August 3, 2010

Do we really need to worry, as Jack Balkin does, that the states will bring too many lawsuits challenging federal tax laws?

Lawprof Jack Balkin doesn't like the way Judge Hudson dealt with the Anti-Injunction Act in the opinion that allowed Virginia to go forward in its attack on the Obamacare individual mandate:
In essence, Judge Hudson argues that by passing [the Virginia Health Care Freedom Act] that says that Virginia will interpose itself to protect its citizens from the individual mandate, Virginia has succeeded ... in getting around the federal tax-anti-injunction act. 
... The fact that Virginia can get around the tax anti-injunction act simply by passing a statute saying that it thinks the federal law is unconstitutional means that every state in the Union can do so as well. This undermines the purposes of the tax anti-injunction act, which was to keep tax protesters from littering the federal courts with protest litigation; the act requires that challenges to tax laws proceed in an orderly fashion through requesting refunds.
Tax protesters? You see the states, acting through their legislatures, as presenting the same problem of frivolous, wasteful litigation posed by private litigants?

There is a built-in check here that is not present for those private litigants, which is that elected representatives of the people of a state have gone through a deliberative process in making that statute, and, in addition, the state executive branch has made the decision to bring the lawsuit. These tiers of public accountability make a difference with respect to the necessity of the Anti-Injunction Act.

That act, as Judge Hudson noted, does not refer to a state as being barred from bringing suits for injunctions, only a "person." There's a question of interpretation about whether a state should be included in the word "person," and there's good reason to think it should  not. For one thing, the general rule of statutory interpretation is that "person" does not mean state. And, even more important, as I've just explained, structural checks mean that the state as a litigant doesn't present the same problems posed by an individual litigant.
Indeed, the logic of the opinion seems to suggest that if Virginia had objections to any other part of the federal tax laws, it could pass a Virgina Tax Freedom Act related to that provision, claiming that the tax provision was beyond the reserved powers of the states under the Tenth Amendment. 
How big of a threat is that? The federal tax power is extremely broad, so that virtually any lawsuit like this would be easily dismissed on the merits. You don't need a broad interpretation of the Anti-Injunction Act to solve this problem. Nearly all of the cases you ask us to fret about would either never be brought or be dismissed quickly for failure to state a claim. In the Virginia case, by contrast, the question on the merits is very difficult, and the judge held back from resolving it. How often could that happen? And when it does happen, should there be a way to challenge it in court?

(Also, Balkin can't mean the state would be "claiming that the tax provision was beyond the reserved powers of the states under the Tenth Amendment." He must have meant to write that the claim would be "the tax provision was beyond the enumerated powers of Congress and thus reserved to the states the states under the Tenth Amendment.")

15 comments:

AJ Lynch said...

The term "statist" is sufficiently derogatory to describe those who want the govt and especially the fed govt to be all powerful.

Now what should those who oppose statism be called? Is there a good antonym for lemmings?

t-man/wurly/henry buck said...

I think there is an unresolved question of fact over whether the mandate is, in fact a tax. I'm sure that a well-developed factual record would contain countless statements by the bill's supporters rejecting the notion that it is a tax.

Scott M said...

What difference does this all make anymore? Pete Stark has, either willingly or not, exposed the underbelly. They think the federal government can basically do whatever it wants with "rules" governing our lives.

I've long been optimistic about the Republic's ability to weather bad administrations and congressional eras, but I'm starting to think that we may, like those among to most pessimistic contend, have already crossed the Rubicon and just haven't yet realized it.

YoungHegelian said...

The fact that this legal challenge isn't just Virginia off on a tangent, but VA being in the vanguard of legal challenges by multiple states supports Prof. Althouse's rejoinder.

It's not just one set of pissed-off legislators challenging the law, it's about a dozen.

If the concerns of a dozen states can't be seen as a reason to stay Federal power, what survives of federalism at all?

http://www.csmonitor.com/USA/Justice/2010/0322/Attorneys-general-in-11-states-poised-to-challenge-healthcare-bill

Scott M said...

Now what should those who oppose statism be called? Is there a good antonym for lemmings?

Federalist. There was a period of time when this was a pejorative in certain circles. I believe there are still those with the hands on the levers that believe it today.

Bruce Hayden said...

Standing is a real dilemma here. On the one hand, there are 300+ million legal Americans here, all of whom will presumably be affected by this extensive new set of laws. And if even a small fraction were allowed to sue to stop the implementation of the laws, then they could be tied up in the federal courts for generations. Compounding this are 2,000 pages of legislation and likely 10's of thousands of pages of regulations enacted pursuant to them.

