The Volokh Conspiracy

Below, my colleague Orin offers his predictions as to whether the Supreme Court will restore the “lost” Privileges or Immunities Clause to constitutional law. He may well be correct in predicting but a single vote for that proposition, but I remember when many predicted Angel Raich would get 0–1 votes for her Commerce Clause challenge to the Controlled Substances Act. Instead, in addition to Justice Thomas’s vote, she also received the support of Chief Justice Rehnquist and Justice O’Connor–in a “marijuana case” no less. True, her challenge did fail, as widely predicted, but she definitely beat the spread.

But note that, by Orin’s count, only one Justice is willing to follow the text of the Constitution. According to him, the others will decide the case based on stare decisis–i.e. their own ancient decisions (Scalia), the potentially revolutionary implications of reviving the actual text of the Constitution (Roberts & Alito, the latter of whom gave a speech just last week on the importance of Justices following the actual text as it appears to the naked eye), his personal “style” (Kennedy), and undesirable results (Breyer, Ginsburg, Stevens & Sotomayor). How sad it is that one can implicitly criticize a brief to the Supreme Court of the United States for relying on the text of the Constitution. Although Alan Gura’s brief does stress both original public meaning and original intent, under the relevant precedent Orin thinks the Court will or should (?) follow, the alternative is not that the Privileges or Immunities has a modern meaning but has no meaning whatsoever!

I wonder how Orin would have predicted the grant of cert, which stated the question presented as follows:

Whether the Second Amendment right to keep and bear arms is incorporated as against the States by the Fourteenth Amendment’s Privileges or Immunities or Due Process Clauses.

When choosing between the two pending cases in the Seventh Circuit, why would four Justices grant cert on the McDonald case in which the challenge was focused on the Privileges or Immunities Clause and deny cert on NRA case, which confined its argument to the Due Process Clause? Why would they have rejected the City of Chicago’s proposal which limited the question presented to Due Process?

Faced with this background and the actual question presented, I wonder how would Orin have briefed the case. Would he have offered any of the analysis in his post? Would he have told the Court just to ignore the Privileges or Immunities Clause? Or might he not have assumed as an experienced litigator that the Justices could write a Due Process Clause “incorporation” opinion in their sleep–heck, their clerks could write that opinion in their sleep–and then devoted the bulk of his brief to describing the meaning of the Privileges or Immunities Clause in context? 

Ultimately, Orin’s analysis is based in what he thinks will be the Justices’ dislike for the interpretation of the Privileges or Immunities Clause described in the brief. The conservatives will hate the references to “natural rights” while the liberals will hate the references to “property.” Fair enough. But notice that the brief does not offer Alan Gura’s theory of the Privileges or Immunities Clause. All the phrases to which Orin objects are taken from quotes from the historical sources. Was Gura supposed to conceal these sources from the Court or faithfully report them? Orin may think this case is a hoot, but for the parties and the Court it is serious business.

To see where the references to “natural” and “property” originate consider the rights protected from state discrimination by the Civil Rights Act of 1866, which the Privileges or Immunities Clause was intended, in part, to constitutionalize:

to make and enforce contracts, to sue, be parties, and give evidence, to inherit, purchase, lease, sell, hold, and convey real and personal property, and to full and equal benefit of all laws and proceedings for the security of person and property

Or consider this portion of Bushrod Washington’s opinion in Corfield v. Coryell identifying “privileges and immunities” to which Art. IV, sec 2 refers, a quote repeatedly offered in Congress to help identify “privileges or immunities”:

What these fundamental principles are, it would perhaps be more tedious than difficult to enumerate. They may, however, be all comprehended under the following general heads: Protection by the government; the enjoyment of life and liberty, with the right to acquire and possess property of every kind, and to pursue and obtain happiness and safety; subject nevertheless to such restraints as the government may justly prescribe for the general good of the whole.

Washington merely borrowed the canonical formulation of natural rights expressly affirmed in numerous state constitutions at the time of the founding and leading up to the Civil War (each of which became or was admitted as a free state):

Massachusetts: “All men are born free and equal, and have certain natural, essential and unalienable rights; among which may be reckoned the right of enjoying and defending their lives and liberties; that of acquiring, possessing, and protecting property; in fine, that of seeking and obtaining their safety and happiness.” New Hampshire: “All men have certain natural, essential, and inherent rights; among which are—the enjoying and defending life and liberty—acquiring, possessing and protecting property—and in a word, of seeking and obtaining happiness.” New York: “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.” Pennsylvania: “That all men are born equally free and independent, and have certain natural, inherent and unalienable rights, amongst which are, the enjoying and defending of life and liberty, acquiring, possessing and protecting property, and pursuing and obtaining happiness and safety.” Vermont: “That all Men are born equally free and independent, and have certain natural, inherent and unalienable Rights, amongst which are the enjoying and defending Life and Liberty; acquiring, possessing and protecting Property, and pursuing and obtaining Happiness and Safety.” Ohio: “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, acquiring, possessing and protecting property, and pursuing and obtaining happiness and safety. . . .” Indiana: (1816): “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 pursing and obtaining happiness and safety.” Illinois (1818): “That all men are born equally free and independent, and have certain inherent and indefeasible rights, among which are those of enjoying and defending life and liberty, and of acquiring, possessing and protecting property and reputation, and of pursuing their own happiness.” Iowa (1846): “All men are by nature free and independent, and have certain unalienable rights, among which are those of enjoying and defending life and liberty, acquiring, possessing, and protecting property, and pursing and obtaining safety and happiness.” Wisconsin (1848): “All men are born equally free and independent, and have certain inherent rights, among these are life, liberty and the pursuit of happiness. . . .”

This is scary stuff indeed. 

