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A More Perfect Union?

June 30, 2015 1 comment

Last week, the United States Supreme Court delivered its decision in Obergefell v. Hodges, 576 U.S. ___ (2015), deciding unequivocally that “same-sex couples may exercise the fundamental right to marry in all States” and “that there is no lawful basis for a State to refuse to recognize a lawful same-sex marriage performed in another State on the ground of its same-sex character.” (Slip op. at 28).

While there is no question as to the result of the case, the Court’s journey to reach that result, as helmed by Justice Anthony Kennedy, does leave for the future some stones unturned, as highlighted, in part, by the dissenting opinion of Chief Justice John Roberts. In particular, the majority’s reasoning does not go as far as it could have to secure the protection of same-sex rights.

For all of its quotable flourishes, the majority opinion is, in Roberts’ words, “difficult to follow,” at least as concerns its technical underpinnings. Obergefell, 576 U.S. at ___ (Roberts, C.J., dissenting) (slip op. at 23). While Kennedy purports to rely upon both the due process and equal protection clauses of the Constitution’s Fourteenth Amendment, his equal protection analysis departs in all material respects from the Court’s established jurisprudence. This light treatment of the equal protection analysis is not so much a problem for this case– I believe the outcome can stand on the due process basis alone– as it is for future cases. Obergefell leaves unanswered a question many see as critical to the course of development of homosexual rights: what degree of scrutiny must courts apply in reviewing regulations that discriminate based upon sexual orientation?

Under the Fourteenth Amendment, equal protection generally means that the government must treat everyone the same. Courts have recognized that there are some instances when it is appropriate for the government to treat people differently, however. Men and women, like the old and the young, are alike in many respects, but not all, and there may be areas in which it makes sense for a law to treat people differently on the basis of their gender or age. When reviewing a law that discriminates based upon race, though, courts hold the government to a much higher standard, on the notion that there are few legitimate reasons to differentiate people on the basis of their race. Through the development of equal protection law, the Court has established a hierarchy of sorts that informs courts as to the degree of scrutiny they should apply in their review of a law that discriminates along a given line. The Obergefell majority missed an opportunity to enunciate where in that hierarchy sexual orientation belongs and thus establish a precedent for future treatment of state laws that discriminate on the basis of sexual orientation.

The meat of the disagreement between Kennedy’s majority opinion and Roberts’ dissent involves the due process component of the decision, and it boils down to a disagreement over the essence of the basic question presented to the Court.

The Fourteenth Amendment’s due process clause prohibits states from “depriv[ing] any person of life, liberty, or property, without due process of law.” U.S. Const. Am. XIV, s 1. As Roberts helpfully explains, “[t]his Court has interpreted the Due Process Clause to include a substantive component that protects certain liberty interests against state deprivation . . . . The theory is that some liberties are so rooted in the traditions and conscience of our people as to be ranked as fundamental, and therefore cannot be deprived without compelling justification.” Obergefell, 576 U.S. at ___ (Roberts, C.J., dissenting) (slip op. at 10) (citations and internal quotation marks omitted). The basic question under the due process analysis thus is whether the right asserted “rank[s] as fundamental.”

The disagreement between Kennedy and Roberts is not so much about the fundamentality of the right sought to be protected– although they do disagree along those lines– as about the very right itself. They do not even agree about what they are being asked to decide.

For Kennedy and the majority, the due process question is whether the right to marriage is fundamental. For Roberts, it is whether the right to same-sex marriage is fundamental. It is hardly a surprise that their paths would diverge when they began from different starting points. (Starting points they chose purposefully and with the bigger picture of the case in mind, to be certain.) For both, the analysis flows fairly naturally from there. Kennedy cites from ample historical and legal authorities to show that marriage is fundamental, while Roberts repeatedly points to the (many would say understandable) absence of the express inclusion same-sex couples in the historical and legal discourse surrounding marriage. While each seeks to score points against the other in the lengthy literature review portions of their opinions, the spread that matters is the one between the descriptions of the question before the Court.

While I appreciate Roberts’ structural critiques of the majority opinion, I find his framing of the question presented and the due process analysis that follows unsatisfying. On the other side, I agree that the result Kennedy reached is the correct one, but I think his reasoning could have been more robust.