BUT, this is a massive overhaul of 1/5 or so of the economy that is also fairly unpopular with the people - massively unpopular with many, and disliked by a majority. Add to that that we are a government that derives its powers from the people, and there has to be Constitutional review of much of this apparent overreaching.

Sure, the Democrats in Congress would love there to be no standing with anyone, so that their handiwork wouldn't have to be judged against our Constitution's grant of powers to them. But that would grant them powers that our founders had no intention of granting them - and set the stage for another American Revolution.

So, the courts have to find a happy medium, where enough challenges are heard to settle the legal questions, without destroying our federal court system with this litigation.

Richard Dolan said...

The "too many lawsuits" claim is about the administrative burden of having to defend on the merits. It's a practical concept more than a theoretical principle. Since a lawsuit by a state against the feds is pretty rare to begin with, the administrative burden argument doesn't have much going for it.

Ann points out one of the judge's reasons for rejecting the gov't's claim that the VA suit is barred by the anti-injunction act -- i.e., the statute applies only to 'persons', a category that does not include states. The judge had two other reasons.

First, the anti-injunction act presumes that an alternative remedy is available (usually a taxpayer's suit for a refund in district or tax court), but if it barred VA's claim here, VA would be without a remedy to assert its sovereign rights to adopt its own statutes.

Second, the 'individual mandate' was not described by Congress or Obama as a tax when it was under consideration; to the contrary, Congress and Obama rejected that characterization. Even though it is codified in the IR Code, it doesn't exactly look, smell or feel like a tax in the ordinary sense. Whether it should be deemed a tax nonetheless, either for purposes of upholding Congress's power to adopt it under the Tax Clause or for applying the anti-injunction act (assuming the 'person' and 'no other remedy' reasons aren't enough) is an open question.

Academics like Balkin are usually cheer-leaders for expansive theories of constitutional law and the broad scope of judicial review that goes with it. Except, that is, when the target is executive or legislative policy-making that they agree with.

Bruce Hayden said...

I think there is an unresolved question of fact over whether the mandate is, in fact a tax. I'm sure that a well-developed factual record would contain countless statements by the bill's supporters rejecting the notion that it is a tax.

Actually, I suspect that you won't find much along those lines, because the supporters of the Bill, in deference to the President, went out of their way to make sure that they didn't call it a tax, since that would mean admitting that they were about to raise taxes on the middle and lower classes, and thus violating probably his most frequently made promise (and, of course, they are innocent bystanders to the imminent expiration of the Bush Tax Cuts that will effectively be the biggest tax increase in our history).

More to the point though, what you are talking about aren't really considered "facts" of the type that require adjudication by a finder of facts, and thus cannot be determined in a summary judgment motion. Rather, they just go to the interpretation of the law itself, and theoretically could have been determined by SJ.

Nevertheless, it really doesn't matter, since apparently the government can bob and weave as much as they want to here, as to whether these mandates are based on regulation of interstate commerce or the taxing power of the government (despite being contrary to any such actually found in the Constitution). So, they can do as they apparently did here, and throw both theories up against the wall, and see which one sticks.

virgil xenophon said...

This is Jack " el supremo bat-shit crazy leftist" Balkin you're talking about here, Ann. What the H did you expect? I don't care how "learned" he is as a Yale Law prof, the guy has nothing but an insane crazy, single-track leftist explanatory take on EVERY subject. I read his blog consistently under the "know your enemy rule" and his take is EMINENTLY predictable.

Scott M said...

So, they can do as they apparently did here, and throw both theories up against the wall, and see which one sticks.

Funny you should mention, "up against a wall"...

Ann Althouse said...

"I think there is an unresolved question of fact over whether the mandate is, in fact a tax."

Yes, but the Anti-Injunction Act ground for dismissal was rejected by the judge without needing to decide that.

It's still a question to be determined in the case, and it could have determined the A-I A ground, but it didn't.

Calypso Facto said...

His disdain for those who would fight over-taxation by "littering the Federal courts with protests" is telling...

junyo said...

I think there is an unresolved question of fact over whether the mandate is, in fact a tax. Not really. The Administration is now calling it a tax:
http://www.nytimes.com/2010/07/18/health/policy/18health.html?_r=1

...So they can defend their power to enforce it.

mtrobertsattorney said...

A tax is generally levied on some positive act,i.e. earning income, buying something or earning a profit. In this case, the claimed "tax" is levied on doing nothing. That is, it is a tax on the failure to purchase a product.

If the regime can tax anyone for their failure to purchase a product, are their any limits to this power?

How about an hefty tax on the failure to purchase GM's new Volt??

DADvocate said...

I worry they don't bring enough lawsuits against the feds, not just against tax laws, either.