Of course, all that is before the Court is the protection of the right to keep and bear arms. In this case, the Court need not decide how or even whether the other privileges or immunities of citizens should be judicially protected. But the Court now has rich doctrinal resources by which it can protect both the rights enumerated in the Constitution and unenumerated fundamental rights that are as “deeply rooted in our nation’s tradition and history” as are these rights. As the Supreme Court, they may not be as afraid to transfer these constitutional doctrines over to the correct clause as Orin predicts. Of course, that is not likely to happen unless the parties or amici inform the Court of the meaning of the now-lost Privileges or Immunities Clause. The sort of “legal realist” analysis offered by Orin in his post would simply be of no assistance to the Court in reaching its decision. Nor would it help much in oral argument. But who knows? As a mere prediction, it could turn out right, in which case Orin can say he told us so.

Journalist Jeff Benedict is the author of an excellent book on the Kelo condemnations, that I reviewed here. In this Hartford Courant op ed, he discusses the Pfizer Corporation’s recent decision to close down its headquarters in the New London, Connecticut neighborhood where it had previously played a key role in instigating the notorious condemnations that led to the Kelo litigation:

I’m often asked if I’d consider writing a novel. My answer is always no, truth is better than fiction ... and often harder to swallow.

Consider the bitter pill that Pfizer Inc. slipped New London this week. Barely a decade after constructing a $300 million research and development headquarters in the city, the pharmaceutical giant announced it was shutting down the facility. Just like that, New London will lose 1,400 jobs and become home to a gigantic, vacant office park that sprawls over a 24-acre campus.

Never mind that an entire residential neighborhood was bulldozed by New London to change the look of a 90-acre landscape around the Pfizer campus. And never mind that along the way the city used eminent domain to drive out homeowners and then fought a costly eight-year legal battle against holdouts Susette Kelo and her neighbors that went all the way to the U.S. Supreme Court....

After all the shouting, the developer ran out of money and the city has zero prospective replacements. Barren weed fields are all that exist where homes once stood.

Now that all of New London’s best-laid plans have been laid to rest, Pfizer is leaving, too. It’s tempting to suspect a connection. After all, let’s not forget that Pfizer never wanted to make its corporate home on the edge of New London’s urban Fort Trumbull neighborhood. “Pfizer wants a nice place to operate,” one well-connected Pfizer employee famously told a reporter shortly after New London officials courted the drug company. “We don’t want to be surrounded by tenements.”

What Pfizer wanted next door is what drove New London’s plan to raze buildings and replace them with a five-star hotel, a health club and spa, office space and upscale housing. At one point, Pfizer even talked about guaranteeing 50 percent occupancy at the hotel. The state did its part to sweeten the deal by kicking in close to $100 million in public money to the project, some of which was used to acquire and demolish private homes.

In the end, the Pfizer facility is the only thing that went up, although many would argue that a lot of taxpayer money went up, too — in smoke, that is. At least Pfizer employees haven’t had to look at tenements for the past 10 years. But how are those brownfields looking about now? 

I have previously written about Pfizer’s withdrawal from New London and its role in the Kelo takings in this series of posts, and in a recent New York Times forum.

Jay-Z and Alicia Keys sing “there’s nothing you can’t do” in New York.  That may be true for Hova, but it’s not supposed to be true when it comes to eminent domain under New York law.  A purported “public purpose” is insufficient to seize private property for economic development.  So government authorities resort to “blight” designations to condemn private property they would like to redevelop.  This is the strategy being used for the Atlantic Yards Arena and Redevelopment Project in Brooklyn.  Yet as Nicole Gelinas reports, the blight designation here is a bit of a stretch, as it relies upon the condition of the Metropolitan Transit Authority’s railyards, occasional weeds and grafitti, and the alleged “underutilization” of local properties.  As Gelinas notes, if “underutilization” is sufficient to constitute blight, then nearly any proposed economic redevelopment project could utilize eminent domain under New York law.

The New York Times Room for Debate blog has a forum on the implications of Pfizer’s decision to abandon its New London headquarters. Pfizer and its New London facility had previously played a key role in instigating the condemnations that led to the Supreme Court’s decision to uphold the use of eminent domain for “economic development” in Kelo v. City of New London. My contribution argues that Pfizer’s role in the Kelo takings and their failure to produce any actual development bolsters the case for strengthening protection for property rights. Here’s an excerpt:

Far from producing the promised “development,” the condemnation of private property in New London under Kelo damaged the local economy by destroying homes and businesses and wasting taxpayer money.

This result should not have been surprising. Government planners who undertake “economic development” condemnations have strong incentives to approve takings that benefit well-connected interest groups, even if they end up destroying more development than they create. Usually, as in Kelo, those targeted for condemnation are poor or politically weak. 

I previously wrote about Pfizer’s role in the Kelo case and its recent withdrawal from New London here, here and here.

Over at the Land Use Prof Blog, property scholar Matt Festa has a good discussion of the implications of Pfizer’s decision to close down its New London headquarters for the ongoing debate over the use of eminent domain to promote economic development. As I explained in this post, the construction of this Pfizer facility was at the center of the firm’s successful efforts to lobby for the condemnations that eventually resulted in the Supreme Court’s controversial decision upholding “economic development” takings in Kelo v. City of New London.

Festa suggests that this experience, as well as other cases such as the notorious 1981 Poletown condemnations where some 4000 Detroit residents were forced out of their homes so that General Motors could build a new factory, may lead local governments to be more skeptical of economic development condemnations that depend on a single big firm for their viability:

Politicians and planners might be more cautious about hitching their redevelopment wagons to one big private entity. I’m as enticed as anyone by the idea of revitalizing a downtown/waterfront/etc. with a grand scheme that involves jobs, tax revenues, public-private partnerships, mixed-use development, walkable urbanism, transit, and the creation or enhancement of public space. But if the plan is based around promises from Pfizer, or GM, the incoming sports team, or any other single private entity or group, then the whole plan risks failure if the private actors decide to go elsewhere . . . When these plans fail to deliver, both the eminent domain power and the public fiscal resources are wasted.

