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Duplicative Taxation Among the States: a Problem Not Worth Solving?
Get PDFRecent legal and economic changes—not to mention the rise in telecommuting caused by COVID--have raised the salience of a long-simmering fact about the operation of state and local income tax systems: some multistate employers and employees pay a combined income tax liability that is higher than the tax they would have borne had they operated in just one jurisdiction. Seemingly beyond the reach of the courts to correct, there have been persistent calls for Congressional action to eliminate or reduce this “duplicative” taxation. This Article suggests that the alleged problem may be both less of a problem, and more resistant to a solution, than is commonly understood
The Long Arm of Bostock v. Clayton County: Opening 42 U.S.C. § 1985(3) to Claims of Anti-LGBT Discrimination
No full text42 U.S.C. § 1985(3) is a Reconstruction-era statute that allows one to recover damages from those that conspire to deprive one of one’s constitutional or statutory rights. In the 1970s, the Supreme Court began requiring a showing of discriminatory animus in order to confer liability under the statute. The lower courts have since found that allegations of discriminatory animus against LGBT folks are insufficient to satisfy the requirement. Most circuits have also held that sex-based discrimination is cognizable under § 1985(3), citing federal law’s condemnation of the practice. Other circuits have found sex-based discrimination cognizable under the statute as well, but for opaque reasons. And others still have concluded that § 1985(3) does not reach sex-based discrimination at all, appealing to its legislative history.
Then in 2020, the Supreme Court decided Bostock v. Clayton County, with Justice Neil Gorsuch establishing a new interpretation of Title VII’s prohibition of sex-based discrimination. This Comment argues that Justice Gorsuch’s opinion is not merely relevant for the scope of Title VII but also has ramifications for the scope of § 1985(3) because it gives rise to three key propositions: (1) federal law now condemns anti-LGBT discrimination, affording special protections to LGBT folks; (2) discrimination against LGBT folks necessarily constitutes discrimination on the basis of sex; and (3) legislative history should only be used if the relevant statute is genuinely ambiguous. Justice Gorsuch has thus provided LGBT plaintiffs with a master key, suggesting arguments tailored to each circuit’s position on sex-based discrimination, such that any circuit should permit LGBT folks to use § 1985(3) in the wake of Bostock
Climate Change Policy in the International Context: Solving the Carbon Leakage Problem
Get PDFUnder the Paris Agreement, nations set their own emissions goals and policies. As a result, climate policies vary widely across countries, with some countries imposing stringent emissions policies and others doing very little. A key problem when carbon policies vary across countries is that energy intensive industries can relocate to places with few or no emissions restriction. Relocated industries would continue to pollute but would be operating in a less desirable location. Moreover, the countries that imposed strict emissions reductions lose the benefit of having those industries located domestically. This problem, known as leakage, is one of the key reasons the United States has failed to enact substantial climate change policies. Without a solution to leakage, it may be much more difficult to prevent catastrophic climate change.
The most commonly proposed response to leakage is to impose border adjustments—tariffs on imports based on the emissions from the production of the imported good, and rebates for exports of prior taxes or other prices imposed on emissions. Border adjustments ensure that the same price is paid regardless of the location of production. Border adjustments, however, are complex to impose and potentially incompatible with the WTO. Moreover, numerous studies show that border adjustments do not significantly improve the effectiveness of regional carbon policies.
We propose a better solution to the leakage problem. Our solution, the extraction/production tax or the EPT, combines a tax on domestic extraction with a conventional tax on emissions from domestic production. The core intuition behind this hybrid tax is that shifts in location due to carbon prices arise because of their effects on the price of energy seen by foreign actors. By reducing demand for fossil fuels, taxes on emissions from domestic production lower the global price of energy. In response, foreign actors increase their energy use, generating leakage. Border adjustments do not change this effect: carbon taxes on production with border adjustments also reduce the price of energy and increase energy use abroad. A tax on domestic extraction, however, raises the global price of energy because it reduces supply. A higher price of energy causes foreign users of energy to reduce their energy use, reducing leakage. Foreign extractors of energy, however, increase their supply. By combining a tax on the supply of energy and a tax on the demand for energy, the EPT sets these two forces against each other. A tax on the supply side of the market allows a lower tax on the demand side, with the two taxes set to minimize distortions in non-taxing regions.
