Not the Power to Destroy: An Effects Theory of the Tax Power

The Supreme Court’s “new federalism” decisions impose modest limits on the regulatory authority of Congress under the Commerce Clause. According to those decisions, the Commerce Clause empowers Congress to use penalties to regulate interstate commerce, but not to regulate noncommercial conduct. What prevents Congress from penalizing non-commercial conduct by calling a penalty a tax and invoking the Taxing Clause? The only obstacle is the distinction between a penalty and a tax for purposes of Article I, Section 8. In National Federation of Independent Business v. Sebelius (NFIB), the Court considered whether the minimum coverage provision in the Patient Protection and Affordable Care Act (ACA) imposes a penalty or a tax by requiring most individuals to either buy health insurance or make a payment to the Internal Revenue Service. Writing for the Court, Chief Justice Roberts concluded that the minimum coverage payment is a tax for constitutional purposes, even though Congress called it a penalty. This Article develops an effects theory to distinguish between penalties and taxes. The authors believe that it provides the best theoretical justification of the tax-power holding in NFIB. The effect of a penalty is to prevent conduct, thereby raising little revenue, whereas the effect of a tax is to dampen conduct, thereby raising revenue. Three opposing characteristics of an exaction give incentives for preventing or dampening conduct, and thus provide criteria for distinguishing between penalties and taxes. A pure penalty condemns the actor for wrongdoing; she must pay more than the usual gain from the forbidden conduct; and she must pay at an increasing rate with intentional or repeated violations. Condemnation coerces expressively and relatively high rates with enhancements coerce materially. Alternatively, a pure tax permits a person to engage in the taxed conduct; she must pay an exaction that is less than the usual gain from the taxed conduct; and intentional or repeated conduct does not enhance the rate. Permission does not coerce expressively and relatively low rates without enhancements do not coerce materially. The ACA’s required payment for non-insurance has a penalty’s expression and a tax’s materiality. Its constitutional identity depends on the reasonable expectations of Congress concerning its effect. If Congress could have reasonably concluded that the exaction will dampen—but not prevent—the general class of conduct subject to it and thereby raise revenue, then courts should interpret it as a tax regardless of what the statute calls it. If Congress could have reasonably concluded only that the exaction will prevent the conduct of almost all people subject to it and thereby raise little or no revenue, then courts should interpret it as a penalty. In the case of the minimum coverage provision, the Congressional Budget Office predicts that the exaction for non-insurance will dampen uninsured behavior but not prevent it, thereby raising several billion dollars in revenue each year. Accordingly, the exaction is a tax for purposes of the tax power

Not the Power to Destroy: An Effects Theory of the Tax Power

The Supreme Court’s “new federalism” decisions impose modest limits on the regulatory authority of Congress under the Commerce Clause. According to those decisions, the Commerce Clause empowers Congress to use penalties to regulate interstate commerce, but not to regulate noncommercial conduct. What prevents Congress from penalizing non-commercial conduct by calling a penalty a tax and invoking the Taxing Clause? The only obstacle is the distinction between a penalty and a tax for purposes of Article I, Section 8. In National Federation of Independent Business v. Sebelius (NFIB), the Court considered whether the minimum coverage provision in the Patient Protection and Affordable Care Act (ACA) imposes a penalty or a tax by requiring most individuals to either buy health insurance or make a payment to the Internal Revenue Service. Writing for the Court, Chief Justice Roberts concluded that the minimum coverage payment is a tax for constitutional purposes, even though Congress called it a penalty. This Article develops an effects theory to distinguish between penalties and taxes. The authors believe that it provides the best theoretical justification of the tax-power holding in NFIB. The effect of a penalty is to prevent conduct, thereby raising little revenue, whereas the effect of a tax is to dampen conduct, thereby raising revenue. Three opposing characteristics of an exaction give incentives for preventing or dampening conduct, and thus provide criteria for distinguishing between penalties and taxes. A pure penalty condemns the actor for wrongdoing; she must pay more than the usual gain from the forbidden conduct; and she must pay at an increasing rate with intentional or repeated violations. Condemnation coerces expressively and relatively high rates with enhancements coerce materially. Alternatively, a pure tax permits a person to engage in the taxed conduct; she must pay an exaction that is less than the usual gain from the taxed conduct; and intentional or repeated conduct does not enhance the rate. Permission does not coerce expressively and relatively low rates without enhancements do not coerce materially. The ACA’s required payment for non-insurance has a penalty’s expression and a tax’s materiality. Its constitutional identity depends on the reasonable expectations of Congress concerning its effect. If Congress could have reasonably concluded that the exaction will dampen—but not prevent—the general class of conduct subject to it and thereby raise revenue, then courts should interpret it as a tax regardless of what the statute calls it. If Congress could have reasonably concluded only that the exaction will prevent the conduct of almost all people subject to it and thereby raise little or no revenue, then courts should interpret it as a penalty. In the case of the minimum coverage provision, the Congressional Budget Office predicts that the exaction for non-insurance will dampen uninsured behavior but not prevent it, thereby raising several billion dollars in revenue each year. Accordingly, the exaction is a tax for purposes of the tax power

