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Friday, June 29, 2007

Last Taxpayer Standing

The popular American folklore that taxpaying citizens are the masters and government the servant might lead one to expect that taxpayers can sue the government when they think it has spent their money in a way that violates their rights. But that's not how the courts see the matter. By and large, taxpayers as such have no standing whatever to sue the government. Maybe the master is the servant and the servant the master.

Earlier this week the U.S. Supreme Court ruled, once again, that mere taxpayer status confers no standing to sue the government when it allegedly spends money in an unconstitutional manner. The decision in Hein v. Freedom From Religion Foundation left intact the Bush administration's power to administer its Faith-Based Organization and Communities Initiative. The Freedom From Religion Foundation (FFRF) filed suit after officials of the Bush administration held conferences and gave speeches to encourage the participation of religious groups in the Faith-Based Initiative. The purpose of this program is to permit religious social-service organizations to compete with secular organizations for taxpayer money to carry out various government purposes, such as drug counseling. FFRF argued that using tax money for such a religious purpose violates the First Amendment's Establish Clause, which states, Congress shall make no law respecting establishment of religion….

Let's be clear about this: the Court did not say there was no merit to the plaintiff's constitutional argument. Rather, it said that simply being a taxpayer does not qualify a person to make that argument in a court of law. Why not? Because no mere taxpayer can claim he specifically has been damaged by government spending. (See Richard Epstein's op-ed in Friday's Wall Street Journal.)

Had FFRF raised any grounds but religion the suit would have been laughed at from the start. But the Supreme Court has allowed one narrow exception to the general prohibition on taxpayer suits for unconstitutional spending. The exception is embodied in the 1968 case known as Flast v. Cohen. The Flast ruling says a taxpayer does have standing when he alleges that a specific congressional appropriation violates the Establishment Clause's restriction on Congress's power to tax and spend. (Congress had voted to give taxpayer money to religious schools in the Elementary and Secondary Education Act of 1965.)

Despite that ray of hope, FFRF lost in federal district court, but then won on appeal. That set the stage for the Supreme Court reversal. While five of the nine justices ruled against FFRF, the majority had serious differences among themselves and thus did not all sign on to the same opinion. Justice Samuel Alito wrote a plurality opinion that was also signed by Chief Justice John Roberts and Anthony Kennedy, who filed an additional concurring opinion. Justice Antonin Scalia also wrote an opinion, joined by Justice Clarence Thomas, that, while concurring with the plurality, took it to task for not going far enough. Justice David Souter wrote a dissent, joined by Justices John Paul Stevens, Stephen Breyer, and Ruth Bader Ginsburg. (All opinions are here.)

Briefly, the plurality said the exception in Flast, although good law, doesn't apply to the facts in the FFRF case because the spending at issue was not a specific congressional appropriation but rather a presidential initiative using general appropriations. Scalia agreed that FFRF does not have standing to challenge the spending but added that the standard set out in Flast is ridiculously arbitrary: why, he asked, is a congressional appropriation treated differently from an executive order? Both are government spending. But Scalia said the precedent is bad law and should be reversed–no taxpayer should have standing to sue the government over spending. The Souter's dissenting opinion said Flast does apply to the FFRF case and that it is good precedent in need of protection.


Presumption against Taxpayer

What I find interesting about the case is not the specifics, but the attitude toward taxpayer standing. As noted, it has long been held that merely being a taxpayer does not entitle a person to sue the government when he thinks it is spending money unconstitutionally. Why not? The answer seems to be that no taxpayer is specifically harmed by the spending. As the Supreme Court put it in the controlling Frothingham case, [I]nterest in the moneys of the Treasury … is shared with millions of others; is comparatively minute and indeterminable; and the effect upon future taxation, of any payment out of the funds, so remote, fluctuating and uncertain, that no basis is afforded for an appeal to the preventive powers of a court of equity. Scalia pointed out that psychic injury from unconstitutional spending, apart from any wallet injury, has also sometimes been alleged, but he dismissed it. Is a taxpayer's purely psychological displeasure that his funds are being spent in an allegedly unlawful manner ever sufficiently concrete and particularized to support … standing? The answer is plainly no.

