although strong liberals are the only group who feel they can say what they believe, the share who feel pressured to self‐​censor rose 12 points from 30% in 2017 to 42% in 2020. The share of moderates who self‐​censor increased 7 points from 57% to 64%, and the share of conservatives rose 70% to 77%, also a 7‐​point increase. Strong conservatives are the only group with little change. They are about as likely now (77%) to say they hold back their views as in 2017 (76%).

Self‐​censorship is widespread across demographic groups as well. Nearly two‐​thirds of Latino Americans (65%) and White Americans (64%) and nearly half of African Americans (49%) have political views they are afraid to share. Majorities of men (65%) and women (59%), people with incomes over $100,000 (60%) and people with incomes less than $20,000 (58%), people under 35 (55%) and over 65 (66%), religious (71%) and non‐​religious (56%) all agree that the political climate prevents them from expressing their true beliefs.

50% of Staunch Liberals Support the Firing of Trump Donors

Nearly a third (31%) of Americans say they’d support firing a business executive who personally donated to Donald Trump’s re‐​election campaign for president. This share rises to 50% among strong liberals who support firing business executives who personally donate to Trump.

36% of Staunch Conservatives Support Firing Biden Donors

The survey finds that “cancel culture” goes both ways. Nearly a quarter (22%) of Americans support firing a business executive who personally donates to Democratic presidential candidate Joe Biden’s campaign. This share rises to 36% among strong conservatives who support firing Biden donors. These results are particularly notable given that most personal campaign contributions to political candidates are public knowledge and can easily be found online.

32% Worry Their Political Views Could Harm Their Employment

32% worry they could  miss out on job opportunities or get fired if their political views became known

Nearly a third (32%) of employed Americans say they are worried about missing out on career opportunities or losing their job if their political opinions became known. Americans across the political spectrum share these concerns: 31% of liberals, 30% of moderates, and 34% of conservatives are worried their political views could get them fired or harm their career trajectory. This suggests that it’s not necessarily just one particular set of views that has moved outside of acceptable public discourse. Instead these results are more consistent with a “walking on eggshells” thesis that people increasingly fear a wide range of political views could offend others or negatively impact themselves.

These concerns cut across demographics and partisan lines: 28% of Democrats, 31% of independents, 38% of Republicans, 38% of Hispanic Americans, 22% of African Americans, 31% of White Americans, 35% of men, 27% of women, 36% of households earning less than $20,000 a year, and 33% of households earning more than $100,000 a year fear their political opinions could impact their career trajectories.

Read the full survey report and results here.

The topline questionnaire, crosstabs, full methodology, and analysis of the survey findings can be found here.


The Cato Institute Summer 2020 National Survey was designed and conducted by the Cato Institute in collaboration with YouGov. YouGov collected responses online during July 1–6, 2020 from a national sample of 2,000 Americans 18 years of age and older. Restrictions are put in place to ensure that only the people selected and contacted by YouGov are allowed to participate. The margin of error for the survey is +/- 2.36 percentage points at the 95% level of confidence.

July 21, 2020 1:03PM

The People of Portland: DHS’s Involuntary Human Test Subjects

The people of Portland are now experiencing what many people of color–particularly Latinos living on the American side of the U.S.-Mexico border–have experienced for decades: out of control DHS agents violating their constitutional rights with apparent impunity.

A few years back, I launched Checkpoint America: Monitoring The Constitution‐​Free Zone, which examined Customs and Border Protection (CBP) checkpoints located inside this country–checkpoints which are frequently used to detain, question and sometimes inflict violence on motorists who refuse to answer whether or not they are U.S. citizens. Since the Supreme Court misguidedly blessed the use of such checkpoints by CBP in the infamous 1976 U.S. v Martinez‐​Fuerte decision, Congress has taken no action to put real limits on what CBP can and cannot do to people at those checkpoints, despite multiple General Accounting Office reports (2009 and 2017) showing how useless they are, and how they have morphed into generalized crime control checkpoints–something expressly forbidden in the Martinez‐​Fuerte decision.

The lack of oversight and restraints on CBP has created a culture of impunity. The same has been true of its counterpart DHS agency, Immigrations and Customs Enforcement (ICE) for decades. The bitter fruits of the lack of oversight and accountability for those DHS components is now on full display in Portland.

The de facto kidnapping by DHS agents of Mark Pettibone on July 15 should have resulted in the immediate suspension of the agents and a civil rights violation investigation by the Department of Justice. But it is the Department of Justice, in coordination with DHS, that is facilitating these kinds of rights violations.

On May 31, the Justice Department authorized the Drug Enforcement Administration (DEA) to conduct covert surveillance and related activities against Black Lives Matter protestors in the wake of the murder of George Floyd. And following President Trump’s issuance of a “monument protection” executive order on June 26, DHS on July 1 circulated press guidance to its components about how to field inquiries from reporters about pending deployments of DHS law enforcement personnel assigned to its “Protecting American Communities Task Force (PACT)” for “potential surge activity to ensure the continuing protection of people and property.”

