Janus as a Tax Case

by

John Ryskamp
philneo2001@yahoo.com

Seventy years of the West Coast Hotel/Carolene Products scrutiny regime have

left the bar and the courts, pathetically unable to come to terms with an end of the

scrutiny regime. Most pathetically, the groups who advocated for the holding in

Janus, are entirely unable to advance the doctrines of the case in order to change

policy. There has been no doctrinal follow up to Janus. People are simply scratching

their heads. There are, of course, suits for refunds of the union fees, but no suits to

change policy.

Justice Kagan provides the sole exception to the current confusion. She knows

exactly what Janus means: the long-sought end to the scrutiny Constitutional regime.

The only objection she does not provide in her dissent is really the one which

matters: what is the black-letter, multi-pronged legal test of the new Constitutional

regime? That is currently the bone of contention, and the Janus Court does nothing

to advance the struggle. It is a struggle for the soul of the Constitution which is

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being played out quietly—probably even secretly—as Constitutional students

entirely unschooled in how to carry out a Constitutional regime change, struggle to

come to terms—literally!—with the new regime. An examination of just one aspect

of Janus—taxation—shows how many questions are raised by the Court’s

recognition of a factual, and individually enforceable, speech indicium in taxation.

In her Janus dissent, Kagan correctly notes: “So when a government mandates a

speech subsidy from a public employee—here, we might think of it as levying a tax

to support collective bargaining—it should get at least as much deference as when it

restricts the employee’s speech.” That is, if there is deference, and since the scrutiny

regime is over, there is no deference. The point is that she is correct in her

characterization: the union fee is a tax just as the penalty in the Affordable Care Act

is a tax, as the Court held in upholding the ACA. Indeed, it seems Kagan put in this

Janus comment in as a dig at the Court, as if to say, If you upheld ACA as a tax, why

wasn’t the union fee in this case upheld as a tax? This, of course, includes the notion

that the ACA was upheld under scrutiny regime doctrines—so why weren’t the

union fees? And, no speech indicium of taxation was found in the ACA, so why is

one found in the union fees? And, the ACA establishes no individually enforceable

right with respect to medical care, so why is one established with respect to union

fees?

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 The Court did not take the tax bait, but in refusing to do so, what it alluded to,

tax-wise, opens the door to challenging all policies which depend on taxation:

The State claims that its employment-related debt is ‘squeezing core programs in education, public
safety, and human services, in addition to limiting [the State’s] ability to pay [its] bills….’ It
therefore ‘told the Union that it would attempt to address th[e financial] crisis, at least in part,
through collective bargaining….’ And ‘the State’s desire for savings’ in fact dr[o]ve [its]
bargaining’ positions on matters such as health-insurance benefits and holiday, overtime, and
promotion policies….But when the State offered cost-saving proposals on these issues, the Union
countered with very different suggestions. Among other things, it advocated wage and tax
increases, cutting spending ‘to Wall Street financial institutions,’ and reforms to Illinois’ pension
and tax systems (such as closing ‘corporate tax loopholes,’ ‘[e]xpanding the base of the state sales
tax,’ and ‘allowing an income tax that is adjusted in accordance with ability to pay’).

What prevents “tracing back” to policies put in place as a result of the Janus tax?

What prevents negating policies where it can be shown that, but for the tax (or is it,

where the tax played any role at all in securing passage?), those policies would never

have been enacted? Nothing, except the sloth of the advocates of Janus. They

simply have no idea what to do with this victory. For example, there are no progeny

Janus doctrines.

And that is characteristic of the conservatives who challenge the scrutiny regime.

Although they are not the only ones who ridicule the scrutiny regime, they are the

ones who bring the cases which tear down scrutiny regime doctrines. Liberals are

content with legislative advances which seem (but actually, do not) move in the

direction of individually enforceable rights: they will take the Affordable Care Act,

even though it does nothing to establish an individually enforceable right to medical

care.

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 Opposition to refunds in Janus is the spearhead of efforts to limit and neutralize

Janus. As Chemerinsky and Fisk say in “Exaggerating the Effects of Janus…:”

First, the unions are private entities; they are not state actors bound by the First Amendment, were
not acting “under color of law,” and therefore are not liable under § 1983. Second, if they are
deemed to have acted under ‘color of law,’ the unions are protected by qualified immunity under
Filarsky v. Delia, the Supreme Court’s most recent decision concerning the liability of private
actors sued under § 1983. Third, even if the unions are not protected by qualified immunity, they
still have a ‘good faith’ defense; they were acting in good faith following Abood until it was
overruled.

And yet it is highly unlikely that such arguments will prevail outside a scrutiny

regime analysis, or even under current refund legal doctrines which don’t bear any

particular relation to the regime. Kagan maintains that Janus will only create a hole

in the regime: “And so, the key point about today’s decision is that it creates an

unjustified hole in the law, applicable to union fees alone. This case is sui generis

among those addressing public employee speech—and will almost surely remain

so.” However, whatever will happen in the future, that prognosis is not the law

today. The law today, is something else she said: “the majority has chosen the

winners by turning the First Amendment into a sword, and using it against workaday

economic and regulatory policy.”

Janus does two important things regarding taxation: it establishes that there is an

individually enforceable speech factual indicium of taxation, and it establishes that

that taxation reaches into nearly every policy in the country. Doubtless this is why

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Kagan believes that Janus will be restricted to its facts. But that is at odds with what

she says about the reach of the speech right in Janus:

Speech is everywhere—a part of every human activity (employment, health care, securities
trading, you name it). For that reason, almost all economic and regulatory policy affects or touches
speech. So the majority’s road runs long. And at every stop are black-robed rulers overriding
citizens’ choices. The First Amendment was meant for better things. It was meant not to undermine
but to protect democratic governance—including over the role of public-sector unions.

Taxation has exactly the same reach? So why the difference in enforcement

between individually enforceable speech and supposedly individually unenforceable

taxation? Especially since now the Court recognizes a speech factual indicium in

taxation.

The refund issue changes dramatically when viewing the union fees as taxes, and

brings into play doctrine which lands taxation squarely within due process

enforcement. We haven’t yet litigated whether Janus fees are actually Federal, not

state, taxation. If scrutiny regime doctrine—which is a Federal legal doctrine—

permitted the State to levy the fees, and these fees are taxes, how are they not Federal

taxes? How is the State not acting as the Federal government? Qualified sovereign

immunity does not apply to refunds of Federal taxes. It is waived under subsection

(a)(1) of 28 U.S.C. Section 1346 in conjunction with Internal Revenue Code section

7422 (26 U.S.C. Section 7422), or under section 7422 in conjunction with subsection

(a) of Internal Revenue Code section 6532 (26 U.S.C. Section 6532). Further,

in United States v. Williams, the U.S. Supreme Court held that in case where an

individual paid a federal tax under protest to remove a federal tax lien on her property
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where the tax she paid had been assessed against a third party, the waiver of

sovereign immunity found in 28 U.S.C. Section 1346, authorized her tax refund suit.

It is implausible to argue both that Janus ended the scrutiny regime, and that the

scrutiny regimes continue to protect—under minimum scrutiny—private or public

entities. Neither are states immune: the Court has clearly said that states may not

enact an unchallengeable tax (https://harvardlawreview.org/2016/02/reconciling-

state-sovereign-immunity-with-the-fourteenth-amendment/).