One of the numerous subplots in this case involves whether and when courts should defer to legislatures, and while that subplot is less deserving of comment here because justices’ preferences for deference seem to shift with their preference for the legislative act at issue, Roberts makes a broader point with which I agree as a matter of fact: political results achieved through the democratic process (i.e., legislatures) are more robust than those achieved through litigation (i.e., the judiciary). See id. at 26-27. Roberts’ conclusion– that the Court should not intervene here because a result through the legislature would be more effective– does not follow, however. If the government has infringed upon a fundamental right, those injured as a result of that infringement should not have to wait for a remedy from their legislature, the very body that has acted to their detriment, simply because success there might prove more more immediately widely respected than a judicially ordered remedy.

Categories: Current, Law, Legal, Privatize

April Fools

April 30, 2014 Leave a comment
Here then, a brief comment at the end of this the taxiest month. We are beginning to learn that big tax returns are not such a thing to be celebrated. Receiving our return on our zero-interest loan should not be an excuse to go on a spending spree. Still, it is better to receive a return than be required to pay up on the fifteenth, right? Again, no. Receiving a return means that the principal amount of that zero-interest loan, gathered through periodic withholdings during the year, was too high. Better to pay more of your invested money at the end then have paid too much in the past.

What are the roots that clutch, what branches grow
Out of this stony rubbish? Son of man,
You cannot say, or guess, for you know only
A heap of broken images, where the sun beats,
And the dead tree gives no shelter, the cricket no relief,
And the dry stone no sound of water. Only
There is shadow under this red rock,
(Come in under the shadow of this red rock),
And I will show you something different from either
Your shadow at morning striding behind you
Or your shadow at evening rising to meet you;
I will show you fear in a handful of dust.

Categories: Privatize, Tax

Eminent Corporate Domain: Double-Dipping and Alter Egos

January 31, 2014 Leave a comment

From the first-ever eminent domain case to one of the most recent: Last week, the Georgia Supreme Court decided Dept. of Transp. v. McMeans, No. S13G0614 (Jan. 21, 2014), a case involving the condemnation of land owned by a man named Brian McMeans. McMeans Leasing, Inc. (“MLI”), a corporation solely owned by McMeans, operated as a business on the land.

McMeans filed an answer acknowledging ownership in the condemned property. MLI then filed an “amendment” to McMeans’ answer, asserting that McMeans’ original answer was for MLI; that it was a leasehold tenant on the property; and that it would suffer business-loss damages as a result of its removal from the property. McMeans filed another answer for himself, asserting that he would suffer damages from a) loss of the use of the property; b) interruption in business income; c) loss of business; and d) damage to business; in addition to the value of the property itself. McMeans then sought to amend his answer to add a separate business loss claim. The Georgia Department of Transportation (“DOT”) moved to strike MLI’s answer and McMean’s answer adding the business-loss claim, and the trial court granted DOT’s motion. McMeans immediately appealed.

The Georgia Court of Appeals reversed the trial court and, citing Dept. of Transp. v. Acree Oil Co., 266 Ga. 366 (1996), ruled that business loss is recoverable as a separate element of damages where the landowner owns the business and the taking results in a total loss of the business.

The Georgia Supreme Court reversed the appellate court. The court agreed with the court of appeals that, under Georgia law as enunciated in Acree Oil Co., business loss is recoverable as a separate element of damages (separate from the value of the taken land, the primary measure of damages in condemnation cases) when the business belongs to a lessee other than the landowner or when the landowner owns the business and the taking results in a total loss of the business. Basic tenets of corporate law apply to distinguish as separate legal entities McMeans and MLI, even though McMeans is the sole owner of MLI. Because MLI “owned the business located and operated on the condemned property,” MLI, not McMeans, was the party that could properly assert the business-loss claim.

Was McMeans’ error here the result of a basic misunderstanding of corporate law principles or a lack of precision in pleading? The inelegant series of answers and amended answers filed at the beginning of the action suggests he appreciated to some degree the legal distinction between himself, a natural person, and MLI, a corporate person, each with different, concurrent interests– an ownership estate and a leasehold estate, respectively– in the condemned realty.

My initial read of the case was that McMeans was trying to double dip: he wanted to claim business-loss damages for himself and for MLI. The Georgia Supreme Court appears to have interpreted the case that way as well, because it emphasized its corporate-law analysis, seemingly admonishing McMeans for forgetting that he and MLI were separate entities, and not engaging in any significant analysis of condemnation-law.

