Are state tax caps unconstitutional?

flag-of-coloradoIn a push-back against the tyranny of conservative tax caps that prevent some state and local tax increases except by referendum, activists and some legislators in Colorado are trying to persuade the courts to hear a case that says these restrictions are Federally unconstitutional.

Why? Because of the U.S. Constitution’s slightly vague requirement that state governments be “republican” in nature (i.e. ruled by representatives instead of the people directly) and that the Federal government must ensure compliance:

Article 4. Section 4. The United States shall guarantee to every State in this Union a Republican Form of Government…

 
This clause has generally only come up as a formality when Congress has to admit a new state to the union. In the past, the Federal courts have refused to hear cases on this issue of what is or isn’t a “republican” form of government in the states, since most of the disputes are openly political fights between rival state camps rather than legitimate constitutional cases.

But they seem to have taken an interest over the extreme case where Colorado legislators have been legally powerless to raise any taxes whatsoever without the consent of a popular referendum, for over two decades.

Unlike California where many — but not all — taxes end up going to ballot, or other states where legislators can only raise taxes by a certain fixed percentage every year without a ballot question, Colorado’s constitution completely removes that power from its legislature — and even the local governments — and hands it over to the voters.

…no unit of government, from the legislature to local boards, can raise taxes or approve a new tax without a vote of the people. In addition, if existing taxes bring in revenue greater than “inflation plus the percentage change in state population” for the year previous, that “surplus” must be refunded to the taxpayers. In short, TABOR froze state government in its existing shape as of 1992, and left the legislature to flounder helplessly.

 
First of all: That’s a genuinely ridiculous constitutional amendment to put in place, given that it doesn’t even allow the government to raise more money through natural growth of revenues resulting from economic growth, without even increasing the tax rate. Sadly, it’s not a huge surprise, since the anti-tax conservative fanatics in Colorado Springs have been trying to make the state a low-tax paradise for ages, even at the cost of crumbling roads and other failures.

Second of all: Since taxing and spending are essentially the core powers of a sovereign government, it’s pretty easy to develop a case arguing that it’s an un-“republican form of government” to prevent the elected representatives of the State of Colorado from doing any taxation.

That doesn’t necessarily mean the courts will ultimately agree or find in favor, but it’s enough to get the case heard in the first place. The U.S. 10th Circuit Court of Appeals ruled for the first time in Federal court history last week that the plaintiffs have standing (i.e. have been directly harmed in some way by the status quo) to bring a case on Article 4 Section 4 grounds. The Court said that:

“With respect to taxing and revenue, the General Assembly allegedly operates not as a legislature but as an advisory body, empowered only to recommend changes in the law to the electorate.”

 
Again, they haven’t agreed definitively that this allegation is true, just that it is a plausible allegation about core functionality (irrespective of political alignment) — and enough to allow a case to go forward to determine whether or not it is unconstitutional.

And as The Atlantic’s Garrett Epps said on this debate:

As a con-law nerd, I’m rooting for a trial. A state whose legislature can never pass a tax strikes me as a kind of anarchy ruled by sporadic popular vote, rather than anything that qualifies as representative government.”

Bill Humphrey

About Bill Humphrey

Bill Humphrey is the primary host of WVUD's Arsenal For Democracy talk radio show and is a Senior Editor for The Globalist. Follow him @BillHumphreyMA on twitter.
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