The exception for Establishment Clause grievances was permitted only because earlier courts thought that serious violations of conscience could be involved. In creating the exception the Flast court cited James Madison's Memorial and Remonstrance Against Religious Assessments, which expressed concern that tax money might be used to help one religion at the expense of others. Scalia saw no grounds for an exception to the rule. As he put it,

[I]t is of no conceivable relevance to this issue whether the Establishment Clause was originally conceived of as a specific limitation on the taxing and spending power. Madison's Remonstrance has nothing whatever to say on the question whether suits alleging violations of that limitation are anything other than the generalized grievances that federal courts had always been barred from considering before Flast. Flast was forced to rely on the slim reed of the Remonstrance since there was no better support for its novel conclusion, in 1968, that violation of the Establishment Clause, unique among the provisions of our law, had always inflicted a personalized Psychic Injury upon all taxpayers that federal courts had the power to remedy.

He has a point, but it works in the other direction. Why should religious offense be the only exception? Surely the government is capable of violating freedom of conscience in ways that do not involve the Establishment Clause. What if a taxpayer believes that farm subsidies are unconstitutional? Or, if the government fights an undeclared nondefensive war, why shouldn't taxpayers who object to aggression or think only Congress can declare war be able to sue on grounds that their money is being used unconstitutionally? A virtually limitless list of other possibilities could be compiled.


Separation of Powers?

Another rationale for not permitting such suits is that they would prompt a violation of the separation-of-powers doctrine by making the courts the judge of what the executive branch may do and say. As Justice Kennedy wrote, Permitting any and all taxpayers to challenge the content of … executive operations and dialogues would lead to judicial intervention so far exceeding traditional boundaries on the Judiciary that there would arise a real danger of judicial oversight of executive duties.

Justice Alito added another reason:

It has long been established, however, that the payment of taxes is generally not enough to establish standing to challenge an action taken by the Federal Government. In light of the size of the federal budget, it is a complete fiction to argue that an unconstitutional federal expenditure causes an individual federal taxpayer any measurable economic harm. And if every federal taxpayer could sue to challenge any Government expenditure, the federal courts would cease to function as courts of law and would be cast in the role of general complaint bureaus.

An earlier court said a mere taxpayer suit, if successful, would provide relief that no more directly and tangibly benefits [the plaintiff] than it does the public at large.

To all of which, one may ask, so what? Why does any of that matter? According to reigning dogma, does the government exist for the convenience of the governed or do the governed exist for the convenience of the government? Barring taxpayers from suing for misuse of their money is far more consistent with a view of the state in which the citizen is the servant. He is relieved of his money by force and expected not to watch too closely how it is spent. If he thinks it has been spent in violation of the stated rules — tough luck. The best he can do is marshal his one vote and try to unseat the offending political incumbents. That is what's called accountability and popular sovereignty.

The ultimate problem here is taxation. When money is given in exchange by consent, problems can be averted by written agreements or solved as a last resort by dissociation. But taxation is not based on consent. It's based on compulsion. There is no enforceable contract. Once that is understood, the reluctance of the government to recognize legal standing for taxpayers is understandable — and revealing. The theory of popular sovereignty is inconsistent with practice.

Taxpayer standing may seem like an arcane technical legal issue of little consequence for freedom But this is not the case. It's a critical issue addressing the question of how the taxpayers are to keep the government on a short leash.

A final word: Scalia's dissent shows that the case law on this issue (like others) is, in the words of Judge Frank Easterbrook, arbitrary, illogical, and lacking in comprehensiveness and rationality. Scalia adds, [T]here is no relying on the random and irrational where you have a chaotic set of precedents. In other words, a court can reach any conclusion it wants and find past cases to support its position. Indeed. As John Hasnas (pdf) suggests, the line between the rule of law and the rule of men is exceedingly fine.

  • Sheldon Richman is the former editor of The Freeman and a contributor to The Concise Encyclopedia of Economics. He is the author of Separating School and State: How to Liberate America's Families and thousands of articles.