I hope he is right. But I fear that this analysis may be too optimistic. The Kelo and Poletown takings occurred in large part because politically influential corporations (GM and Pfizer) lobbied for them in the first place. One of the designers of the Kelo development plan described Pfizer as the “10,000 pound gorilla” behind the taking (quoted in this article, pg 266). If the true purpose was to benefit these firms rather than promote development that benefits the general public, future “politicians and planners” might not be deterred from undertaking similar actions in the future merely because the promised long-term development could fail to materialize. To be sure, voters may eventually punish them at the polls. But, as I argued here and here, years are likely to pass before the project’s failure becomes clear. By that time, public attention is likely to have moved on to other issues, and the politicians who originally approved the taking may no longer even be in office.

It hasn’t gotten much media attention, but last week, Texas voters overwhelmingly approved Amendment 11, an eminent domain reform measure that purports to ban “economic development” takings of the kind the Supreme Court upheld in Kelo v. City of New London. Texas badly needs stronger protection for property rights, since it has a long history of eminent domain abuse, including recent examples documented by the Institute for Justice (the libertarian public interest firm that represented the property owners in Kelo) in this report.

Unfortunately, the new Texas law is one of a long series of eminent domain reforms that fall short of actually forbidding the kinds of abuses they supposedly target. The amendment does forbid the taking of property for “the primary purpose of economic development or enhancement of tax revenues.” , But it continues to permit condemnations in areas with “urban blight.” And, as I document in this article (pg. 2124), Texas is one of many states where the definition of “blight” is so broad as to include virtually any property that the government might want to condemn. Indeed, Texas’ definition counts as “blighted” any area that, due to a wide range of possible causes, creates an “economic or social liability to the municipality” where it is located. This includes any area that creates an “economic . . . liability” because of insufficient development. Furthermore, the new Amendment still allows the power of eminent domain to be wielded by private organizations if they are “granted the power of eminent domain under [state] law.” 

Amendment 11 is a small improvement over Texas’ previous almost completely toothless post-Kelo reform law (which I discussed in this article, pp. 2124, 2135–37). The main positive change is that “blight” now has to be shown on a property by property basis. Previously, local governments could simply declare an entire area blighted and then condemn any property within it, even if there was nothing wrong with that particular tract. However, the impact of this improvement is likely to be minor, at best, given the ease of proving the existence of proving “blight” under Texas’ definition of the term. Amendment 11 also closes the previous law’s loophole allowing takings for “community development.” However, the broad blight exemption undercuts this improvement as well. “Community development” takings can easily be couched as “blight” takings. 

Why did Amendment 11 turn out to be so ineffective? One possible explanation is that, under the Texas Constitution, a proposed amendment has to get the approval of two thirds of the state legislature before being submitted to a popular referendum. In my recent article on post–Kelo reform, I found that eminent domain laws that go through the state legislature are far less likely to impose meaningful constraints on condemnation than those that are enacted by an initiative process in which citizen groups can place propositions on the ballot directly. State legislators have strong incentives to water down eminent domain reforms so that takings that benefit influential interest groups can continue. And widespread political ignorance makes it difficult for voters to tell the difference between laws that actually ban economic development takings and those that merely pretend to do so, while allowing them to continue under a different name. 

The Pfizer Corporation has announced that it will close down its headquarters in New London, Connecticut. [HT: my former student Josh Blackman, and other VC readers]. As our regular readers may recall, Pfizer played a key role in instigating the notorious condemnations that led to the Supreme Court’s decision upholding the taking of private property for “economic development” in Kelo v. City of New London. Pfizer lobbied state and local governments to undertake the condemnation so that the land could be transferred to developers who would build facilities that were expected be useful to the firm and its employees. The head of the New London Development Corporation — the quasi-governmental agency that ordered the takings — had close ties to Pfizer and was married to a Pfizer executive.

The Kelo condemnations inflicted great harm on the people who lost their homes and businesses and led to the expenditure of some $80 million in public funds. To date, however, nothing has been built on the site, and there is no prospect that anything will be in the foreseeable future. Pfizer’s decision to leave New London makes it even less likely that anything productive will be done with the condemned land anytime soon. So far, the main beneficiaries of the Kelo takings seem to be the feral cats who have settled in the area. Far from producing the “economic development,” the Kelo condemnations have actually damaged the local economy by destroying taxpaying homes and businesses and expending large amounts of public money for no return.

For reasons I discuss in much greater detail in this article, this outcome should not be surprising. State and local governments that undertake “economic development” condemnations have strong incentives to approve takings that are expected to benefit well-connected interest groups even if they destroy more development than they create.

Last week I blogged about a very interesting article in the Manhattan Institute’s City Journal by Claremont Review of Books contributing editor William Voegeli titled “The Big-Spending, High-Taxing, Lousy Services Paradigm” (Autumn 2009).  It compared the tax-services models of California and Texas.  VC commenters were spirited as ever and raised a number of important questions.

Although I haven’t had the pleasure of meeting William Voegeli, I took the liberty of contacting him through the Claremont Institute and asked if he might have any additional thoughts for us, particularly responding to VC commenters.  Mr. Voegeli was kind enough to say yes, and has sent along the following response, below.  Let me add, on behalf of the VC community, myself as well as readers and commenters, our great thanks for engaging with us.  And let me add to the VC commenting community, that in the spirit of the original article, you might call Volokh Conspiracy a ... Low-Taxing, High-Services blog!  Mr. Voegeli:

Dear Prof. Anderson:

Thank you for bringing my City Journal article (http://www.city-journal.org/2009/19_4_california.html) on California and Texas to the attention of the Volokh conspirators, and for your generous and thoughtful analysis (http://volokh.com/2009/11/02/the-california-versus-texas-model-and-public-choice/) of the piece.  Your post elicited many . . . spirited comments.  It would be cumbersome to address them individually, but I can offer a few points that speak to some of the general questions your readers brought up.