This isn’t about protecting monuments. It’s about using the people of Portland as involuntary human test subjects for political repression operations carried out under the guise of protecting federal property–operations that DHS, with legal cover and possibly intelligence assistance from DoJ, intends to export to other cities beginning this week.

July 21, 2020 12:48PM

Uyghur Genocide Shows Urgency of Combating Neo‐​Malthusianism

Mounting evidence shows that China has enacted wide‐​ranging human rights abuses, including coercive population control, on its Uyghur minority. An Associated Press investigation released in late June showed that while China’s rate of permanent sterilization procedures is falling nationally, the rate in Xinjiang, where many Uyghurs live, has skyrocketed. Many of those surgeries were involuntary. Many Uyghur women are forcibly sterilized after having two children, as third children are illegal in China. The two‐​child policy replaced China’s previous one‐​child policy in 2016.

The immense cruelty of what is happening to China’s Uyghur population demonstrates the inhumanity of China’s two‐​child policy and the urgency of combating the mindset that undergirds it. The way that the policy is enforced is influenced by prejudice against minorities, but authorities justify the policy with neo‐​Malthusianism, defined as the fear that a large population size could lead to a humanitarian and ecological disaster and that combating so‐​called overpopulation is thus an urgent problem. “The tensions between population and resources and environment will not fundamentally change,” noted China’s State Council in its national population development plan for 2016–2030, released in 2017. The plan specifies, according to state‐​run news agency Xinhua, that the government must continue to implement the “two‐​child policy to promote balanced population development.”

Sadly, the view that some groups are less worthy of having children than others has often gone hand in hand with neo‐​Malthusianism, both historically and today. China’s government subjects Uyghurs to strict enforcement of the country’s two‐​child limit, using overpopulation concerns about resource scarcity in part as a cover to make forcibly decreasing the population of a minority more palatable.

Related Event

Fewer, Richer, Greener: Prospects for Humanity in an Age of Abundance

The world is doomed, many people argue, citing poverty, dwindling natural resources, and an allegedly unsustainable rate of population growth. They say there are just too many problems to overcome. But is that really the case? Join the conversation and find out.

Join the Conversation

The neo‐​Malthusian mindset has caused many people outside of China to turn a blind eye to the coercive nature of the one‐​child (now two‐​child) policy. As recently as 2018, New York University law professor Dan Guttman told Harvard Political Review: “With the one‐​child policy, China put into effect the single most effective climate change rule in the world.”

In fact, Western development professionals originally encouraged China’s birth limits. In 1983, the United Nations Population Fund bestowed an award on Qian Xinzhong, head of China’s State Family Planning Commission and the man in charge of the country’s one‐​child policy, as well as Indira Gandhi, India’s prime minister who declared a national “Emergency” that suspended civil liberties and mandated sterilizations on a massive scale between 1975 and 1977.

Fears that without coercion, China would have seen an environmentally damaging “population explosion” are unfounded. China’s birth rate would have fallen without coercion, in the normal course of economic development. Today, even in Sub Saharan Africa, the world’s poorest region, birth rates are falling voluntarily. Projections of world population growth show that the total population of the planet will decline in the long run. Moreover, population growth can coincide with rising prosperity. China’s remarkable economic growth and poverty eradication over the last few decades have been the result of economic liberalization, not regulating women’s allowable number of births.

While many accounts of coerced sterilization and forced abortion have emerged from the Uyghur community, the Han ethnic majority is not exempt. Even as the Chinese national government now frets about falling birth rates’ impact on the country’s economy, many revenue‐​hungry local governments throughout China continue to fine couples for illegal births and enforce childbearing limits.

For example, last year, one couple in Shandong province, who could not afford a fine of $9,570 for violating family planning regulations had their life savings (around $3,000) seized. Also last year, a school teacher in Guangdong lost her job after giving birth to a third child in violation of the two‐​child policy. There are now many hopeful signs that the Chinese government may move toward ending childbearing limits, but that has not yet come to pass.

Today, neo‐​Malthusian thinking is seeing a resurgence. At the 2020 World Economic Forum in Switzerland, famed primatologist Jane Goodall opined, “All these [environmental] things we talk about wouldn’t be a problem if there was the size of population that there was 500 years ago.” The world population 500 years ago is estimated at 420–540 million people, or around 6.7 billion fewer people than today.

Goodall is far from alone in her belief that population growth is an urgent problem. Public figures, ranging from Prince Harry and Bill Nye “the Science Guy” to television host Bill Maher, have all recently expressed overpopulation fears. Last year, Rep. Alexandria Ocasio‐​Cortez (D-NY) famously questioned the morality of childbearing in the face of climate change, asking, “Is it OK to still have children?”

Countering neo‐​Malthusianism is especially critical now given the recent prominence of such thinking. To learn more about the history of coercive population control inspired by neo‐​Malthusianism, and the problematic policies that persist today—including the forced mass sterilization of Uyghur women—consider reading my new paper, Neo‐​Malthusianism and Coercive Population Control in China and India.