Recently in Constitutional Law Category

In September, I wrote about the unconstitutional Welcome Back Tax that was tucked into LD 1495, the latest installment of the Legislature's perpetual saga of broken promises of real tax relief for Maine taxpayers.  At that time, we at the Center for Constitutional Law had also announced our intent to file a lawsuit seeking to have the courts strike down this illegal new tax.  The issue for us then was the timing of the lawsuit.

By the time of our announcement, a people's veto effort was well underway, collecting tens of thousands of signatures for a petition to give the voters a chance to repeal the new tax law.  If they collected enough signatures to put it on the ballot, then the law would not go into effect before the voters had a chance to vote on it next June.  Under that scenario, we wouldn't be able to go to court until after the vote, and then only if the voters did not vote to repeal it.  If, however, they did not collect enough signatures to put it on the ballot, then we could file our lawsuit right away.

According to state law, the Secretary of State has 30 days from the filing deadline to determine whether the petition is valid.  Because of a weekend and the Columbus Day holiday, the Secretary of State's deadline was Tuesday, October 13, 2009.  That was the day we were waiting for, to see if we would be filing our lawsuit right away.

Well, October 13 came and went with no decision by the Secretary of State.  As of today--three weeks later--there is still no decision by the Secretary of State.  The delay has prompted the petitioners leading the people's veto effort to go to court seeking a court order that the people's veto be put on the June ballot.

What does all this mean for our legal challenge to the unconstitutional Welcome Back Tax?  It looks like we won't be going to court anytime soon.  The Maine Constitution does not require the Secretary of State to validate the people's veto petition before it can be voted on.  The Maine Constitution requires the petition to be voted on unless it is determined to be invalid by a procedure enacted by the Legislature.  The procedure enacted by the Legislature gave the Secretary of State until October 13, 2009, to invalidate this petition, which he did not do.  The next step is a vote by the people.  Before we can get to it, the Welcome Back Tax will have to get by the voters in June.  If it does, we will go to court and see how it holds up against the constitution.

Posted by Arnie Clark, Director of the Center for Constitutional Law

There has been a lot of discussion lately over the relative merits and drawbacks of the recent blast of changes to the tax laws here in Maine.  Most of that discussion has been from a policy perspective--about whether the changes are good policy or bad policy.  One consideration that has been getting overlooked in all this is whether the new law is even constitutional to begin with.  

Take, for example, the newly created "household credit."  Under the old law, taxpayers could use deductions (standard or itemized) and personal exemptions to reduce their taxable income.  Under the new law, taxpayers can no longer use deductions and exemptions.  Instead, they use the household credit to reduce their tax liability.  (As a shining example of tax code simplification, the household credit replaces the deductions and exemptions, but the taxpayer's household credit is calculated based on what the taxpayer's deductions and exemptions would have been.) The big difference, though, is that the household credit is only available to established residents.  Suppose you are a new resident moving to the state, or a Maine native coming back to raise your family here.  You will be greeted with a big tax bill your first year back.  Meanwhile, all your neighbors with the same household income that were here before the new law took effect will pay a much lower tax.  Welcome Back!  Or, suppose you work here in Maine, but you commute from out of state to do so.  You will be greeted with a big tax bill every year.  Welcome Back!  So, what about this "household credit" and the "Welcome Back Tax" it creates?  Are they constitutional?

After a bit of looking, it appears this new law runs afoul of no less than three provisions of the United States Constitution.  This paper (pdf) summarizes how the new income tax scheme collides with the Commerce Clause, the Privileges and Immunities Clause, and the Equal Protection Clause.

The amount of the tax isn't the same for everyone.  For a family of four with an average household income, the Welcome Back Tax can amount to $2,200, and the more kids you have the higher the tax can go.  I doubt I'll hear someone explain how the Welcome Back Tax encourages businesses to move here, or encourages our young people to come back home.  I'd be even more surprised to hear someone explain how the Welcome Back Tax is constitutional.

The mission of the Con Law Center is to protect private property rights in Maine and restore economic freedom by challenging illegal state laws and local ordinances.  In practice - we provide legal representation to individuals, property owners and small business owners whose constitutional rights are being violated by state or local governments.

The Con Law Center is the new advocate for Maine's entrepreneurs, small businesses, and property owners who do not have the necessary resources and time needed to organize a legal challenge when their constitutional rights are threatened.  The Maine Legislature, state agencies, local officials, committee members, and town employees too often believe their decisions cannot be questioned - but now the ordinary citizens have a new voice.



I will be pursuing cases to roll back the encroachment of state and local laws and regulations that make it hard to start or run a business and create jobs in Maine.  Most of our state's job growth is with small companies and family businesses, and my job is to get the intrusive laws and regulations out of their way so they can grow.  When these companies are free to make common-sense business decisions without being denied, restricted, or second-guessed by regulators, more people get hired and have new opportunities to prosper right here in Maine.

If you believe you are in a situation where your Constitutional Rights are being restricted by a state or local law or official, please go to the CASE SUBMISSION FORM in the "Latest Research" section of the site's CON LAW tab.