My essay argues that it’s not enough to look at how much states and localities spend because how well they spend is very important.  I understand several people in the comments section to be saying that this principle applies to the tax side of the equation, too.  Thus, California’s problem is not so much that it is a high-tax state but, as one commenter says, that it is a “constrained-and-erratic tax” state.

That’s a fair point.  The combination of direct democracy and the state’s belief that vast optimism could overcome mundane realities left Californians believing they could somehow be “taxed like libertarians, but subsidized like socialists,” as Troy Senik recently said (http://www.nationalaffairs.com/publications/detail/who-killed-california) in National Affairs.  Not only did it prove impossible to achieve the best of both worlds, but the political impotence created by undertaking the effort helped bring about the worst of both: “In a grim irony, Californians are now being taxed like socialists and subsidized like libertarians.”

Proposition 13 is certainly not beyond criticism.  Some things need to be said in defense of the law and its advocates, however. Lots of poorly drawn laws and state constitutional amendments have been passed at the ballot box.  The ballot initiative is never going to be a precision instrument, however, and it’s unfair to hand the voters an axe and then judge their work as if they possessed a scalpel.

The best way to have averted the enactment of Proposition 13 would have been if California’s political establishment in 1978 had put forward a better alternative, one that addressed Californians’ anxieties about tax escalation without 13’s flaws.  Instead, Gov. Jerry Brown and the Democratic legislature held off for as long as possible in offering any sort of response to the people angry and fearful about rapidly rising property taxes, in the hope that the political problem would blow over.  When it didn’t, they finally devised a tax limitation alternative to 13 whose distinguishing feature was that it didn’t guarantee that anyone’s taxes would be limited.

In the 31 years since Proposition 13 was enacted that bait-and-switch problem crops up over and over.  When people here complain that taxes are too high, especially given the doubtful quality of the public services they purchase, the enlightened response is always that taxes aren’t high so much as they’re arbitrary and complicated.  The correctives proposed to enhance the quality of the citizen’s tax-paying experience all purport to make taxes fairer and simpler, but their one clear outcome is that taxes would be higher.  Thus, the reforms that would streamline how California’s governments collect money would have the consequence of relieving those governments of any obligation to devise better, smarter and fairer ways to spend it.  It takes a trusting spirit to believe that this outcome would be an accidental byproduct of tax reform.

A final note.  One commenter argued that government is expensive in California largely because housing is expensive, thus disproving the idea that California governments spend their money in undisciplined, ineffective ways.  Two points:

• 1) California’s state and local employees are the best compensated in the country (http://www.census.gov/compendia/statab/tables/09s0448.pdf) and the differences between them and their counterparts in states that are also expensive are not trivial.  Local government employees make 11.5% more in California than Connecticut, and 21.4% more than those in Massachusetts.  State workers in California make 13.1% more than New York’s and 19.9% more than those in Massachusetts.
• 2) The high cost of living in California, especially the high cost of housing, is a problem for government, in that it puts pressure on it to increase the pay scale for public employees.  That fact does not preclude the possibility that the high cost of housing is, in significant measure, a problem caused by California’s governments.

Let me close on this point by bringing in an expert witness, Edward Glaeser of Harvard’s economics department and Taubman Center for State and Local Government.  In a Los Angeles Times article (http://www.latimes.com/news/opinion/commentary/la-oe-glaeser4-2009mar04,0,4085382,print.story) earlier this year he said:

Although California is a populous state, it still has plenty of land. Santa Clara County, the home of Silicon Valley, only has about 2.2 people per acre. Even in denser places, such as Los Angeles, there is plenty of room to build.

California’s growth has slowed because the state has made it increasingly difficult to build new homes. There is an almost perfect correlation between the growth of an area and the amount of housing that is permitted in that area. California has some of the toughest land-use regulations in the country, which are often justified as environmental measures. When high housing demand is met with restrictions — not construction — California homes become unaffordable and new construction goes somewhere else.

Best regards,

Bill Voegeli

I started out legal life in California, clerking for the California Supreme Court and, already being a tax geek, was handed many of the state tax issues.  So I have some familiarity with California’s tax law.  It is complicated and in many policy aspects problematic, but also, to be clear as a lawyer, it is also highly sophisticated as a body of regulatory law.  I have not had time to look back to California law and regulations on withholding, and haven’t updated my knowledge of the topic since I clerked there a long time ago and dealt with a couple of minor issues.

However, my understanding then was that withholding law was premised on it being an enforcement mechanism to ensure that the proper tax would be withheld on an expeditious basis and taking account of difficulties in collecting the tax due after the fact.  I did not think that it had a basis in law as a revenue raising device in its own right — it was legally an administrative provision for the correct, fair, and efficient collection of tax due, where the actual tax due was figured on the basis of separate statutes.

So I am confused as to the legal authority of the state of California apparently to impose an increase in the withholding rate, not for reasons having to do with the fair and efficient collection of tax finally to be due, but instead to raise revenues or time revenues for reasons not deriving from the administrative necessities of actually collecting a tax, the amount of which is determined by separate tax statutes and regulations.  Or have I not understood correctly, from news articles, what has taken place in a legal, tax-lawyer sense?

Starting Sunday, cash-strapped California will dig deeper into the pocketbooks of wage earners — holding back 10% more than it already does in state income taxes just as the biggest shopping season of the year kicks into gear.

Technically, it’s not a tax increase, even though it may feel like one when your next paycheck arrives. As part of a bundle of budget patches adopted in the summer, the state is taking more money now in withholding, even though workers’ annual tax bills won’t change.

Think of it as a forced, interest-free loan: You’ll be repaid any extra withholding in April. Those who would receive a refund anyway will receive a larger one, and those who owe taxes will owe less.

