Posted by Ilya Somin:
Wall Street Journal Article on the Empress Casino Takings Case:
http://volokh.com/archives/archive_2009_03_22-2009_03_28.shtml#1238012218
The Wall Street Journal has[1] a good editorial summarizing Empress
Casino v. Giannoulias, an important takings case that is currently
before the Supreme Court on a petition for cert. The case involves an
extremely blatant effort to tax one small group of firms (four
riverboat casinos) for the sole purpose of transferring the money to
rival businesses (racetracks). Unfortunately, the Illinois Supreme
Court categorically ruled that no "tax" can be a taking requiring
compensation under the Fifth Amendment's Takings Clause, even when the
tax narrowly targets one specific group of businesses for the purpose
of benefiting another. Along with several other property scholars, I
helped author [2]an amicus brief urging the Court to hear this
important case.
As the Wall Street Journal article points out, the tax in question may
have been enacted in part because of corruption on the part of
since-impeached Illinois Governor Rod Blagojevich. The case also has
important implications for takings law more generally:
Illinois politics seems to be everywhere this year -- and now it
may be headed to the Supreme Court in the form of a lawsuit brought
against the state. The case, which has ties to impeached Illinois
Governor Rod Blagojevich, could have an important impact on the
definition of a "taking" under the Fifth Amendment -- as well as
implications for the state's power of taxation.
In Empress Casino v. Giannoulias, the question involves the passage
of a state law that took money from four riverboat casinos and gave
it to five horse-racing tracks to use as purse money, among other
things. According to the Illinois Supreme Court, the action cannot
be considered a "taking" because it involved the transfer of money
from one party to another, not the confiscation of land, as takings
law has traditionally been applied. (The casinos are appealing to
the U.S. Supremes, who will consider the certiorari petition soon.)
Property is property, however, whether it's the contents of a bank
account, a factory, or a house with a white picket fence. If the
Illinois Supreme Court ruling is allowed to stand, it could
establish a precedent whereby the government may take money from
any successful business to prop up a failing one. That means, in
theory, the government could pass a law to take money from the
successful dry cleaner on Main Street to subsidize the lousy one
around the corner -- or from Barnes and Noble to subsidize the
corner bookshop.
Broadly levied, wealth redistribution for public purpose has
already been ruled Constitutional by the Supreme Court in the case
of the income tax. Writ small, as it is in Empress Casino, it's a
tool that might be wielded against unpopular industries and used by
politicians to kiss up to favorite constituents. Think revenge of
the aldermen.
This is close to the way things were working in Illinois under Mr.
Blagojevich's leadership. The bill authorizing the transfer of
money from the four riverboat casinos to the horse-racing industry
came in the context of more than $340,000 in contributions by
Balmoral and Maywood race track owner John Johnston and other
associates to the Friends of Blagojevich between 2002 and 2007.
Among the evidence in the Governor's impeachment trial were
transcripts of Mr. Blagojevich and his brother Rob discussing some
$100,000 in contributions as a quid pro quo for the legislation to
benefit the racing industry.
References
1. http://online.wsj.com/article/SB123785278166719611.html
2. http://volokh.com/files/empresslawprof.pdf
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