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Do we really need to worry, as Jack Balkin does, that the states will bring too many lawsuits challenging federal tax laws?

Lawprof Jack Balkin doesn't like the way Judge Hudson dealt with the Anti-Injunction Act in the opinion that allowed Virginia to go forward in its attack on the Obamacare individual mandate:

In essence, Judge Hudson argues that by passing [the Virginia Health Care Freedom Act] that says that Virginia will interpose itself to protect its citizens from the individual mandate, Virginia has succeeded ... in getting around the federal tax-anti-injunction act. 

... The fact that Virginia can get around the tax anti-injunction act simply by passing a statute saying that it thinks the federal law is unconstitutional means that every state in the Union can do so as well. This undermines the purposes of the tax anti-injunction act, which was to keep tax protesters from littering the federal courts with protest litigation; the act requires that challenges to tax laws proceed in an orderly fashion through requesting refunds.

Tax protesters? You see the states, acting through their legislatures, as presenting the same problem of frivolous, wasteful litigation posed by private litigants?

There is a built-in check here that is not present for those private litigants, which is that elected representatives of the people of a state have gone through a deliberative process in making that statute, and, in addition, the state executive branch has made the decision to bring the lawsuit. These tiers of public accountability make a difference with respect to the necessity of the Anti-Injunction Act.

That act, as Judge Hudson noted, does not refer to a state as being barred from bringing suits for injunctions, only a "person." There's a question of interpretation about whether a state should be included in the word "person," and there's good reason to think it should  not. For one thing, the general rule of statutory interpretation is that "person" does not mean state. And, even more important, as I've just explained, structural checks mean that the state as a litigant doesn't present the same problems posed by an individual litigant.

Indeed, the logic of the opinion seems to suggest that if Virginia had objections to any other part of the federal tax laws, it could pass a Virgina Tax Freedom Act related to that provision, claiming that the tax provision was beyond the reserved powers of the states under the Tenth Amendment. 

How big of a threat is that? The federal tax power is extremely broad, so that virtually any lawsuit like this would be easily dismissed on the merits. You don't need a broad interpretation of the Anti-Injunction Act to solve this problem. Nearly all of the cases you ask us to fret about would either never be brought or be dismissed quickly for failure to state a claim. In the Virginia case, by contrast, the question on the merits is very difficult, and the judge held back from resolving it. How often could that happen? And when it does happen, should there be a way to challenge it in court?

(Also, Balkin can't mean the state would be "claiming that the tax provision was beyond the reserved powers of the states under the Tenth Amendment." He must have meant to write that the claim would be "the tax provision was beyond the enumerated powers of Congress and thus reserved to the states the states under the Tenth Amendment.")

Full post as published by Althouse on August 03, 2010 (boomark / email).