Is It Constitutional To Tax Democrats More than Republicans?

This article first appeared on Verdict.

The changes to the tax code passed by Congress last week overwhelmingly benefit corporations and wealthy individuals, although they also include measures that cut taxes on most middle-class taxpayers, albeit only temporarily.

Despite the Trump administration's claim that the tax cuts will pay for themselves through increased economic growth, they will almost certainly decrease the amount of revenue the federal government collects.

To compensate for some of that lost revenue, the new legislation includes measures that will result in net tax increases, even in the short term, for a non-trivial minority of taxpayers.

That, in itself, is unremarkable. All legislation involves trade-offs, tax legislation especially so.

Voters mark their ballots beneath surfboards in a Venice Beach lifeguard station during the California gubernatorial recall election October 7, 2003 in Los Angeles, California. Mario Tama/Getty

More disturbing is the distribution of the added tax burdens Congress has imposed.

Prior to the new law, state and local taxes (SALT) were deductible against federal income. By capping such deductibility at $10,000, the new law effectively targets its tax increases on upper-middle-class taxpayers in states with relatively high SALT.

Which states are those? Topping the list are New York, Connecticut, New Jersey, California, Massachusetts, Illinois, Maryland, Rhode Island, and Vermont. Those are all states that have, in recent years, reliably voted Democratic. None currently has a single Republican US Senator.

What if that correlation is not mere coincidence? What if it turns out that the SALT cap was included in the tax law—which passed the House and Senate without the support of a single Democrat—specifically because its burden would be felt overwhelmingly by residents of heavily Democratic states?

If Congress or a state legislature enacted a law with a racially discriminatory impact for the very purpose of disadvantaging a racial minority, that law would be unconstitutional.

Does the same principle apply where, instead of favoring, say, white people over black people, Congress favors red states over blue states?

Potential Constitutional Objections

The Fourteenth Amendment says that "No State shall . . . deny to any person within its jurisdiction the equal protection of the laws." That provision bars states from discriminating on invidious grounds, such as race, national origin, and sex. Does it also bar Congress from discriminating against particular States?

The Equal Protection Clause does not, by its terms, forbid the federal government—which is not a "State"—from discriminating against a State—which, in turn, is not a "person," but those textual limits may not be dispositive.

After all, Supreme Court cases have long said that the federal government is bound by the equal protection principle, relying on the Due Process Clause of the Fifth Amendment as a textual hook.

Meanwhile, corporations are not obviously "persons" either, but numerous cases protect corporations under the Fourteenth Amendment.

Suppose someone—a constitutional law professor residing in New York State who expects his taxes to go up, say—wished to argue that just as the Constitution has been construed to give corporations equal protection rights against the federal government, so it should be construed to bar Congress from discriminating against blue states in its tax legislation.

How might he go about it? Let's consider a couple of possibilities.

First Amendment

A New York or California taxpayer who loses some of the benefit of the SALT deduction might invoke the First Amendment. If Congress enacted a law that explicitly taxed Democrats at higher rates than it taxed Republicans or vice-versa, that would be a clear violation of the First Amendment right to expressive association.

That would also be true if, instead of expressly providing for different tax treatment of Democrats and Republicans, a statute used some proxy for political identification. Given the well-known phenomenon of "geographical sorting"—whereby people tend to live among like-minded people—geography is a fair proxy for political identification.

To be sure, state residence is not a perfect proxy for political affiliation. In both red states and blue states, urban areas tend to be bluest and rural areas reddest, with suburbs falling somewhere in between.

But in giving effect to constitutional provisions that contain an anti-discrimination norm—as the First Amendment does—the courts do not require plaintiffs to show that the government has disguised its illicit intent using a perfect proxy.

So long as a plaintiff can show that a law with a disparate impact was deliberately adopted because of that disparate impact rather than in spite of it, a constitutional challenge can proceed.

Equal Sovereignty of the States

Or consider a second avenue of attack. In the 2013 case of Shelby County v. Holder, the Supreme Court invalidated the coverage formula of the Voting Rights Act (VRA). That formula, the Court said, was based on data that were nearly fifty years old.

But why should that matter? Congress has no general obligation to update our laws. Indeed, some laws have been on the books more or less unchanged since 1789.

