July 29, 1999
The “Taxpayers Defense Act” presents three constitutional issues. The first is basic. Article I, Section 7 begins: “All Bills for raising Revenue shall originate in the House of Representatives … ” The intent of the Founders was clear: all measures to raise money to defray the costs of the federal government must originate with the Congress, specifically, the “people’s body.” The revenue measures that give rise to The “Taxpayers Defense Act” do not originate with the people’s body, nor even with Congress. They emerge from another branch of government altogether – the executive branch or even an “independent,” fourth branch.
Second, under a long line of court cases, there is a strong argument that some, if not all, of the revenue measures that give rise to the “Taxpayers Defense Act” constitute an unconstitutional delegation of authority to a regulatory agency. That is, quite aside from Article I, Section 7, the taxes imposed by regulatory agencies may be unconstitutional because the delegation of such authority may be deemed “excessive” or “undue.”
The third constitutional issue relates to the wording of the “Taxpayers Defense Act” itself. In short, there may be a “Chadha problem.” If the bill’s language is constructed so that, notwithstanding any other provision of law, regulatory agencies have no power to levy “taxes,” but do have the power to recommend revenue-raising legislation to Congress, with initial action by the House of Representatives and final presentment to the president, then there is no question. But if the language is construed to mean that the agencies continue to have “taxing” authority, but that their actions are subject to a “check” by Congress and the president, then the effort runs a risk of being overturned by the Courts.
The technique employed in the “Taxpayers Defense Act” could be expanded to include major non-financial regulations in addition to those that raise money. By reasonable estimates, the financial burden federal regulatory action imposes on the private sector is a substantial (approximately one-third) fraction of the financial burden the federal government imposes through ordinary taxes. Moreover, such an effort, perhaps limited initially to “major” regulations (for instance, those having a financial impact of $100 million or more) could be an important initial step in putting together and employing a “regulatory budget,” which would greatly improve the cost-effectiveness and accountability of government.
However, it must be pointed out that such “tax” and regulatory measures that go through the legislative proposal route, as opposed to being issued under the Administrative Procedures Act, would not be reviewable by the courts (except, of course, with respect to constitutionality). That is, no matter how sloppy or unfair the procedures the agency employed to come up with their “tax” or regulatory proposal, or how unsubstantial the evidence the agency relied on to support its arguments, favorable action by Congress and the president would moot any challenge of the type frequently employed in the courts.
Making it clear that agencies have no authority to apply taxes (as opposed to specific user fees) would increase the accountability of government. The “Taxpayers Defense Act” is deserving of support.