Okay, forced interest-free loan, got that.  What I don’t understand is the legal basis for ordering it.  I realize that I should do a little legal research, or anyway tell my research assistants to do it, but I’m swamped while still interested — and think it is broadly interesting, and not just in California.  So:  I would be interested to know particularly if any experienced California tax lawyers could explain for us the following.

• First, what is the statutory or regulatory basis, if any, on which the state of California has justified the change, and, for that matter, where is the change officially promulgated and on whose authority?
• Second, is there precedent for this, as an administrative but also legal matter in California — has this occurred before and has there ever been litigation, administrative or otherwise?
• Third, is there a basis on which to contest the lawfulness of the increase?  And further to that, how does that proceed in California — can one proceed on an injunctive basis, on a class basis, what — or is it foreclosed by law or precedent?
• Fourth, even if the Governor or the Legislature has issued the order, does the administrative agency thereby have the authority under California law to carry it out; that is, is it possible that such an order exceeds the authority of the relevant agency?
• Finally, is anyone pursuing such litigation; or alternatively, is the order obviously lawful?

I’m happy to hear people’s views on the policy and political issue, but I particularly welcome comments going to California law and regulations.  Thanks.

Update:  TaxLawyer (thanks!) provides helpful comments and a couple of links, below.  One link is to a client advice memo (ie, public) from the Littler law firm.  It provides a good, succinct analysis of the law and the change, and makes clear that the change is a revision to the standard withholding tax schedules.  But it also adds that this is essentially a trap for the uninformed (emphasis added):

As part of California’s annual budget ordeal, rather than enacting new taxes, the legislature enacted (and the Governor signed) various income shifting and tax acceleration provisions. Under ABX4-17, as of November 1, 2009, employers will be using a new state income tax withholding table to increase by 10% the amount of income taxes withheld based on existing claimed exemptions ...

Typically, employees adjust the level of income tax withholding by submitting to their employers an IRS form W-4. California also has its own form, DE-4. Employees can submit different forms reflecting their state and federal personal income tax circumstances. Rarely will the use of either or both forms result in withholding that precisely matches the employee’s own annual income tax liability. Ultimately personal tax liability is a matter for the employee.

In an effort to accelerate revenue flow, beginning November 1, 2009, California is adjusting its income tax withholding tax tables by 10%. For example, if bi-weekly state income tax withholding is currently $500 a pay period on an employee’s regular wages, come November 1, such withholding will automatically adjust to $550 ....

As this flat rate adjustment may have no relationship to actual state income taxes, employers can anticipate employees will be potentially flooding payroll departments with revised W-4 and DE-4 forms to “right size” their withholding arrangement. Since nothing in the law forces employees to increase their withholding, an employee can effectively reduce the effect of this law by increasing claimed exemptions, if the new tables would result in excessive tax withholding.

California is proceeding on the assumption that either employees under withhold income taxes through payroll or that employees will not be smart enough to adjust their withholding, and instead give California an interest-free loan of California employees’ income.

That’s with respect to withholding taxes on employment income.  There are separate issues with respect to other kinds of withholding, and the Littler memo notes the following.  The statutory authorization, ABX4-17

also provides for those who file estimated taxes (typically the self-employed) to also accelerate such payments. Both of these acceleration features raise potential constitutional issues and/or other statutory issues, as in many instances such accelerated revenue receipts exceed an individual’s tax obligations and conflict with other state and/or federal laws obliging an employee to accurately provide for income tax withholding.

The Wall Street Journal has an editorial urging the Supreme Court to rule in favor of the property owners in Alvarez v. Smith, an important property rights case that I have been trying to draw attention to for a long time (see my recent Findlaw column on it and previous posts on the subject here and here):

With states and cities struggling with deficits, one fertile source of revenue has been money or property seized by police in possible connection with crimes. Not to be left behind, Illinois has pursued this tactic aggressively, using a law which encourages both police departments and prosecutors to take property for forfeiture, long before the accused ever get their day in court.

This practice was challenged at the Supreme Court recently in Alvarez v. Smith, where six people allege that police use of the Illinois Drug Asset Forfeiture Procedure Act violated their right to due process under the Fourteenth Amendment. Though forfeiture laws are designed to strip criminals of ill-gotten gains, three of the six were never charged with a crime. All six had their property or money taken without a warrant and had to wait for months or years without a hearing on the legitimacy of the forfeiture...

Under Illinois law, the state has 187 days after property is seized to file forfeiture proceedings. Meanwhile, of forfeited funds seized, 25% lands in the lap of the prosecutor’s office. Another 65% goes to the department that seized the property, giving police added incentive to take the property to pad their budgets. Justice Sonia Sotomayor noted this police incentive with concern....

We’re all for relieving criminals of illegal profits, but civil forfeiture laws must be used with caution and oversight lest they infringe on fundamental rights. Alvarez v. Smith provides an opportunity to restore the balance of justice to citizens. 

The points emphasized in the WSJ editorial are similar to those I and others have made previously. However, the WSJ piece is still noteworthy because it shows that at least some of the national media have finally begun to give the case the attention it warrants. It’s also telling that even the generally pro-law enforcement WSJ editorial page isn’t willing to endorse the government’s position in this case.

Findlaw has just posted a column I wrote on Alvarez v. Smith, an important Fourteenth Amendment Due Process Clause property rights case that was heard by the Supreme Court today:

Today, the Supreme Court hears Alvarez v. Smith, an important case that will affect the constitutional property rights of many people around the country but has failed to attract the attention it deserves.

In Alvarez, the federal Seventh Circuit Court of Appeals ruled that it was unconstitutional for Chicago police to seize cars and other property and hold it for many months at a time a without giving the owners any chance challenge the seizure. The Illinois Drug Asset Forfeiture Procedure Act (DAFPA) allows the police to seize property that may have been involved in a drug-related crime and hold onto it for up to 187 days without any kind of legal hearing. This rule applies even to property owned by completely innocent persons who simply had their possessions caught up in a drug investigation through no fault of their own... The three car owners involved in Alvarez were never even charged with a crime, much less convicted....