The coverage formula of the VRA was different, Chief Justice Roberts wrote for the Court, because it was used to subject some, but not all, states and localities to special burdens with regard to changes in their election laws.

A federal law that departs from what the Court called the "fundamental principle of equal sovereignty among the States" can only be justified if the "disparate geographic coverage is sufficiently related to the problem that it targets." Thus, the Court concluded in Shelby County , the out-of-date coverage formula was unconstitutional.

To be sure, the Shelby County principle itself would not directly apply to a challenge to the SALT deductibility cap. The VRA preclearance requirement is a direct limit on how states may legislate, whereas the SALT deductibility cap governs taxpayers.

Yet there is reason to think that difference should not matter. After all, the Constitution contains no express principle of equal sovereignty of the states. Chief Justice Roberts instead inferred it from the principle—also not expressly stated in the Constitution but announced in prior cases —that new states will be admitted to the Union on an equal footing with existing states.

A Court that was willing to discover an unenumerated federalist principle of equal state sovereignty in Shelby County should likewise be willing to discover an unenumerated federalist principle of equal tax treatment of the states.

Proving Illicit Intent

Accordingly, whether under the First Amendment or in the application of general principles of federalism, the courts should be prepared to invalidate provisions of the tax code that discriminate against blue states out of hostility to those states or the voters who live there. Establishing those abstract principles should be relatively simple.

The difficulty would arise when attempting to prove illicit intent.

Numerous tax provisions benefit or burden residents of some states more than others. Tax incentives for installing new solar panels benefit residents of sunnier states more than those with less direct sunlight.

Changes in credits, deductions, and exemptions for dependent children will be felt differently in Utah— the state with the highest birth rate—than in New Hampshire—the state with the lowest.

Tax law allows businesses to depreciate some kinds of assets more quickly than other kinds of assets, thereby favoring states with more of the businesses that make use of the favored assets. Given the tax code's complexity, nearly every provision will have some disparate impact on some state or another.

The question, therefore, is not whether the new cap on SALT deductibility disfavors taxpayers in blue states relative to the prior provision. It clearly does that. The question is whether that differential impact resulted from an invidious congressional motive.

There are legitimate non-political reasons for capping SALT deductibility. For example, one might think that SALT deductions unfairly subsidize high-tax states.

A resident of a low-tax state must pay for services that her state does not provide out of after-federal-tax income, while an otherwise similarly situated resident of a high-tax state was, until now, getting a federal tax deduction for the state and local taxes that went to fund that government-provided service in his state.

Yet whether the old or new system is fairer depends on the baseline. In the public debate over the new tax legislation, elected officials from New York and other high-tax states pointed out that the high-tax states also tend to be net-donor states—that is, they get back less in federal investment than they contribute through taxes—while the lower-tax states tend to be net-recipient states.

It has even been suggested that the low-tax states are low-tax because they receive a disproportionate share of federal largesse, which relieves them of the need to pay for services through state and local taxation.

In this view, states like New York were already paying more than their fair share of federal taxes, so shifting still more of the tax burden to their citizens can only have been motivated by crass partisan considerations.

Perhaps the most we can say is that there could be non-political reasons offered in support of the new cap on SALT deductibility, but it is not clear whether those reasons or more crassly partisan motives actually explain the legislative change.

Under these circumstances, it would be difficult to prove that Congress was actually motivated to cap SALT deductibility by partisan bias. Unlike President Trump, whose Twitter account provides a continual readout of his illicit motives for policies disfavoring Muslims, Latinos, and other minorities, most Republican Senators and House members have not left a trail of smoking guns for plaintiffs suing them for violating the Constitution.

Were a court to order discovery aimed at uncovering Republican congressional defendants' true motives, they could probably get away with pointing to some non-partisan rationale for capping SALT deductibility.

The key phrase there is "get away with." Due to difficulties of proof, the courts probably won't end up ruling that the SALT deductibility cap violates the First Amendment or a core principle of federalism.

But no one should be fooled by the limits of what can be proven in court. In shifting some of the nation's tax burden from over-represented red states to under-represented blue ones, congressional Republicans and President Trump acted in a crassly partisan manner and betrayed core ideals of a country that gained its independence by fighting a war against taxation without representation.

Michael C. Dorf is the Robert S. Stevens Professor of Law at Cornell University and co-author, most recently, of Beating Hearts: Abortion and Animal Rights. He blogs at