In Suzanne M. Bartley et al v. United States, a class-action suit filed on April 17, 1995, in federal district court in Milwaukee, my wife, on behalf of herself and all others who paid federal taxes for the years 1991-93, has sued for a refund of approximately 70 percent of the revenue collected during those years. For fiscal year 1993 alone, the total amount of the refund approximates $808 billion. If the pattern of overcollection for fiscal year 1993 holds true for fiscal year 1991-1992, the grand total of the refund would be a staggering $2.4 trillion.
Unlike the usual “tax protest” cases, the general basis for this suit is that the government, with its various tax statutes and regulations, has far exceeded its lawful taxing authority under Article One, Section 8 of the Constitution. That provision names almost all of the government’s lawful spending powers and strictly limits it to raising taxes to carry out the enumerated functions and those alone. The government has no general power of taxation.
The Constitution’s strict limitation on federal taxing power is made clear in the Federalist papers by both James Madison and Alexander Hamilton. Madison, in Federalist 41, said:
It has been urged and echoed that the [taxing power] amounts to an unlimited commission to exercise every power which may be alleged to be necessary for the common defense and general welfare. No stronger proof could be given of the distress under which these writers labor for objections, than their stooping to such a misconstruction.
Hamilton agreed in Federalist 83: “This specification [of enumerated powers] evidently excludes all pretension to a general legislative authority, because an affirmative grant of special powers would be absurd, as well as useless, if a general authority was intended.”
As the Constitution makes clear, the federal taxing power is limited to funding national defense; postal operations; federal courts; coining and borrowing operations; the administration of laws on bankruptcy, naturalization, patents, trademarks, counterfeiting, weights and measures; the punishment for crimes on the high seas and violations of international law; the District of Columbia and the management of other federal properties; and the regulation of commerce with foreign nations, with Indian tribes, and among the states. For 1993, about 70 percent of all federal expenditures were for purposes not within these enumerated powers. Thus 70 percent of all taxes collected for that year are unconstitutional.
The suit also debunks the myth that Congress has power under the Commerce Clause to tax in order to fund programs not otherwise within the enumerated powers, such as many of today’s social welfare programs. To the Framers, “commerce among the states” meant trade among the states, not manufacturing, mining, agriculture, retailing, or other activities within states—activities that all precede trade among the states. As Professor Richard Epstein of the University of Chicago Law School has shown, it makes no sense textually to say that “commerce” means manufacturing, agriculture, or any other activity that precedes trade:
One should assume that the word commerce . . . bears the same meaning with respect to each of its objects. . . . What possible sense does it make as a matter of ordinary English to say that Congress can regulate ‘manufacturing with foreign nations, or with Indian tribes’ or for that matter ‘manufacturing among the several states’?
Only if “trade” is substituted for “commerce” does the Commerce Clause make sense: “Congress shall have power . . . to regulate trade with foreign nations and trade among the states, and trade with Indian tribes.”
The tax refund suit got a big boost from a recent decision of the Supreme Court. About ten days after the suit was filed, the Court declared in United States V. Lopez that there actually are limits on the commerce power. Perhaps the most important statement in the case came in Justice Clarence Thomas’s concurrence, where he complained, “The [Commerce Clause] power we have accorded Congress has swallowed Article One, Section 8.”
Justice Holmes once said, “Great cases, like hard cases, make bad law.” The tax refund case is at once both a great and a hard case. It is a great case not just because the amount of money in question is astronomical, higher than any other in legal history, and because it involves a question common to all federal taxpayers, but because it seeks to reverse more than 60 years of federally mandated social engineering and to revitalize the simple, founding principle that the government has no more power than that specifically given it in the Constitution.
Leave a Reply