Laws like DAFPA pose a serious danger to the property rights of innocent people caught up in the War on Drugs. In many jurisdictions, police departments are allowed to auction off property seized in drug investigations and keep the profits, giving them a clear incentive to seize cars first and ask questions later. Moreover, many of the people whose cars are seized are poor or minorities. They often lack the political power necessary to persuade police to release their property without judicial intervention.

The Court of Appeals ruled that DAFPA violate the property owners’ rights under the Due Process Clause of the Fourteenth Amendment. It should have been an easy case. After all, the Clause requires that states must not “deprive any person of life, liberty, or property, without due process of law.” One can certainly argue about how much process is “due” in any given situation. But surely it is a violation of the Clause for the state to deprive an innocent citizen of valuable property for many months without any judicial process whatsoever....

I previously wrote about Alvarez here and here. In this post, I wrote about then-Judge Sonia Sotomayor’s excellent opinion in the very similar case of Krimstock v. Kelly.

My column was written before the oral argument transcript became available. Somewhat surprisingly, many of the justices seem to think that the case should be dismissed on technical mootness grounds. If this were really a problem, one wonders why the Court agreed to hear the case in the first place, focusing on the property rights issue in its official question presented. Still, a dismissal on procedural grounds would be far less dangerous than a decision overruling the Seventh Circuit, which I feared might happen. The oral argument transcript also suggests that many of the justices — both liberal and conservative — are skeptical of the government’s position on the merits. They were clearly not pleased with the government lawyer’s admission that his position implies that the police could hold valuable property for a year or longer without any kind of hearing. At the same time, some of the justices seem to believe that the Seventh Circuit ruling would hamper the police unduly. In both cases, obviously, it would be dangerous to predict the justices’ votes based on oral argument questions, since some justices might pose questions that build on premises they don’t necessarily agree with.

I was very happy to hear about Elinor Ostrom’s Nobel Prize in Economics. Her work focuses on the tragedy of the commons and collective action problems, which overlaps several of my own research interests. When Ostrom began writing in this field in the 1960s, the conventional wisdom in economics and political science was that the tragedy of the commons and other similar collective action problems could only be addressed through government intervention. Some dissenting economists (such as Ronald Coase) argued that they could often be addressed through privatization — converting common property into property owned by individuals, who would then have strong incentives not to overuse or destroy it. In a series of influential articles and books, Ostrom showed that there is a third way: often individuals can use social norms and informal institutions to manage common property resources and prevent tragedies of the commons. In many situations, Ostrom demonstrates, informal, decentralized approaches to managing common property resources are superior to government-imposed ones. The former take more account of the specialized local knowledge possessed by the people who actually use the resources and depend on them for their livelihoods. 

For the best summary of Ostrom’s work, see her excellent 1990 book Governing the Commons.

Ostrom’s theories are often seen as an alternative to traditional libertarian thought, which emphasizes the importance of private property and markets. However, it actually fits well with libertarianism defined more broadly as advocacy of the superiority of private sector institutions over government. In some respects, Ostrom’s norm-based approach to dealing with tragedies of the commons is actually less dependent on government than the more traditional libertarian approach of relying on exclusive private property rights. The latter, after all, often depend on enforcement by government. Even where private property rights exist, it is often easier and cheaper to solve some collective action problems by norms rather than relying on the law. And, obviously, Ostrom’s emphasis on the importance of local knowledge is similar to the earlier work of libertarian theorist F.A. Hayek.

Not all tragedies of the commons can be solved by the kinds of mechanisms studied by Ostrom. Her research shows that such approaches usually work well only in groups with no more than a few thousand members. Beyond that point, resource usage norms become hard to enforce and free-riding difficult to suppress. Informal norms and institutions probably cannot solve nationwide collective action problems such as rational political ignorance (the focus of much of my own work), or worldwide ones such as global warming. Still, they can address a great many environmental and economic dangers that most experts once believed required government-imposed solutions.

Because Ostrom is a political scientist, her work hasn’t been as widely recognized by economists as it probably should be; this despite the fact that collective action problems are a major focus of study for modern economics. Steve Levitt writes that he had not even heard of Ostrom before she won the Nobel. However, her work has been enormously influential in political science and legal scholarship. 

I’m not going to argue the question of whether Ostrom deserves the Prize more than various other candidates who are professional economists. Other people are far better qualified to judge that issue than I am. However, there is no doubt that her work is a major contribution to the study of important economic issues. Hopefully, the Nobel will make her scholarship better known in economics and other fields.

UPDATE: Paul Krugman admits that he, like Levitt, was unfamiliar with Ostrom’s work before she won the prize. But he goes on to suggest that she is deserving of the award based on her work on institutions.

The New York Court of Appeals — the state’s highest court –is about to consider an important property rights case, Goldstein v. New York State Urban Development Corporation. The case involves a challenge to the condemnation of large amounts of property for the purpose of transferring the land to influential developer Bruce Ratner, who plans to use most of it to build a stadium for the New Jersey Nets (which he owns), and “luxury housing.” The targeted property owners argue that these takings are not for a “public use,” as the New York state constitution requires. Certainly, the case is a fairly egregious example of the use of eminent domain power to benefit private interests. I wrote about this taking in a 2008 post addressing the federal court case in which the Second Circuit Court of Appeals upheld these condemnations under the federal Constitution (as it was required to do, given the Supreme Court’s decision in Kelo v. City of New London):

...[T]he fact that much of the condemned land is to be used to build a sports stadium raises serious red flags about the true likelihood that the general public will benefit from the condemnation. Numerous studies by economists show that public subsidies for stadium construction create no economic benefits for the general public....

