Maybe this will be one of those times.
Posted on 01/30/2018 7:18:20 PM PST by Tolerance Sucks Rocks
Some leading proponents of centralized federal power have caught that ole-time states’-rights religion.
New York Governor Andrew Cuomo, for example, has been a fervid defender of ObamaCare and other congressional programs invading traditional areas of state control. But, he says, Congress violated the rules of federalism when its new tax law capped income tax deductions for state and local taxes paid (SALT deductions).
Are Cuomo and his allies correct? Does the Constitution require Congress to include SALT deductions in its income tax laws?
Some cite a 1985 speech by the late Senator Daniel Patrick Moynihan (D.-N.Y). arguing for the SALT deduction. But that particular speech is cast in generalities, and does little to address specific constitutional questions.
They also point to Controller v. Wynn, a 2015 case in which the Supreme Court struck down a Maryland law taxing out-of-state income. But that case centered on interstate commerce issues not present in the new tax law.
Still others contend that the original Constitution banned income taxes until the Sixteenth Amendment approved them, and that amendment would not have been approved unless it implicitly required SALT deductions. For several different reasons, however, this argument is extraordinarily weak.
First, its initial premise is wrong: The original Constitution did not ban income taxes. On the contrary, it granted Congress broad authority to impose “direct taxes,” including income taxes. The only restriction was that if Congress imposed a direct tax it had to divide the expected revenues among the states by population. The Sixteenth Amendment eliminated that restriction, but Congress always had enjoyed power to impose an income tax.
Second, cited evidence for the founders’ supposed anti-income tax view actually cuts in the opposite direction. According to one Cuomo ally, “It was feared that the new federal income tax would ‘monopolize’ all of the country’s resources, leaving little money left in state coffers ... Alexander Hamilton outlined this precise fear as early as the 1780s, in Federalist Paper No. 31.”
What the writer fails to mention is this fear arose chiefly among the Constitution’s opponents, and that Hamilton “outlined” it only to rebut it. Specifically, Hamilton pointed out that the Constitution tasked the federal government with national defense and internal order—and that because it was impossible to predict how much revenue would be needed for such functions, additional limits would be unworkable.
For better or worse, most of the founders agreed with Hamilton. They repelled efforts to further curtail Congress’s taxing authority.
Finally, there is little basis to the claim that, “the 16th Amendment likely would not have been ratified without SALT deductions in mind.”
When constitutional language is unclear or exact definitions uncertain, courts may clarify the terms by examining common practices and representations considered part of the “ratification bargain.” But the presence of SALT deductions in short-lived tax bills in 1862 or 1894 tells us little about how the ratifiers understood the Sixteenth Amendment decades later. Moreover, on those rare occasions when legislatures or conventions ratify an unclear measure on the basis of particular meanings, they can say so — which, in the case of the Sixteenth Amendment, they apparently did not.
More importantly, the Sixteenth Amendment is not ambiguous or uncertain. It is straightforward and clear: “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”
Where in this amendment, pray tell, lurks any mandatory SALT deduction?
Opponents of the new tax law are right to be concerned about federal overreaching, but they are barking up the wrong tree. They are inventing a fictional limit on federal authority while ignoring real ones.
For example, when drafting the Affordable Care Act Congress permitted the Senate to insert economic regulations in a tax bill, thereby violating an explicit constitutional rule called the Origination Clause. That violation has not induced Cuomo and his allies to withhold their support. They also have failed to object when Congress ignores other constitutional limits on its powers.
Governor Cuomo and his allies should honor the Constitution’s real restrictions on federal power. When arguing constitutional questions, however, they should not invent non-existent ones.
Robert G. Natelson is a retired constitutional law professor, senior fellow in constitutional jurisprudence at the nonprofit Independence and Heartland Institutes and author of a major scholarly article on the Constitution’s taxation power.
BING!
Tax deduction limits vs Strategic Arms Limitation Treaty?
Finally, there is little basis to the claim that, “the 16th Amendment likely would not have been ratified without SALT deductions in mind.”
Most states including New York did not have an income tax in 1913. New York instituted theirs in 1919.
Do they even hear what they are saying? That taxing some people more than others is unconstitutional? Lord, please let this go to the SC and have them rule that the progressive income tax is unconstitutional.
Tax deductibility is phased out and the AMT overrides it at high income levels - by laws which the Democrats loved. Are Constitutional rights phased out if you make too much?
Most feathers, least hissing.
And that’s pretty much what Federal taxation will be — rotate the pain — till the underlying problems are fixed, and that will be at a social level.
The very wealthy are used to buying more than one home to take advantage of the mortgage & property tax federal income deductions. Now that the wealthy are getting stuck paying more, you hear a lot of complaints from the elite’s donor class!
Nice article and 100% on the money. Too bad that President Ninth Circuit could care the less about the Constitution or the law. President Ninth Circuit has an agenda, the law can be manufactured on the go to support/enforce that agenda.
DACA passed by executive order -unconstitutional but President Ninth Circuit says it is not only a ok but now set in stone law. Congress pass our laws and the President sign them into law? That is soooo yesterday. A leftist pen and a phone are forever.
Restricting refugee immigration into the US? President Ninth Circuit says that’s discrimination and the everyone in the world has more rights under U.S. law that U.S. citizens. Supreme Court overrules?!? President. Ninth. Circuit rules not anyone else.
Cut off funding to cities and states who wantonly disobey Federal
Immigration law? President Ninth Circuit doesn’t give a damn about the law, it is the law!!! Funding is ordered restored.
Enjoin something solely within the Ninth Circuit? Now way, President Ninth Circuit’s ruling are nationwide all the time!!
Build a wall?!? President Ninth Circuit will that. Just given them a snail darter or something living along the Mexican border and I am sure that an environmental law can be found to stop that one forever. So sayeth SUPREME LEADER NINTH CIRCUIT.
Next up: Supreme Leader Ninth Circuit will decide what taxes you pay by striking down the ENTIRE tax reform act. Crash the economy?!? Supreme Leader Ninth Circuit could care.
Some leading proponents of centralized federal power have caught that ole-time states’-rights religion. New York Governor Andrew Cuomo, for example, has been a fervid defender of ObamaCare and other congressional programs invading traditional areas of state control. But, he says, Congress violated the rules of federalism when its new tax law capped income tax deductions for state and local taxes paid (SALT deductions).
But some good, trump-supporting folks are getting caught up in that cap. I would, retroactive to Jan. 1, make SALT = 1/2 * (income + property + sales). Some people would claim half of what they claimed before; some would claim a little more than half if they included all three, rather than the either-income-or-sales tax standard that currently prevails. But many more good people in these high tax states would be able to itemize, while further tax increases on the state and local level would hopefully be discouraged.
They should have gotten rid of that disgusting AMT, rather than simply making it apply to fewer people.
All three = all three categories: income, sales and property.
Maybe this will be one of those times.
This isn’t over.
This GOLDMAN SACHS TEMPORARY TAX CUT/MIDDLE CLASS TAX INCREASE is clearly a 14th Amendment violation.
The reason why the American communists haven’t taken this to Court yet is that Trump has them off balance, and they are slow on the uptake.
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