in
LEGAL COMMENT
NoTaxat[enWithoutBewesentaUen
(lintessih'deeedby a |edeni Judge)
Clark is senior
partner in the firm
of Lathrop & Clark,
legal counsel to the
WASB.
BY
James E
Clark
~
n 1764 when King George decided to
raise additional revenue from the
colonies by means of his Stamp Act,
the colonists were incensed. They had
no say in the matter of their own taxation, which struck them as profoundly unfair. "Your Memorialists conceive
it to be a fundamental Principle...without
which Freedom can no Where exist, that the
People are not subject to any Taxes but such
as are laid on them by their own Consent,
or by those who are legally appointed to
represent them, "1 they wrote to the King.
Thus, "No taxation without representation" became a rallying cry of the American
Revolution. Not surprisingly, when establishing their new government, the Founding
Fathers placed the power to tax squarely in
the hands of the people's elected representatives - - state and federal legislators. They
did not expect judges to levy taxes. "The
judiciary...has no influence over either the
sword or the purse, ,,2 explained Alexander
Hamilton. He would have been surprised.
Last April, in Missouri v. Jenkins, 3 the
United States Supreme Court ruled that
federal judges can force district officials to
increase property taxes to finance efforts to
remedy constitutional violations in the public
schools. What's more, the justices ruled 5-4
that federal judges can order district officials
to disregard state laws placing limits on
taxation whenever there is a constitutional
reason for doing so. This Legal Comment
discusses the basis for the Court's decision
and the potential scope of its applicability.
Background. In Jenkins a federal trial court
found that unconstitutional racial discrimination existed in a Missouri school district. 4
After years of litigation, the court approved
a desegregation plan to be funded by the
state and the school district to remedy the
constitutional violations. The remedial plan
represented an extensive and costly renovation of virtually every aspect of education
within the district. More than $200 million
was allocated to convert the entire district
into a Series of magnet schools with distinctive programs. Another $265 million was
earmarked for rehabilitation of the physical
plant.
Unfortunately, district officials had no
way to raise their share of the remedial
costs. The state constitution and statutes
placed restrictions on the district's taxing
authority, the Legislature had rejected
efforts to broaden that authority, and the
taxpayers of the district had repeatedly
repudiated proposals to increase taxes.
So the federal judge personally doubled
the property tax levy. He also ordered an
income tax surcharge on all work done,
services rendered, and activities conducted
within the district. Finally, he enjoined
enforcement of state laws prohibiting these
tax measures.
On appeal, the federal court of appeals 5
decided the judge had exceeded his powers
in ordering the income tax surcharge
because the surcharge entirely restructured
the state's scheme of school financing rather
than merely removing restrictions on an
existing taxing authority. In all other
respects, the court of appeals affirmed the
actions of the judge. To minimize
IJa=b
NOVEMBER 1990 WISCONSIN SCHOOL NEWS
19
intrusion on local affairs, however, the court
of appeals r e c o m m e n d e d that in the future
the judge should order district officials to
raise taxes (while enjoining enforcement of
the state constitution and statutes) rather
than raising taxes himself.
~Commentators
have observed
that the decision
applies not only to
cases of racial
discrimination, but
to virtually all
constitutional
violations of which
local governmental
bodies are found
guilty if those
bodies do not
have sufficient
resources to fund
remedies. ~
Lsga/Commit is deigned to
provl¢~ authoritative general
information, with oommeotary,
as a see,ice to WASE] members,
It should not be reli~:l upon as
legal advice. If legal advice ~s
required, the services o! competent legal cotrlsel should be
c~tainecl.
20
WISCONSIN
Supreme Court Decision. The Supreme
Court ruled unanimously that the judge
abused his discretion by personally imposing property taxes. (The court did not consider the income tax surcharge.) Referring
to the judicial tax levy as "an extraordinary
event," the court stated that "in assuming
for itself the fundamental and delicate
power of taxation, the district court not only
intruded on local authority but circumvented it altogether."
To give proper deference to the integrity
and function of local government institutions, the court added, such a drastic remedy as a tax increase should only be imposed
after exhausting all permissible alternatives.
The judge did have alternatives, the court
pointed out. He could have ordered school
officials to raise taxes, as the court of
appeals recommended, rather than doing it
himself. Thus, the court decided that the
court of appeals should have reversed the
judge's decision and r e m a n d e d the case to
him rather than permitting the tax increase
to stand.
The court might have stopped right there.
(Indeed, four of the justices did.) Instead, the
majority proceeded to offer its opinion about
the course of action recommended by the
court of appeals. Is there a difference
between raising taxes directly and ordering
someone else to raise them? The court's
majority thought so. "The difference between
the two approaches is far more than a matter
of form," it said. Directing local governmental
bodies to implement remedies both protects
the function of those bodies and places the
responsibility for solving problems on those
who created them.
The majority then discussed the validity
of ordering local officials to raise taxes
under the principle of comity and under
Article III and the 10th A m e n d m e n t of the
US Constitution. Concerning comity, the
state argued that the drastic remedy of judicial taxation would not have been necessary
SCHOOL NEWS
NOVEMBER
1990
were it not for the expansive and excessive
nature of the remedial plan. According to
the state, the expenditures went far beyond
what was required to eliminate the vestiges
of segregation. Because the court had
agreed to review only the judicial tax levy
and not the validity of the plan the levy was
designed to finance, the majority refused to
entertain the state's argument.
