Friday, July 27, 2012

A Gift From 1816

As Indiana’s bicentennial is now only four years away – and with that, the 200th anniversary of the adoption of the State’s first constitution – I propose that we amend Indiana’s current constitution to restore an important part of the original, which was replaced when Indiana’s second (and current) constitution took effect in 1851.

Our original (1816) constitution’s Bill of Rights began, “That the general, great and essential principles of liberty and free Government may be recognized and unalterably established; WE declare, That all men are born equally free and independent, and have certain natural, inherent, and unalienable rights; among which are the enjoying and defending life and liberty, and of acquiring, possessing, and protecting property, and pursuing and obtaining happiness and safety.”

This language, which is noticeably similar to one of the most memorable parts of the Declaration of Independence (“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable rights, that among these are life, liberty, and the pursuit of happiness”), was actually drawn from an early Pennsylvania constitution, which itself had adopted (with a slight modification) the language of the Virginia Declaration of Rights, which was adopted about two months before the Declaration of Independence. Twenty-one state constitutions currently include this or something like it, including Virginia and West Virginia, which use the older version from the Virginia Declaration of Rights. The very close Massachusetts variant, adopted in 1780, was used to bring about the end of slavery there, making it the first of the United States to do so. Later, in 1847, in Liberia, when former American slaves and their descendants formed a republic and constitution for themselves, they chose to incorporate into that constitution this same language that Pennsylvania, Indiana, and other American states had used.

At Indiana’s 1850 - 1851 constitutional convention, a delegate named Watts initially proposed carrying the 1816 language over into our new (and now current) constitution, but at the suggestion of another delegate, he agreed to replace it with the more elegant but less specific language of the Declaration of Independence, which ultimately was used. The only reason given for the change was to invoke and honor Jefferson and other contributors to the Declaration. Records of the debates and proceedings of the convention show delegates using the two versions interchangeably, with some delegates, including Watts, indicating that they believed the two versions to have the same meaning (though later on in the convention, Watts attempted to change the wording back to the 1816 version, explaining that the Declaration version did not include everything that he had thought that it included). Ultimately, the Declaration version was used, and it remains in Indiana’s constitution today (altered only by a 1984 amendment which replaced the word “men” with “people”).

The Hoosiers of 1851 were right to understand the rights to “life, liberty, and the pursuit of happiness” as having a certain, settled meaning which extends to the defense of life and liberty, the just acquisition, possession, and protection of property, and the pursuit of happiness and safety. However, these rights can only be applied in their long-established meaning, in practice, so long as the people, the legal community, and the judges of the state remain aware of that meaning. Unfortunately, through no fault of their own (after all, unless they had somehow been notified that the meaning and effect of natural rights had already been well-discussed, established, and settled, why would people go looking for that information, and how would they know where to look?), this no longer seems to be common knowledge, even among lawyers or judges. 1

If our legal system is unable or unwilling to vindicate the great rights of “Life, Liberty, and the Pursuit of Happiness” when they are stated in these general terms, then let us be more specific. We can begin by restoring the details that were declared and established by the first Hoosiers, in 1816.

1. In Doe v. O’Connor, in 2003, though the Indiana Supreme Court did not ultimately apply this section or state its understanding of it, the Court’s review of other states’ courts’ treatment of similar sections of their own constitutions strongly implies that it would treat our own Article I, Section I as though it were only a vague mission statement rather than binding law – notwithstanding that the Court has given effect to that section on previous occasions. (Indeed, if conclusions can be drawn from that portion of Doe v. O’Connor, the Court may well even be hesitant to apply the more specific, 1816 language; however, even if the change has no other effect, I would hope that the Court could be persuaded at least to recognize the right to defend life, liberty, and property – traditionally known as the “First Law of Nature” – which the 1816 language would clearly embed.)