Maybe McMeans was trying to double dip by simultaneously respecting that he and MLI were separate legal entities and acting as MLI’s alter ego. The condemnation-recovery principle from Acree Oil Co. does seem to offer a potential avenue for McMeans, though:

Post-taking business losses can be recovered as a separate legal element in instances when the business belongs to a separate lessee or when the business belongs to the landowner and there is a total taking of the business.

Because “[t]he distinct corporate entity MLI owned the business located and operated on the condemned property,” the business-loss claim belonged to MLI, not McMeans.

While the court viewed this case under the first prong of the Acree Oil Co. language quoted above, as an “instance[] when the business belongs to a separate lessee,” the second– an “instance[] . . . when the business belongs to the landowner and there is a total taking of the business,” also seems to apply. McMeans, the landowner, does “own the business,” after all, even as “the business,” MLI, leases the land from McMeans.

Alternatively, as a matter of practical corporate law practice and parlance, “the business” and MLI may not be synonymous here. The possible confusion raised in the previous paragraph does illuminate the rub of this case, however. The administration of the power of eminent domain, in its compensatory facet, must balance the interests of those with direct interests in the taken property against those of the general public, the ultimate source of the compensatory funds. Double dipping by someone like McMeans harms the public at large. Additionally, when a corporate personhood element is in play, respecting corporate formalities is important in every case in order to protect the interests of, for example, leasehold tenants that lack a close legal relationship to the landowner.

Whatever entity “owns the business” in the McMeans case, there was only one business operating on the taken land, and the state therefore should pay, at most, one business-loss claim. In McMeans, as a practical matter, it did not make a difference whether McMeans or MLI brought the business-loss claim, as sole owner of MLI; McMeans was going to receive the money either way. By allowing only MLI to bring the business-loss claim, the court reached the correct result: it protected the citizens of Georgia from paying a windfall, and it protected the independent right of others with leasehold interests to recover in future condemnation actions.

Categories: Current, Legal, Privatize

Preeminent Domain

June 28, 2012 2 comments

Briefly: I have tried to come up with ideas, conduct research, and write legal material fit for publication in the past, see e.g., here and here, but I was not successful until I collaborated with a senior colleague beginning last year, and I found myself in print last month, see here. The Michigan Real Property Review published our article on the effects of certain state constitutional amendments and legislation passed in the wake of the United States Supreme Court’s decision in Kelo v. New London, 545 U.S. 469 (2005). In short, our conclusion is that Michigan law currently treats private landowners very favorably when it comes to compensation for the taking of real property.

The full article is available here.

Categories: Discourse, Law, Legal, Privatize

Michael Sandel’s Untimely Response to the Libertarian Critique

July 11, 2011 4 comments

Last week, I had the fortunate opportunity to hear two presentations by (and briefly meet) Michael Sandel, a leading political theorist and, less magnanimously, a substantial influence on my undergraduate thesis. While a review of his latest book, the New York Times bestselling Justice: What’s the Right Thing to Do?, will have to wait until I finish Justice Breyer’s book, I wanted to make a timely note of the experience of hearing and meeting Sandel.

The morning lecture, thoroughly covered by The Chautauquan Daily, was a traditional presentation in which Sandel familiarized the audience with his approach to public discourse. Sandel carries the mantle of Aristotelian civic republicanism into this late-modern age, arguing that deliberation over the good life, morality, and spirituality, is an appropriate and necessary part of our public discourse. Rather than restraining public debate to a narrow set of political values and leaving things like religion and morality to the private sphere, Sandel believes– contrary to the prevailing view– that people should not have to hold back parts of themselves when participating in public discourse. While I’m not sure he’s gone so far as to say this outright, I think his approach rejects the public-private division contemporary liberal society mandates, instead advocating a broad spectrum of public life in which the public-private deliberative division melts away.


The afternoon lecture, by contrast, was styled after one of his interactive classroom presentations, in which he engaged the audience on questions of policy. Did the handicapped golfer, Casey Martin, have a right to use a cart in PGA events? Should state governments limit marriage to heterosexual couples?

At the end, he took audience questions, the last of which presented a good opportunity to explain his approach. The question came from a self-described libertarian, who told Sandel that he didn’t think the government had any business even answering the questions Sandel posed. The questioner said that the PGA, a private organization, should be able to include or exclude whomever it wants, and the government has no authority to say otherwise. As for state governments, the questioner explained, they should not be regulating activities, such as marriage, between consenting adults.