Collective Action Federalism: A General Theory of Article I, Section 8

The Framers of the United States Constitution wrote Article I, Section 8 in order to address some daunting collective action problems facing the young nation. They especially wanted to protect the states from military warfare by foreigners and from commercial warfare against one another. The states acted individually when they needed to act collectively, and Congress lacked power under the Articles of Confederation to address these problems. Section 8 thus authorized Congress to promote the “general Welfare” of the United States by tackling many collective action problems that the states could not solve on their own. Subsequent interpretations of Section 8, both outside and inside the courts, often have focused on the presence or absence of collective action problems involving multiple states—but not always. For example, the Supreme Court of the United States, in trying to distinguish the “truly national” from the “truly local” in the context of the Commerce Clause, United States v. Morrison, 529 U.S. 598, 617–18 (2000), has differentiated “economic” activity, which Congress may regulate, from “noneconomic” activity, which Congress may not regulate. A federal constitution ideally gives the central and state governments the power to do what each does best. Economic activity does not generally cause collective action problems among the states, and noneconomic activity is not generally free from collective action problems. Consequently, Congress is not generally better at regulating economic activity, and the states are not generally better at regulating noneconomic activity. The distinction between economic and noneconomic activity seems mostly irrelevant to the problems of federalism. We propose a better foundation for American federalism in Section 8. Our theory distinguishes activities that pose collective action problems from those that do not. This approach flows directly from the relative advantages of the federal government and the states. We show that Section 8 mostly concerns collective action problems created by interstate externalities and national markets. We conclude that Section 8 authorizes Congress to tax, spend, and regulate to solve these collective action problems. Collective action federalism finds that the limits and expanse of congressional power in Section 8 turn on the difference between individual and collective action by the states. The theory uses this distinction to differentiate interstate commerce from intrastate commerce, not the economic/noneconomic distinction. Our distinction best explains why Congress may not ordinarily use its commerce power to regulate such crimes as assault or gun possession in schools. Collective action federalism also identifies a constitutional “hook” for Congress to regulate multi-state problems of collective action that may not involve commerce: Clause 1 of Section 8 authorizes some forms of regulation of noneconomic harms that spill over state boundaries, such as contagious diseases and certain kinds of environmental pollution

A Computational Procedure to Detect a New Type of High Dimensional Chaotic Saddle and its Application to the 3-D Hill's Problem

A computational procedure that allows the detection of a new type of high-dimensional chaotic saddle in Hamiltonian systems with three degrees of freedom is presented. The chaotic saddle is associated with a so-called normally hyperbolic invariant manifold (NHIM). The procedure allows to compute appropriate homoclinic orbits to the NHIM from which we can infer the existence a chaotic saddle. NHIMs control the phase space transport across an equilibrium point of saddle-centre-...-centre stability type, which is a fundamental mechanism for chemical reactions, capture and escape, scattering, and, more generally, ``transformation'' in many different areas of physics. Consequently, the presented methods and results are of broad interest. The procedure is illustrated for the spatial Hill's problem which is a well known model in celestial mechanics and which gained much interest e.g. in the study of the formation of binaries in the Kuiper belt.Comment: 12 pages, 6 figures, pdflatex, submitted to JPhys

On Supermultiplet Twisting and Spin-Statistics

Twisting of off-shell supermultiplets in models with 1+1-dimensional spacetime has been discovered in 1984, and was shown to be a generic feature of off-shell representations in worldline supersymmetry two decades later. It is shown herein that in all supersymmetric models with spacetime of four or more dimensions, this off-shell supermultiplet twisting, if non-trivial, necessarily maps regular (non-ghost) supermultiplets to ghost supermultiplets. This feature is shown to be ubiquitous in all fully off-shell supersymmetric models with (BV/BRST-treated) constraints.Comment: Extended version, including a new section on manifestly off-shell and supersymmetric BRST treatment of gauge symmetry; added reference

Suppression of dissipation in Nb thin films with triangular antidot arrays by random removal of pinning sites

The depinning current Ic versus applied magnetic field B close to the transition temperature Tc of Nb thin films with randomly diluted triangular arrays of antidots is investigated. % Our experiments confirm essential features in Ic(B) as predicted by Reichhardt and Olson Reichhardt [Phys.Rev. B 76, 094512 (2007)]. % We show that, by introducing disorder into periodic pinning arrays, Ic can be enhanced. % In particular, for arrays with fixed density n_p of antidots, an increase in dilution Pd induces an increase in Ic and decrease of the flux-flow voltage for B>Bp=n_p Phi_0.Comment: 5 pages, 4 figure

Configurations of Handles and the Classification of Divergences in the String Partition Function

The divergences that arise in the regularized partition function for closed bosonic string theory in flat space lead to three types of perturbation series expansions, distinguished by their genus dependence. This classification of infinities can be traced to geometrical characteristics of the string worldsheet. Some categories of divergences may be eliminated in string theories formulated on compact manifolds.Comment: 24 pages, DAMTP-R/94/1