2011/09/11

Is it a "tax" or not a "tax"?

Rob Natelson wrote an excellent article titled Is it a “tax” or not a “tax”? The original understanding I recommend it. But I have a few comments:


My findings on the question, from my reading of the foundation literature, are as follows:
  1. A “tax” is assessment and collection of money or items of value for the purpose of raising revenue to meet the expenses of government. Agreement here.
  2. A “regulation” is a restriction on the modalities of something, but not the prohibition of all modalities.
  3. A tax and a regulation can have different objects, but their objects can also overlap.
  4. A power to tax does not imply a power to regulate and vice versa. The powers are disjoint.
  5. A tax can have a regulatory effect, but applying a tax for a regulatory effect does not make it a regulation, and it may only be done if there is a power to regulate the same objects. It is still a tax, though perhaps not a constitutional one. Therefore,
  6. A charge that does not to raise revenue but only to have a regulatory effect, but on objects for which there is no power to regulate, is not a “tax”, but it is not a “regulation” either. It is unconstitutional on both points.
  7. The key qualifier and purpose of exercising powers “necessary and proper” is only for “carrying into execution”, for making a certain kind of effort, not to accomplish some outcome sought by the sponsors of the act. It is not “carrying into effect”. Therefore,
  8. Powers to carry into execution a regulation are only to do things like draft and publish regulatory rules, lease office space, hire workers, inspect, and impose civil penalties on violators. It extends only to tangible commodities and the transfer of title and possession of them for a valuable consideration. It does not extend to the activities of those engaged in trade, only to attributes of the commodities themselves. It also does not extend to criminal penalties.