Sandel used this opportunity to “test” the questioner to see if he really would adhere to a libertarian viewpoint as applied to more controversial facts. For example, would the questioner allow the PGA to restrict its events to white golfers? The questioner said he would boycott the events, but the PGA could do so. Sandel also inquired of the questioner’s acceptance of various extreme activities between consenting adults, but the questioner stood by his position. Apparently satisfied that the questioner was, in fact, a true libertarian, Sandel concluded the presentation without further substantive comment.

This exchange was a missed opportunity for Sandel. Rather than defend his view, or at least helpfully contrast it with the libertarian perspective for the attentive audience, Sandel did little more than put the questioner through the paces of a libertarian litmus test. What’s unfortunate is that he had a good response. In his 1996 book Democracy’s Discontent, Sandel wrote about the Lincoln-Douglas debates of 1858, when the two politicians debated slavery and other issues. Stephen Douglas supported a liberal position: because people disagreed as to the morality of slavery, the federal government ought to maintain a neutral position and allow the states and territories to decide the question for themselves. Abraham Lincoln, on the other hand, took a position in line with Sandel’s civic republican view and in opposition to slavery on moral grounds, observing that anyone can advocate political neutrality “who does not see anything wrong in slavery, but no man can logically say it who does see a wrong in it; because no man can logically say he doesn’t care whether a wrong is voted up or voted down.” Michael Sandel, Democracy’s Discontent 22 (The Belknap Press of Harvard University Press, 1996).

Lincoln’s view is a direct challenge to those like the questioner, who say that while they personally (morally) oppose a particular activity, the best public policy respecting it is one of neutrality. This is the query Sandel should have put before his libertarian questioner.

Backwards Down The Number Line?

July 1, 2011 1 comment

The disconnect between the principles and practices of the new wave of ostensibly fiscally conservative politicians may not be a unique feature of those serving on the federal level. As I previously noted, U.S. House Republicans, behind the fiscal leadership of Rep. Paul Ryan, may be a bit mixed up when it comes to the privatization of healthcare benefits. The situation at the state level, where Michigan legislators, with the strong support of Governor Rick Snyder, have eliminated state income tax credits for charitable donations, is a bit more conceptually nuanced.

Earlier this month, the Flint Journal reported on the policy change:

As part of a massive tax reform bill signed into law last month, all state income tax credits for charitable donations were eliminated to help close Michigan’s $1.5 billion budget deficit.

The tax measure is expected to save the state $35 million or more a year. . . .

In 2009, the $35 million the state gave back for tax credits leveraged nearly $100 million in charitable giving to nonprofits.

Kristin Longley, “Michigan income tax credits for donating to charities end next year,” Flint Journal (June 13, 2011). In eliminating the tax credit, Snyder “relied on research that showed charitable giving doesn’t necessarily hinge on a tax credit, but rather a personal cause or inclination toward generosity.” Id. 

As best I can tell, economists of all stripes probably would agree that, as a general policy matter, eliminating tax credits is good because a broader tax base taxed at a lower rate is preferable and less distorionary, and because “tax credits,” more properly termed “tax expenditures,” are a less transparent form of government spending. (For more on these ideas, see my earlier comment here.)

By eliminating tax credits, Snyder is trimming government spending, an unobjectionable outcome for fiscal conservatives. Charitable donations may present a special case, however, for the fiscally conservative view that government should tax less so that it spends less in order to stay out of the way of the private sector, which, the view holds, can provide services more effectively and efficiently. A perhaps less frequently enunciated, but necessary tenet of this view is that citizens freeing themselves from the burden of compulsory wealth redistribution (i.e., taxes to fund social services) must personally shoulder the burden of private charity. To do otherwise (just as to privatize services even where privatization will lead to less effective and more inefficient provision of those services) is simple greed, and greed is not the basis of fiscal conservatism or any other viable political theory.

Does elimination of the charitable donation tax credit do more to benefit the provision of private charity by allowing taxpayers to hold more money for that purpose, rather than filter it through the governing apparatus, or does maintaining the credit do more to benefit the provision of private charity by (imperfectly) removing money from the public taxing-and-spending cycle funds that no longer need to be used for publicly provided services? (At the very least, there is an empirical tax question here that is beyond my grasp: does the state net more money by eliminating the tax credit that it can turn around and spend on public services, do taxpayers end up with more in their pockets for private charity under the broad-base/low-rate tax structure, or is the best result an appropriately valued tax credit combined with a decrease in public spending on services?)

