The Wall Street Journal has a good editorial on Empress Casino v. Giannoulias, an important takings case that is currently before the Supreme Court on a petition for cert. The case involves an extremely blatant effort to tax one small group of firms (four riverboat casinos) for the sole purpose of transferring the money to rival businesses (racetracks). Unfortunately, the Illinois Supreme Court categorically ruled that no "tax" can be a taking requiring compensation under the Fifth Amendment's Takings Clause, even when the tax narrowly targets one specific group of businesses for the purpose of benefiting another. Along with several other property scholars, I helped author an amicus brief urging the Court to hear this important case.

As the Wall Street Journal article points out, the tax in question may have been enacted in part because of corruption on the part of since-impeached Illinois Governor Rod Blagojevich. The case also has important implications for takings law more generally:

Illinois politics seems to be everywhere this year — and now it may be headed to the Supreme Court in the form of a lawsuit brought against the state. The case, which has ties to impeached Illinois Governor Rod Blagojevich, could have an important impact on the definition of a "taking" under the Fifth Amendment — as well as implications for the state's power of taxation.

In Empress Casino v. Giannoulias, the question involves the passage of a state law that took money from four riverboat casinos and gave it to five horse-racing tracks to use as purse money, among other things. According to the Illinois Supreme Court, the action cannot be considered a "taking" because it involved the transfer of money from one party to another, not the confiscation of land, as takings law has traditionally been applied. (The casinos are appealing to the U.S. Supremes, who will consider the certiorari petition soon.)

Property is property, however, whether it's the contents of a bank account, a factory, or a house with a white picket fence. If the Illinois Supreme Court ruling is allowed to stand, it could establish a precedent whereby the government may take money from any successful business to prop up a failing one. That means, in theory, the government could pass a law to take money from the successful dry cleaner on Main Street to subsidize the lousy one around the corner — or from Barnes and Noble to subsidize the corner bookshop.

Broadly levied, wealth redistribution for public purpose has already been ruled Constitutional by the Supreme Court in the case of the income tax. Writ small, as it is in Empress Casino, it's a tool that might be wielded against unpopular industries and used by politicians to kiss up to favorite constituents. Think revenge of the aldermen.

This is close to the way things were working in Illinois under Mr. Blagojevich's leadership. The bill authorizing the transfer of money from the four riverboat casinos to the horse-racing industry came in the context of more than $340,000 in contributions by Balmoral and Maywood race track owner John Johnston and other associates to the Friends of Blagojevich between 2002 and 2007. Among the evidence in the Governor's impeachment trial were transcripts of Mr. Blagojevich and his brother Rob discussing some $100,000 in contributions as a quid pro quo for the legislation to benefit the racing industry.

George Will has written an op ed on Empress Casino v. Giannoulias, the important takings case in which I and other property scholars coauthored an amicus brief urging the Supreme Court to hear it. As Will points out, the case involves a challenge to a narrowly targeted Illinois tax that transfers money from four riverboat casinoes to several horse-racing tracks. Will correctly points out that this is an egregious example of special interest legislation transferring wealth from one narrow interest group to another without any justifying public interest.

Unfortunately, Will also somewhat misstates the legal point at issue in the case. At this stage of the litigation, it is not whether the taking of the riverboat casino's money is for a valid "public use," but whether there has been any taking at all. The Illinois Supreme Court's opinion in the case ruled that no tax could ever be a taking. If that ruling is allowed to stand, the Illinois tax will not only be permitted, but the casinos won't even receive any compensation for their losses. More importantly, state governments will be able to circumvent the Takings Clause simply by using taxation to force firms or individuals to do whatever the legislatures want with their property - without compensation. For example, if the state passes a law requiring a property owner to use his land in a particular way, there might well be a taking. But under the Illionis court's reasoning, there could never be a taking if the state achieved the same result by requiring the owner to pay a special tax if he refused to use the land in the way the legislature mandates.

The "public use" issue was also litigated at the state court level. But it is not part of the cert petition presented to the Supreme Court. In my view, Will is correct to suggest that if there is a taking, there is no defensible public use here. Indeed, the tax is a particularly blatant example special interest legislation, one that may have been passed in part because of a payoff to notoriously corrupt Illinois Governor Rod Blagojevich. However, as Will also points out, the Court reaffirmed the position that almost any governmental objective counts as a "public use" in Kelo v. City of New London (2005). Like Will, I hope that the Court eventually revisits and overrules Kelo and previous decisions that have essentially gutted the Public Use Clause. But that's not the issue that the Empress cert petition focuses on.

UPDATE: The Cert petition itself is available here. The petition describes the question presented as:

Whether the State's taking of money from private parties is wholly outside the scope of the Takings Clause.