The American Revolution was ignited by popular outrage over newly imposed English taxes. Two centuries later, most Americans are still disgruntled over taxes. But at least now we have a say in tax policy in so far as we can vote on our elected representatives. Yet, of course, we don’t trust politicians much either.
Our deeply engrained national skepticism toward taxes has led to many tax reforms. Indeed, most states have enacted laws that make it more difficult to impose new taxes or to raise existing tax rates in order to protect taxpayers from politicians. For example, we recently helped secure a victory for small business taxpayers in Kansas, arguing that a Kansas statute limits the prerogatives of municipalities to impose new taxes. But the best taxpayer protections are enshrined in our state constitutions.
Several states—California included—require a supermajority approval in the legislature for any new taxes. Other states require additional procedural hurdles. And in a handful of states, the people have become so fed up with politicians that they have adopted constitutional amendments requiring explicit voter approval for all new taxes and tax hikes.
Colorado’s Taxpayer Bill of Rights (TABOR) is the model for these states. The idea is that the citizens should get the final say in how much they are taxed, and for what purposes, because it’s their money after all. And that makes sense because the citizens are in charge in our republican system of government, right?
Well, not according to a handful of Colorado legislators who think they know what’s best. They would like the prerogative to raise taxes without seeking voter approval, and they’ve initiated a lawsuit alleging that TABOR violates the federal constitution. Strangely, they maintain that the people of Colorado violated the Guarantee Clause of the United Stated Constitution, which requires every state to have a “republican form of government.” Apparently the theory boils down the absurd proposition that the people somehow rendered Colorado’s government anti-republican because now the people have the final say on taxes.
Of course, if that dubious legal theory were to take hold, it would open the door for ideologically motivated litigants to challenge taxpayer protections throughout the rest of the country as well. That is why the NFIB Small Business Legal Center has been leading the effort to defend TABOR. But in addition to our concerns about the nationwide impacts of this lawsuit, it has immediate implications for thousands of small business taxpayers in Colorado, who would be vulnerable to new taxes if TABOR should be struck down in court.
Last fall, we led a coalition of twenty different organizations in urging the Supreme Court to reverse a decision of the Federal Court of Appeal for the Tenth Circuit, which had allowed the lawsuit to proceed. Our efforts were successful. At the close of the 2014-2015 term, the Supreme Court issued an order invalidating the Tenth Circuit’s decision and ordering the Court to reconsider the case in light of its recent decision in Arizona State Legislature v. Arizona Independent Redistricting Commission.
Now, as the case is pending in the Tenth Circuit once more, NFIB Legal Center has filed another brief in defense of TABOR—this time arguing that the case should be dismissed in light of the Supreme Court’s affirmation, in the Arizona case, that the citizens may make law through the initiative process. So, however clever Colorado’s politicians think they may be, they cannot undo constitutional amendments approved by the people. As we put it, the handwriting is on the wall for this case. After four years of litigation, its time the case was put to rest.
Our friends at the Washington Policy Center offer further commentary here.