In debating the elimination of the credit, the two sides seem to be talking slightly past each other. The Governor’s view, in part, is that elimination of the credit is acceptable because the credit “doesn’t necessarily” provide a real incentive for giving– people decide to give based on other reasons. Proponents of the credit, though speaking with multiple voices, seem to see the credit as part incentive (to do good), part reward (for having done good), and part compromise (by freeing more assets for private use without evaporating resources for public services). In other words, the credit is more than an incentive, and saying that it may not function as one is not a complete justification for its elimination.

State-level politicians may simply be choosing among competing fiscally conservative values in this case, rather than being (apparently) ignorant of them, as in the federal-level situation I previously described. I do find merit in the broad push to eliminate tax expenditures, but I think it is worth asking whether charity presents a special case worthy of exceptional treatment.

Phish – “Backwards Down the Number Line,” Joy (2009)

Whither Private Sector Efficiency?

April 7, 2011 2 comments

An article on the front page of yesterday’s USA Today described the new budget plan Republicans introduced earlier this week that would “dramatically revamp the twin health care pillars of the Great Society, taking a huge political risk that could reverberate all the way to November 2012 and beyond.” Richard Wolf and Kelly Kennedy, “GOP seeking dramatic changes in Medicare and Medicaid,” USA Today (April 6, 2011). Behind the economic leadership of Rep. Paul Ryan, House Budget Committee Chairman, the Republicans are proposing fundamental changes to the federal Medicare and Medicaid programs. “‘Our goal here is to leave our children and our grandchildren with a debt-free nation,’ said Ryan, 41, of Wisconsin. ‘At stake is America.'” Id.

For those who have tracked the recent rise of fiscal conservatism among Republicans at the national level, news that they are targeting large government programs for reductions is unsurprising. What might be surprising, however, are some of the effects of the GOP plan to privatize Medicare and shift Medicaid to state-level administrators:

Medicare, the government-run health insurance program covering about 47 million seniors and people with disabilities, would be run by private insurers and would cost beneficiaries more, or offer them less. Medicaid, the federal-state program covering more than 50 million low-income Americans, would be turned over to the states and cut by $750 billion over 10 years, forcing lesser benefits or higher co-payments. Social Security eventually would be cut, too.

Id. If these projected outcomes are accurate, they raise questions about the Republicans’ application of conservative fiscal theory.

During George W. Bush’s presidency, Republicans remembered well enough that they favored low taxes, but they appeared to forget why they took that position. In doing so, they created a deficit by continuing to spend at high levels rather than reduce spending to match the reduction in tax receipts.

If USA Today is right that the twin pillars of The Great Society are Medicare and Medicaid, where does that leave Grace?

Now, Ryan and his colleagues appear to have reconnected low taxes and low spending but forgotten why they favor low spending. The idea behind a push for lower taxes and spending, of course, is that it forces government to shrink and permits the private sector to expand. This is desirable because, from the proponents’ perspective, the private sector can provide goods and services more efficiently (cheaper and more effectively) than would be possible in the public sector (i.e., government). The economic calculus of privatization can be complicated, but the results presented in the above article– higher costs and reduced services– do not sound like efficiency gains.

Under conservative economic theory, small government is desirable, not as an end itself, but because it reduces regulatory roadblocks that inhibit the private sector. The stated results of the Republicans’ plan for Medicare and Medicaid imply that they have lost track of the practical goal the application of their theories is supposed to achieve. If the predicted results are accurate, it seems that Republicans either have unsuccessfully applied their theories or reframed small government as an end itself. Remedying the former may simply require more careful work on the part of policy makers and their economists and other advisors. The latter, however, requires a new theoretical justification.

One view, perhaps of an anarchist variety, is that the government is but another (albeit large and special) player in a market that does not distinguish between a public sector and a private one. Under that view, it may not be surprising that there are some goods and services that a traditionally “private” entity or group of entities can provide most efficiently, or that there are others that the entity known as “government” can provide most efficiently, and still others that some combination of the two can provide most efficiently. See, e.g., public-private partnerships. Looking at things in this way, the possibility that government, with its special access to virtually all individuals in the market, could provide the most cost-effective insurance program based on its economies of scale, may not be so surprising. This may not be the actual case here, but the stated results of the Republican plan to privatize services and shift them to the states– increased costs and decreased services– suggest it is a possibility.

If small government itself is a goal, detached from private-sector efficiency gains, for the new group of House Republicans, their “pro-business” stance appears much less principled.

Categories: Action, Current, Law, Politics, Privatize