Saturday, July 14, 2012

More from Gibbons v. Ogden, and more concerning the American Revolution

This is a bit more substantial than the previous post:

"It is true, that duties may often be, and in fact often are, imposed on tonnage, with a view to the regulation of commerce; but they may be also imposed with a view to revenue; and it was, therefore, a prudent precaution, to prohibit the States from exercising this power.  The idea that the same measure might, according to circumstances, be arranged with different classes of power, was no novelty to the framers of our constitution.  Those illustrious statesmen and patriots had been, many of them, deeply engaged in the discussions which preceded the war of our revolution, and all of them were well read in those discussions.  The right to regulate commerce, even by the imposition of duties, was not controverted; but the right to impose a duty for the purpose of revenue, produced a war as important, perhaps, in its consequences to the human race, as any the world has ever witnessed."

The regulation of commerce may be accomplished by means which raise a revenue, and the raising of revenue (using taxes) may be accomplished by means which regulate commerce.  This might be diagrammed using the familiar diagram of two overlapping circles, where the section of overlap is a tax (by any name) which regulates commerce, or at least which is designed to regulate commerce as it brings in revenue.  During the Revolutionary War, the Founders opposed the imposition of taxes for the purpose of raising a revenue where it was not a bona fide regulation of imperial commerce, but NFIB v. Sebelius has brought before us (or, at least, made us conscious of) the matter of regulations -- of something other than commerce among the several states -- which are not bona fide revenue-raising levies.  The overlap between taxes and regulation did not stymie the First Continental Congress.  Maybe we should follow its lead, and draw the line at the boundary between good faith and bad.

Gibbons v. Ogden and NFIB v. Sebelius

Please forgive the absolute lack of context:

"In imposing taxes for State purposes, they are not doing what Congress is empowered to do. Congress is not empowered to tax for those purposes which are within the exclusive province of the States."

Here is a link, in case you are interested in knowing what the Court was actually considering.  I guarantee that this would qualify, at best, as obiter dicta, but still ...

Friday, July 13, 2012

McCulloch v. Maryland and NFIB v. Sebelius

I just re-read McCulloch v. Maryland for the first time since the Supreme Court decision on the health care bill was "handed down," and I was surprised to find that the reasoning, though not necessarily the holding, of McCulloch was very arguably hostile to the understanding of the federal taxing power that was employed by Chief Justice Roberts in his opinion.  (I should admit up front that other parts of the McCulloch opinion tend to favor holding the taxing power to nevertheless extend beyond the distinctions recognized in McCulloch, so I am not making the claim that McCulloch itself, as a precedent, stands or stood against Chief Justice Roberts' opinion -- the importance of it is that such crucial distinctions were understood and recognized early in the Constitution's existence.)

On its face, McCulloch may seem to have little similarity to the health care case, NFIB v. Sebelius -- it concerns the extent of the power of the states to impose a tax directly and specifically on an enterprise of the federal government (which the Court had just determined to be constitutional), and the extent and contours of the power of Congress to impose taxes was not even considered.  However, at several points, the Court recognizes that a tax for certain purposes, or with certain effects and apparent purposes, may differ from other taxes in a crucial legal way.

"That the power to tax involves the power to destroy; that the power to destroy may defeat and render useless the power to create; that there is a plain repugnance in conferring on one government a power to control the constitutional measures of another, which other, with respect to those very measures, is declared to be supreme over that which exerts the control, are propositions not to be denied. But all inconsistencies are to be reconciled by the magic of the word confidence. Taxation, it is said, does not necessarily and unavoidably destroy. To carry it to the excess of destruction, would be an abuse, to presume which, would banish that confidence which is essential to all government. But is this a case of confidence? Would the people of any one state trust those of another with a power to control the most insignificant operations of their state government? We know they would not. Why, then, should we suppose, that the people of any one state should be willing to trust those of another with a power to control the operations of a government to which they have confided their most important and most valuable interests? In the legislature of the Union alone, are all represented. The legislature of the Union alone, therefore, can be trusted by the people with the power of controlling measures which concern all, in the confidence that it will not be abused. This, then, is not a case of confidence, and we must consider it is as it really is."

The part about the power to tax involving "the power to destroy" is well-known, but in the passage above, we find Chief Justice Marshall recognizing that taxes involve not only a power to destroy, but also "a power to control."

