Cain's '9-9-9' Tax Reform Plan Is Unconstitutional
October 14, 2011
This column by ACRU Senior Legal Analyst Ken Klukowski was published October 13, 2011 on The Washington Examiner website.
Herman Cain’s signature 9-9-9 proposal has two problems. First, it’s unconstitutional, and second, it’s not conservative because it transforms Washington from the head of a federal republic into a centralized ruling authority.
Cain proposes scrapping the current tax code, and replacing it with a 9 percent personal income tax, 9 percent corporate income tax, and 9 percent national sales tax.
After an unspecified period of time, the income and corporate taxes would be dropped, and everyone would pay a 30 percent (not 23 percent, as some claim) sales tax.
Cain is right that the federal tax system requires fundamental overhaul and he’s not the first Republican presidential candidate to propose doing so. But the third part of this formula — 9 percent sales tax — would include taxing state and local governments, which spend many billions of dollars every year in purchases.
But it’s unconstitutional for the federal government to tax state governments. States are sovereign, coequal with the federal government. Taxing states therefore violates the 10th Amendment.
In its seminal 1819 case McCullough v. Maryland, the Supreme Court famously declared “that the power to tax involves the power to destroy.” If the federal government can tax the states when performing core functions, then the federal government can destroy the states.
Some federal taxation overlaps state activity. And two Supreme Court cases (from 1946 and 1985) can be read as authorizing Cain’s proposal.
But the 1985 case, Garcia v. San Antonio Metro. Transit, was a 5 to 4 liberal decision eviscerating the 10th Amendment, and which the 26 states in the Obamacare litigation are asking the Supreme Court to overrule.
In dissent, Justice Sandra Day O’Connor wrote, “The true essence of federalism is that the states as states have legitimate interests which the National Government is bound to respect … this Court cannot abdicate its constitutional responsibility to oversee the Federal Government’s [not violating the autonomy of] the States.”
Justice William Rehnquist added in dissent that Garcia would eventually be overruled because respecting state sovereignty, “will, I am confident, in time again command the support of a majority of this Court.”
Even if Cain modifies 9-9-9 to exclude states — instead increasing taxes on people and businesses — another aspect is unconstitutional. Cain says 9-9-9 can’t later become 12-12-12 because he’ll require the bill to specify that tax increases require a two-thirds vote in Congress.
Article I of the Constitution provides that legislation needs only 50 percent plus 1 to pass. Requiring two-thirds is unconstitutional. Any federal judge will strike it down in a heartbeat.
Even if it were constitutional, 9-9-9 is not conservative. Under the “fair tax” concept that Cain supports, in order to prevent the sales tax from becoming a crushing burden on low-income Americans, the federal government would issue “prebate” checks. These are monthly checks to all citizens to cover basic necessities.
Nothing is more antithetical to small government and federalism than relying upon the national government for your daily bread. It creates a permanent welfare state, in which every American becomes conditioned that it’s the proper role of government to provide for your food, clothes and housing.
In short, it turns a limited federal government into an inescapable centralized authority that citizens must depend upon, literally, for their daily bread.
Constitutional conservatism embraces the Founders’ system of government, key to which is that the federal government has only limited jurisdiction in the specific powers granted by the Constitution.
Contrast the big-government collectivism of prebate checks with Gov. Rick Perry’s pledge to make the federal government “as inconsequential in your lives” as possible. Conservatives believe in getting Washington out of your daily lives, not making you forever dependent on Washington.
Cain is bold and charismatic — a happy warrior.
But 9-9-9 doesn’t work. Noting that 9-9-9 is 6-6-6 upside down, Rep. Michele Bachmann, R-Minn., quipped, “The devil is in the details.”
Republicans need constitutional conservative solutions. Holding 9-9-9 to that standard, Cain’s central proposal is neither constitutional, nor conservative.