Second, the court claims that the creation of “affordable housing” for the poor is one of the public benefits to be expected from the project. The project will indeed create some new housing units (in addition to the stadium). However, as the Second Circuit opinion concedes (pg. 15), almost 70% of the new housing units will be “luxury” units for the wealthy, and the remainder is mostly not guaranteed to be ever built and is still intended for the “middle class” rather than the poor. Like the stadium, the housing portion of the project seems likely to be a straight redistribution of wealth from the current residents of the area to the very wealthy Mr. Ratner and the types of wealthy people who will be able to afford to buy the luxury housing he intends to build. To say the least, it is hard to discern any genuine public benefit here.

The Second Circuit also justifies the takings on the basis that they will serve to alleviate “blight.” New York City has indeed designated much of the area condemned area as blighted. However, the validity of this designation is debatable at best (the plaintiffs pointed out that much of the land in the area is among the most valuable in Brooklyn). . . . New York is one of many states with a definition of “blight” so broad that it can encompass virtually any property. Even if the area really is “blighted,” it doesn’t necessarily follow that the current owners and residents should be expelled and their land transferred to a politically powerful developer. Cities have many other options for alleviating genuine blight that do not infringe so greatly on property rights. At the very least, there is no good reason to condemn the 50% of the project area that even the city acknowledges to be free of blight....

In this case, as in Kelo itself, the court took account of the claimed benefits to the general public, but explicitly refused to consider the massive costs (pp. 13–15). Ignoring cost is a requirement under Kelo. But it is not a good way of determining whether a planned condemnation is actually likely to serve a “public use” — even if “public use” is defined broadly to include indirect public “benefits....” Ignoring costs is a blank check for local governments to undertake condemnations that benefit politically powerful interests while imposing the costs on taxpayers and the politically weak.

Finally, the Second Circuit notes that “Ratner was the impetus behind the [condemnation] Project, i.e., that he, not a state agency, first conceived of developing Atlantic Yards, that the Ratner Group proposed the geographic boundaries of the Project, and that it was his plan for the Project that the ESDC [government agency undertaking the condemnations] eventually adopted without significant modification.” The court is probably right to conclude that this is not enough to prove that the taking was a “pretextual” one under Kelo. At the very least, however, such a pattern of events should trigger heightened judicial scrutiny of the government’s true purposes in undertaking the condemnation. 

Damon Root of Reason has some more details here:

In December 2003, Bruce Ratner, a New York real estate tycoon and owner of the New Jersey Nets basketball team, announced his long-simmering plans to build a 22-acre “urban utopia” in central Brooklyn, featuring more than a dozen office and apartment towers rising as high as 60 stories, a 180-room hotel, and a fancy new basketball arena for Ratner’s Nets to call home.....

So Ratner did what most politically-connected elites do when they run into trouble: He turned to the government—including his old Columbia law school pal Gov. George Pataki—for a bailout. More specifically, Ratner partnered with the Empire State Development Corporation (ESDC), a controversial and embattled state agency with the power to bypass zoning laws and seize private property via eminent domain. 

It’s a classic case of eminent domain abuse. Ratner isn’t planning to build a bridge or a road or any other legitimate public project that might permit the forceful taking of private property. He wants to build a basketball arena, sell tickets to the games (not to mention sell broadcast rights, advertising space, concessions, and merchandise), and make a big fat profit. That’s not public use, it’s private gain.

Furthermore, state officials have gone out of their way to put those profits in Ratner’s hands. Consider that when the project was officially announced in 2003 there was no mention of blight, which is the state of extreme disrepair frequently cited by the ESDC to trigger an eminent domain taking under state law. Two years later, however, Ratner and the ESDC started claiming that the neighborhood was “blighted.” Yet by that point Ratner had already acquired many of the properties he wanted (thanks to eminent domain) and left them empty, thus creating much of the unsightly neglect he now cites in support of his project.

Moreover, the ESDC report counted minor things like “weeds,” “graffiti,” and “underutilization” as evidence of blight....

New York case law is among the most hostile to property rights in the entire country, allowing the condemnation of virtually any property for any reason. For example, a 2001 state appellate court decision ruled that Times Square was blighted, allowing the condemnation of property there for the purpose of transferring it to the New York Times to build a new headquarters. New York is also one of only seven states that have enacted no eminent domain reform law whatsoever since the Supreme Court’s controversial 2005 decision upholding “economic development” condemnations in Kelo. For these reasons, I am not optimistic about the property owners’ chances in this case. However, the litigation might still do some good by focusing greater attention on eminent domain abuse in New York. Moreover, there is always the possibility that the state supreme court will change its ways, as several other state high courts have done in recent years.

An opinion released today by the Arkansas Attorney General says “no.” Like most states, Arkansas allows adults to obtain a permit to carry a concealed handgun for lawful purposes, after passing a background check and  safety class.  Like a few states, Arkansas prohibits licensed carry in “Any church or other place of worship.”

In short, the AG opinion says that there is no Free Exercise violation because the statute does not (at least facially) hinder the exercise of religion. Further, the statute is one of general applicability, and does not single out religion for different treatment, because the Arkansas conceald handgun license (CHL) statute also bans CHL in some other locations. The opinon suggests that what these disparate places have in common is that they are likely to be crowded.

There is no Establishment Clause violation because the CHL in churches ban does not appear, facially, to favor one sect or denomination over another. (The AG opinion and this post both use “churches” to include synagogues, mosques, and all other houses of worship of various religions.)

The AG opinion strongly emphasizes that the issue is one of first impression, and that a full legal resolution of the issue might well require fact-finding.  The purpose of an Attorney General opinion is only facial review, and not the kind of fact-finding that a court might engage in.

Given the self-declared limited scope of the AG opinion, its tentative legal conclusions are plausible. However, I think that if we broaden our view a little bit–in either a court of law, or the court of public opinion–there do appear to be some potential violations of the Establishment and Free Exercise clauses.