The (McCulloch) opinion continues,

"If we apply the principle for which the state of Maryland contends, to the constitution, generally, we shall find it capable of changing totally the character of that instrument. We shall find it capable of arresting all the measures of the government, and of prostrating it at the foot of the states. The American people have declared their constitution and the laws made in pursuance thereof, to be supreme; but this principle would transfer the supremacy, in fact, to the states. If the states may tax one instrument, employed by the government in the execution of its powers, they may tax any and every other instrument. They may tax the mail; they may tax the mint; they may tax patent-rights; they may tax the papers of the custom-house; they may tax judicial process; they may tax all the means employed by the government, to an excess which would defeat all the ends of government. This was not intended by the American people. They did not design to make their government dependent on the states."

The same applies to the issues of NFIB v. Sebelius.  Although freedom and individual choice are not made the supreme law of the land by the Constitution (though they are protected by it, to great extent), it can be doubted that the American people intended to subject every aspect of their conduct to the control of the federal government pursuant to the taxing power, just as it can very reasonably be doubted that they intended to subject the power of the federal government to the legislative powers of the individual states.  As one ought to intuitively sense, the power to tax is not a power to lay any conceivable amount of tax on any selected person or class of persons (or all people in the United States) and according to any scheme or on any basis that Congress could conceivably choose.

A principle is concerned, here, that I doubt was fully understood and developed at the time of the Constitution's drafting and ratification (and which I am not sure that I fully understand or have fully developed, yet), but it is nonetheless implicated by the Constitution: that the power to tax is a power to raise revenue, and that taxes levied for that purpose and pursuant to that power have certain attributes that distinguish them (and the incidental incentives and disincentives created by them) from taxes which are designed and levied so as to control human conduct as a general matter, or to reward or punish, or to assist or destroy.  Exactly what those attributes are, I cannot yet say -- as I admitted in an earlier post, Congress certainly should (and, as a logical matter, must) have a certain degree of discretion in deciding the extent to which it taxes what, and with what exceptions, and what exemptions, deductions, and credits, if any, it will allow, among other details.  I do not believe that it can be absolutely indifferent between all interests and all courses of conduct, and I doubt that a default mode or rate of taxation will ever be possible to discern.  Nonetheless, there must be outer limits to that discretion, restraining the use of taxes to roughly its proper purpose of raising a revenue (in ways that do not arrogate to Congress power and control that no one has ever validly given to it).  Otherwise -- if we cannot recognize anything that satisfactorily divides a tax from a law that mandates or prohibits, so long as the penalty is monetary and the violator is not given a trial -- what prevents Congress from effectively making an ex post facto law, where the penalty is a tax, or a bill of attainder or bill of pains and penalties, so long as the fine or forfeiture involved is characterized as a tax?  (Chief Justice Roberts attempted to explain why he accepted the penalty in the NFIB case as a tax, but the reasons he offered focused on forms, not substance.)

Finally, the opinion recognizes the distinction between a general tax which might happen to fall on the bank on the same terms as on everyone else, and one which is imposed specifically on the bank:

"This opinion does not deprive the states of any resources which they originally possessed. It does not extend to a tax paid by the real property of the bank, in common with the other real property within the state, nor to a tax imposed on the interest which the citizens of Maryland may hold in this institution, in common with other property of the same description throughout the state. But this is a tax on the operations of the bank, and is, consequently, a tax on the operation of an instrument employed by the government of the Union to carry its powers into execution. Such a tax must be unconstitutional."

Again, it does not necessarily follow from this that the individual mandate, if accepted as a tax, is unconstitutional; it would be necessary to conclude also that such a regulatory tax falls outside the scope of the taxing power. What McCulloch does, however, is stand for the notion that it is possible for the Court to distinguish between taxes which are intended or designed to constrain, restrain, or destroy, on the one hand, and taxes for the purpose of raising a revenue, and the incidental incentives that follow them, on the other.

