Friday, September 14, 2007
Perpetuating the Delusion
Current mood: amused
Category: School, College, Greek
I chose KENTUCKY DEPT. OF REVENUE v. DAVIS, which is a controversy over the so-called “Dormant Commerce Clause.” Here’s the background on the case from the Court of Appeals of Kentucky:
So the state of Kentucky taxes income earned on out-of-state bonds, but not income earned on its own bonds. Interesting. The Davises, I presume, are holders of out-of-state bonds, and are being “unfairly” taxed on the income earned on those bonds. Fine. So the Davises sue Kentucky over this alleged unconstitutional tax scheme and win at the State level. The State of Kentucky then appeals to the Supreme Court of the United States, giving rise to my assignment.
I was attracted to this case because I want to learn as much as I can about the Commerce Clause. My observation is that the Commerce Clause is the most consistently and shamlessly exploited loophole in the history of American jurisprudence (not that I’m an expert in the history of American jurisprudence yet, but try and roll with me on this, OK?).
In 1942, the Supreme Court ruled in Wickard v. Filburn that if a man grows wheat on his own land for his own consumption, this wheat is subject to Congressional regulation under the Interstate Commerce Clause. Note that the wheat neither crossed a state line, nor was bought or sold in a commercial transaction–yet somehow it was subject to regulation under the “Interstate” “Commerce” clause. Why, you ask? Well, Justice Robert H. Jackson explained:
Right. So if whatever you are doing “competes with” interstate commerce, Congress can regulate it. Anything. Are you brushing your teeth with baking soda? Not so fast! You are competing with toothpaste in commerce. Thinking about weaving a scarf? Think again. Your Congressman could be drawing up the appropriate bills right now. Get it?
Richard Nixon’s War on Drugs is premised on Commerce Clause authority . See 21 U.S.C. §801:
(6) Federal control of the intrastate incidents of the traffic in controlled substances is essential to the effective control of the interstate incidents of such traffic.
After having dispensed with the notion that Congress’s authority to regulate interstate commerce is at all limited to the regulation of “interstate” “commerce“, it’s tough to imagine why Congress felt the need to base further regulatory authority on its on own ineptitude. Yet they don’t hesitate to announce: “Well, since we can’t tell the difference between interstate commerce and intrastate commerce, we’re just going to regulate all of it. …May the Lord know his own!” –and just like that, the courts go along. Oy.
So I took on this case,
The issue in DAVIS is the so-called “Dormant Commerce Clause”. Essentially, if the Supreme Court deems the activity of any state to unjustifiably prejudice commerce among the states, then the court will deem this activity to be in violation of the Commerce Clause. Sounds good, but there is just one problem: The Commerce Clause is an Article I Congressional Power, not an Article III Supreme Court Power! The clause reads: Congress shall have the Power … to regulate Commerce … among the several states.” It does not read ”
So the state of Kentucky wishes to convince the court that its taxation scheme does not violate the Commerce Clause. The argument seems straightforward to me:
2) Observe that the power to regulate interstate commerce is an Article I Congressional power, and not an Article III Supreme Court power. Therefore,
3) the Court must overrule every ill-conceived decision it has made on the matter since 1824 and leave the regulation of Interstate Commerce to Congress where the Constitution placed it.
It sounds like a slam dunk to me. The only problem is that, for this exercise, my friend Noah is arguing for the state of Kentucky. I’m arguing for the Davises. I need to formulate a counter-argument. So far, all I’ve got is:
2) Everybody esle is regulating interstate commerce, so why shouldn’t you? Therefore,
3) the Court should continue its 183-year delusion that the regulation of commerce is an Article III Supreme Court power.
It could use a little of what my comrade Beth would call “a Hallmark tweaking”, but I think I can make it work.
The upshot is that I get to argue on behalf of taxpayers who believe that their state’s tax laws are unfair. I, of course, believe that every tax is an inherently unfair, government-sanctioned theft. I would love to argue on behalf of the Davises that Kentucky’s tax laws are unfair. The only obstacle I can see from here is that pesky Constitution.
The blowback, of course, is that Kentucky can easily fix its so-called “Dormant Commerce Clause” violation by taxing everyone on the full amount of the income from their bonds! So for all those Kentucky-bond-owning Kentucky residents out there in cyberspace, if you happen to notice that all of a sudden your state is charging a tax on the income you earn on your Kentucky bonds, well, you can go ahead and thank Mr. George W. Davis for that, and the Supreme Court of the United States,
Well, not me, but……
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