Two preliminary caveats: First, neither the AG opinion nor this post address whether the church ban violates the right to arms clause of the Arkansas Constitution, or the Second Amendment. I expect that an argument on right to arms grounds would probably involve the rights of almost any landowner to choose to allow licensed carry on his/her/its property; the argument would not be specific to churches as landowners.

Second, as demonstrated by litigation in Minnesota, some churches consider it an intolerable burden on their free exercise of religion if, in order to exclude licensed gun owners, they must post a “no guns” sign similar to signs that ordinary businesses in the state routinely post in order to exclude licensed carry. I presume that a way can be found to accomodate their twin desires for “no guns” and “no signs” and  that this accomodation does not require banning guns from churches that want to allow carry. For example, a statute could presumptively ban guns at churches, and then allow individual churches to opt out by posting a “licensed gun owners are welcome” sign. Or a church could be allowed to authorize carry by specific persons who received a letter of authorization from the church.

One test for Free Exercise violations involves whether the statute imposes a significant burden on the free exercise of religion, even if the legislature had no malign intent to create a burden. A complete ban on CHL at churches, even at churches which strongly desire licensed carry on their premises, does burden free exercise. Churches, by their very nature as religious institutions, are more likely to be the targets of attacks by persons motivated by religious hatred. If the law prevents congregations from protecting themselves, then the state government is making church-goers defenseless at precisely the time when they are especially likely to be attacked by a criminal acting out of religious hatred.   In my forthcoming Connecticut Law Review article Pretend “Gun-free” School Zones: A Deadly Legal Fiction, I describe the case of a December 2007 attack on a church in Colorado Springs by a person who earlier that day had murdered people at a Christian youth group. Dozens of lives were saved because one of the parishioners at that the New Life Church, Jeanne Assam, was using her Colorado CHL to lawfully serve as a volunteer security guard at the church that Sunday.

Obviously not all churches have the same beliefs about the legitimacy of self-defense and defense of others as does the New Life Church. This brings use to the second violation of the First Amendment. The morality of using deadly force when necessary to protect innocent lives is a strongly debated topic among various denominations. The early Christians disagreed on the topic. Historically, the standard Jewish and Catholic view was that self-defense was a right and defense of others was often a duty. Some Christians, particularly since the 20th century, take an opposite view. Likewise, many adherents of the major religions of Asia also support self-defense, while some (especially some Therevada Buddhists) do not. These doctrinal differences about self-defense represent very important, sincerely-held differences in religious beliefs. A religion is, after all, not just about the forms of ritual; religion is especially concerned about providing guidance for moral conduct at moments when a person may face decisions involving the end of life.

The state, of course, must be neutral between the various religious beliefs. The state should not compel a Quaker to shoot someone who is trying to kill her, nor should the state forbid a Baptist from saving her own life.   The CHL prohibition in churches violates the Free Exercise clause because it prevents self-defense by members of a religious community, when they are gathered as a community, even if key tenet of the religion is the communal duty of the adherents to protect their fellow adherents.

Moreover, the CHL ban also violates the Establishment clause because it favors some denominations over others. In effect, the statute privileges pacifist denominations over non-pacifist ones, by forcing the non-pacifist religions to obey pacifist standards of conduct in their own houses of worship. This is not only a Free Exercise violation, it is an Establishment clause violation, because it plainly creates the message that the pacifist way of being is the only way of being which the state will allow in any church, anywhere in the boundaries of the state.

Establishment clause jurisprudence pays attention to the audience and context of the various messages that the government sends. A government message which is directed, for example, at tax accountants, may be less likely to be construed by the audience as an endorsement of a particular religion than that same message would be if delivered by a public school principal to a class of first graders. Churches are quintessential places for family activity; if children know (as many do) that their parents carry handguns lawfully in many places on Monday through Saturday, and on Sunday afternoon, and that the government forbids the parents from carrying the licensed, concealed handguns on Sunday morning at church, then some of those children may perceive a government message expressing an incompatibility between self-defense and religion. The de facto result is government favoritism of pacifist religion over non-pacifist.

None of the above analysis depends in any way on a finding of an expressed desire of legislators to favor pacifism over non-pacifism. First Amendment religion jurisprudence is not limited to a search for bad motives. A statute can violate the Free Exercise or Establishment clause solely because of its effects, including effects that legislators may not have considered or foreseen.

Of course the above analysis is just a sketch of an argument. Law journal students who are interested in the interplay of First and Second Amendment rights might find the issue to be a good topic for a Note.

Update: In response to various thoughtful comments...Yes, if you apply Employment Division v. Smith the way that the Attorney General did, this would defeat a Free Exercise claim. I suggest that such an application of Smith is not necessarily mandatory. Smith says that if you ban peyote (or defensive handgun-carrying) everywhere, then the general ban can apply in churches, without violating Free Exercise. Even if the ban is an essential part of a religious ceremony (peyote) or a matter of life and death for religious people who are at heightened risk of hate crimes (my argument above). This would be Smith applied to Illinois, where handgun carry in general is prohibited (with certain exceptions), and there is no statutory provision to even issue a CHL. 

Arkansas is, I suggest, different. It allows CHL in general, and selects churches as part of a small group of places where CHL is prohibited. Pursuant to Arkansas Code Annotated section 5–73-306, the only places (other than government property) where CHL is banned notwithstanding the wishes of the property owner, are churches, bars, sporting events, and religious or independent schools or colleges. The Attorney General suggests that these are all tied togethether by the common characteristic of being likely to be crowded. If crowdedness is the rationale, the list is both under-inclusive and over-inclusive. Accordingly, it appears that at least some further analysis would be required before rejecting a Free Exercise claim. In addition, not all states have adopted Smith’s restrictive test for their own state constitution’s Free Exercise jurisprudence, but that’s a separate issue.

Not so much.

One of the Comments links to recent pictures of the site.