Eventually, this will be important, because once this legal issue has been given more thought and attention, it will no longer be possible for a Chief Justice of the Supreme Court of the United States to be satisfied that a rule enforced by a fine is nothing more than a tax, simply because it is collected by the IRS, does not observe due process requirements (because it is to be collected "in the same manner as taxes"), does not have a scienter requirement (which, unfortunately, is not as reliably connected with modern penal statutes as the Chief Justice seemed to think -- why would a characteristic that penal statutes tend to have but are not presently required to have, and which nothing prevents a genuine tax from having, help to distinguish a penal statute from a tax?), is of a certain magnitude (the question of the magnitude of tax rates being committed entirely to the discretion of Congress, if anything is ... at least so long as the government is not accumulating an utterly unjustifiable surplus for no legitimate reason, or taxing at rates calculated to bring about our annihilation, for whatever reason), is located in the "Internal Revenue Code" portion of the United States Code, is adjusted in ways which happen to be associated with taxes, right now, or is defended by government lawyers who say that they do not consider nonobservance of the rule to be unlawful -- of which factors, most have more to do with whether Congress thought of the penalty as a tax, or wanted it to be thought of as a tax, than whether it ought to be considered a legitimate use of the taxing power of Article I, Section 8.

Friday, July 6, 2012

Francis Lieber on Fundamental Laws and the Supremacy of Law

“The supremacy of the law is an elementary requisite of liberty. All absolutism spurns, and has a peculiar dislike of, the idea of fundamental laws. Aristotle enumerates as the fourth species of government that in which the multitude and not the law is the supreme master; James II. claimed the dispensing power, and Louis Napoleon affirmed, when yet president under the republican constitution which prohibited his re-election, that if the people wanted him to continue in office he should do it nevertheless, and all his adherents declared that the people being the masters could do as they liked, which reminds us of the Athenians who impatiently exclaimed: ‘Can we not do what we list?’ when told that there was a law forbidding what they intended to do.”

Tuesday, July 3, 2012

The American Revolution, and the distinction between taxes for the raising of revenue and taxes for the regulation of commerce

It is time that I comment on last Thursday's Supreme Court decision on the health care bill ("for I cannot call it a law"). There are, of course, many things to be said about it, but I'll begin with something that I think cuts to the center of Chief Justice Roberts' misstep.

There is a difference between the use of a tax to raise revenue and the use of a tax to regulate commerce. This was not only well-established when the Constitution was written -- it was an important principle in motivating those who formed the early resistance to taxation of the colonies by Great Britain. The Americans, at the time, objected to the use of taxes by Great Britain for the purpose of raising a revenue without the consent of the colonies, not to the use of taxes for certain regulatory purposes, but they definitely recognized the distinction between the two. In the Declaration and Resolves of the First Continental Congress in 1774, they qualified their objection to taxes (without consent of the colonies) by stating that "from the necessity of the case, and a regard to the mutual interest of both countries, we cheerfully consent to the operation of such acts of the British parliament, as are bona fide, restrained to the regulation of our external commerce, for the purpose of securing the commercial advantages of the whole empire to the mother country, and the commercial benefits of its respective members; excluding every idea of taxation internal or external, for raising a revenue on the subjects, in America, without their consent."

Congress, of course, must enjoy a certain latitude in choosing the basis on which it levies taxes. If Congress were not meant to have discretion in this, I have no idea what scheme of taxation it ought to be forced to resort to by default. Additionally, unless Congress was meant to have discretion, I would have expected the Constitution to have been more specific in the terms by which it granted this power. To some extent, the result must be that Congress has some power, pursuant to its taxing power, to provide incentives and disincentives to certain courses of conduct -- if income is taxed, for example, then it is somewhat less advantageous to earn income; if property is taxed, that reduces the desirability of owning property; if the purchase of certain products is taxed, the incentive to purchase those products is reduced. Nevertheless, it is inconceivable that the power delegated to Congress by those who wrote and approved the Constitution extends its discretion in matters of taxation to the use of taxes to regulate all things. This would be so contrary to the principles, language, history, and structure of the Constitution that the Chief Justice ought to have recognized the absurdity of it in an instant -- I am not even aware of any Antifederalist who objected to the possibility of the use of the taxing power to force people to buy a product.

It is true that long-standing precedents of the Supreme Court have failed to make the necessary distinction between a tax and a fine, but the Supreme Court is obligated to correct its precedents, when necessary, in order to follow the Constitution. In this case, the correction was needed, but the Supreme Court failed to recognize what was established (and declared by the First Continental Congress, even) nearly thirteen years before the Constitution was approved by the Constitutional Convention, and over fourteen years before it took effect. I think that the principle is obvious enough that there is no excuse for this failure.