Concerning the 10th Amendment, the
state contended the federal government was
powerless to interfere in matters of local
taxation. In the American political system,
the federal government has only limited
powers. The 10th A m e n d m e n t reserves to
the states and to the people those powers
not delegated to the federal government by
the Constitution. The majority pointed out,
however, that the 14th A m e n d m e n t (with its
equal protection and due process clauses}
permits federal courts to disregard state
laws that interfere with its commands.
Finally, concerning Article III, the majority rejected the state's argument that an
order to increase taxes overstepped the
bounds of federal judicial authority. Said the
majority: "[A] court order directing a local
government body to levy its own taxes is
plainly a judicial act within the power of a
federal court."
The majority also rejected the state's
claim that federal judges cannot require
local governments to levy taxes beyond the
extent authorized by state law. Pointing to a
"long and venerable line of cases" holding
that federal courts can compel local governmental bodies to impose taxes adequate tb
meet their financial obligations, the majority
concluded: "[A] local...taxing authority may
be ordered to levy taxes in excess of the
limit set by state statute where there is a
reason based in the Constitution for not
observing the statutory limitation."
Scope of Decision. The majority's holding
is potentially very broad. Commentators
have observed that the decision applies not
only to cases of racial discrimination, but to
virtually all constitutional violations of
which local governmental bodies are found
guilty, if those bodies do not have sufficient
resources to fund remedies.
Court-ordered tax levies could also be
imposed, as the concurring justices noted, to
pay damages awarded against school districts for civil rights violations under 42
U.S.C. § 1983.
Despite its potentially expansive scope,
the effect of the Jenkins decision may be
limited by a n u m b e r of factors.
For one thing, the majority's discussion
of the court of appeals' recommended form
of judicial taxation appears to be unnecessary to its decision and thus of questionable
value as precedent. The four justices who
concurred in the court's reversal of the
judge's personal tax levy refused to join in
this further discussion, stating, "Today's
casual embrace of taxation imposed by the
unelected, life-tenured federal judiciary
disregards fundamental precepts for the
democratic control of public institutions...[We] cannot acquiesce in the majority's statements on this point."
Furthermore, Justice Brennan, who
recently retired from the court, was among
the majority to discuss the recommended
form of judicial taxation with approval.
With his departure, the justices are evenly
split on whether the majority's discussion is
a holding or simply dictum. The continued
vitality of Jenkins may thus depend on the
views of newly appointed Justice Sourer.
Finally, the unprecedented extent of the
remedial plan, though a revenue windfall
for this particular school district, raises a
specter of federal judicial intrusion into
educational policy and financing that is
troubling to many. The judge decided the
taxes he imposed were necessary to fund
the desegregation plan he selected. But the
plan, by the judge's own admission, was
intended to do much more than end segregation. It was also designed to make the
city's schools "visually attractive" and comparable to the schools in surrounding suburban communities.
The judge's remedial plan included such
things as a 2,000-square-foot planetarium;
greenhouses and vivariums; high schools in
which every classroom has air conditioning
and 15 microcomputers; a 25-acre farm
with air-conditioned meeting rooms; a model
United Nations wired for language translations; broadcast-capable radio and television
studios with editing and animation labs; a
temperature-controlled art gallery; and
1,875-square-foot elementary school animal
rooms for use in a zoo project.
Such items, the concurring justices noted,
are a legitimate part of political debate over
educational policy and spending priorities,
but they are not necessary to eliminate
racial discrimination. On the conviction that
an initial finding of a constitutional violation
should not be used as the basis for~a wholesale shift of authority over the public schools
from parents, teachers, and elected officials
to an unaccountable federal judiciary whose
province is law, not education, congressional efforts are now afoot to restrict the
power of federal judges to order local
officials to raise taxes.
Conclusion. In the American political
system, taxation has not been regarded as
one of the powers of the federal judiciary.
As James Madison wrote long ago, "The
legislative department alone has access to
the pockets of the people. ''6
Recently, however, in Missouri v. Jenkins,
a majority of the United States Supreme
Court decided that a federal judge may
order a school district to raise taxes - - and
may prohibit enforcement of state and local
laws that would otherwise prevent such a
tax increase - - to fulfill the district's constitutional obligations. Although the implications of the opinion are potentially broad,
the full effect of the decision cannot yet be
determined. ®
References
1. The Stamp Act Crisis 41
(E. Morgan, ed. 1952).
2. The Federalist No. 78, at 523
(J. Cooke, ed. 1951).
3. 110 S. Ct. 1551 (1990).
4. Jenkins v. Missouri, 672 F. Supp. 400
(WD Me. 1987).
5. Jenkins v. Missouri, 855 F.2d 1295 (Sth
Cir. 198.8}.
6. The Federalist No. 48, at 334
(J. Cooke, ed. 1961).
NOVEMBER 1990 WISCONSIN SCHOOL NEWS
21