Tuesday, December 2, 2008

TAXATION WITHOUT REPRESENTATION

Guest column by Glenn Neal, retired-lawyer-turned-writer


As President-elect Barrack Obama moves toward his inaugural, and maybe the highest taxes in history, there is a more sinister taxing body many people don't even know about. Do you remember voting for a delegate to represent you on the United States Supreme Court? I don't.

Chief Justice John Marshall wrote, "An unlimited power to tax involves, necessarily, a power to destroy; because there is a limit beyond which no institution and no property can bear taxation." The Supreme Court seems to have forgotten that.

In Missouri v. Jenkins (1990), the Court affirmed the right of federal courts to levy taxes. Justice Anthony Kennedy criticized that part of the decision giving the federal courts the power to levy taxes directly. He called it, "An expansion of power in the Federal Judiciary beyond all precedent. Today's casual embrace of taxation imposed by the unelected, life-tenured Federal Judiciary disregards fundamental precepts for the democratic control of public institutions."

There are also indirect taxes. When the courts require local governments to build new, more "humane" jails, for example, the argument is not about whether the court has jurisdiction to do that. It doesn't, actually--the Constitution confers no authority for the federal courts to impose unfunded mandates on the states. The court just assumes it has jurisdiction and the Supreme Court allows it to happen.

Direct and hidden taxes levied by the federal courts are separate from taxes levied by Congress. Over the past ten years, federal taxes enacted by Congress have averaged 19% of Gross Domestic Product (GDP), according to the Congressional Budget Office (CBO).

The director of CBO testified earlier this year that if entitlements continue to expand at their present rate, by the middle of this century the tax to pay for just three of the entitlements -- Social Security, Medicare and Medicaid -- will be 21% of GDP, up from 4.1 %in 2004. The cost of running the government, the military, foreign aid, the farm subsidies, the bailout and all other federal giveaways would be in addition to that.

So what can we do about it?

To believe that you can successfully "lobby" the average heroin addict to give up his habit voluntarily, without drastic intervention by some outside force, is naïve. To believe Congress or the Court will restrain itself from imposing taxes goes beyond naiveté to delusional. For there to be meaningful tax reform and/or limitedgovernment, there must be some draconian action by the people to impose limits that Congress--and the Supreme Court--cannot avoid.

President Lincoln at Gettysburg called on those gathered there, "to be dedicated here to the unfinished work . . . that this nation,under God, shall have a new birth of freedom--and that government of the people, by the people, for the people, shall not perish from the earth." We need to follow his lead.

Stay with me, I'll tell you how.

2 comments:

Johnny Smoke said...

I think I know where you're going with this but... I guess we'll have to wait and see?

The first sentence of this article was unnecessary and muddies the water of your argument. You subtly implicate there's a connection between Obama and the highest taxes in history.

I know your point is regarding hidden taxes but I think it's also important to point out the fact that the American taxpayer is about to get hit with the largest tax burden in history has nothing to do with the new democratic prez. Thanks to Wall Street and prior administrations we're going to get hit with a $10 trillion dollar tax bill when this is all over.

Where do I come up with this number? NYT recently said that to make up for the drop in consumer spending the govt. will have to pump $1 trillion per year to prop up the GDP. As we know with most of this we're being low-balled and from what I hear the number is more like $2.2 trillion. Many prognostics are saying it will be 5 years before we're out of this business cycle and there you have it.

Maria Hsia Chang said...

Glenn Neal responds to "Johnny Smoke":

Your point about my Obama comment muddying the water in this essay is
useful and I will keep it in mind for future posts. However, I believe that the statement about Obama raising taxes is true.

I won't presume to know what he intends to do--presidents often do not follow their campaign promises once in office. However, with the cost of the bailout, his promise to remove the cap on payroll taxes for Social Security on high income people, increase taxes on the "rich" (which includes small businesses that employ people) and will taxes is inevitable.

The point of the essay is we will may get to see too soon whether John Marshall was right when he said the power to tax is the power to destroy.

Glenn