The EPT not only better solves the economic problem of leakage than conventional approaches; it is also much simpler to implement. The EPT can be implemented by imposing a nominal tax on domestic extraction and border adjustments only on energy (but not goods in general) at a lower rate than the nominal extraction tax. Both an extraction tax and border adjustments on energy are easy to impose, which means that the EPT can greatly simplify the administration of carbon taxes. Finally, the EPT reduces concerns with WTO legality raised by traditional approaches. The EPT is a practical solution to the leakage problem and, therefore, can be a key piece to solving the global climate change problem
Proceduralism: Delaware’s Legacy
Get PDF“for law students or others who think of law as just a kind of a blunt instrument in which there are judgments and damages at the end of it, the fact is that the law grows through a sort of a conversation in the opinions . . .”1
This article examines the Delaware courts’ 1980s shift from managerialism to a theory I label proceduralism. I argue that managerialism, which justified corporate law’s deference to directors in the preceding fifty years, was corporate law’s response to social, political, and cultural concerns outside corporations. At the turn of the twentieth century, corporations and their managers were empowered to fight socialism by protecting the interests of workers, while in the midcentury, corporations became the first line of defense against the threats of totalitarianism and later the Cold War. Corporate directors were viewed as heroes and their power justified as necessary for the survival of American democracy. By the 1980s, however, in response to numerous hostile acquisitions, decisions of the Delaware Supreme Court appeared to discard managerialism as the Court used the fairness standard to review, and even invalidate, directors’ actions. Yet, as this Article demonstrates, the Court did not abandon its deference to corporate directors. Rather, the Court substituted proceduralism for managerialism as a theory justifying managerial power. Grounded in the concept of fairness, specifically fair dealing, proceduralism is the idea that certain procedures—for example, authorization by disinterested directors or ratification by shareholders—ensure maximization of value, and that corporate law should focus on incentivizing corporate directors to follow these procedures by assuring them that, when they so do, their actions will not be subject to judicial review. Proceduralism was cemented into law in the decades following the hostile takeover boom, as the Delaware Chancery Court enmeshed fair dealing, or fair procedure, with the presumption of the business judgment rule, assuring directors that if they followed the procedural frameworks suggested by the Court, their actions will receive the protection of the business judgment rule, whether such actions offered their shareholders a fair price or a price at all. By the twentieth century’s end, Delaware corporate law became fixated on internal processes rather than discretion and expertise; proceduralism became Delaware’s legacy
Workers of the World, Differentiate: Expanding Protections for Workers in the Age of Labor Antitrust
Get PDFAntitrust has traditionally served consumers—how can the law regulate firms in a manner that prevents monopolization and preserves competition among sellers of goods? A recent turn in scholarship and shifting application of antitrust law from a regulatory perspective suggests the possibility for a broader expansion of antitrust protections into the labor market. Rather than considering monopoly effects in a market (where a market is dominated by a single seller), this line of work suggests a turn to focus on monopsony effects (where a market—such as a labor market—is dominated by a single buyer), and a particular focus on the risk of harm to employees created by one company dominating a labor market. Existing theoretical work on merger review regarding labor markets thus far has been in the context of traditional employees, as has been the broader consideration of antitrust’s application to labor. But the positioning of a worker that emerges from a situation like the recent attempt by publisher Penguin Random House to acquire Simon & Schuster is distinct. This Comment proposes and attempts to answer two questions: first, how can we think not only about new applications of antitrust law, but about a new category of worker? And second, how can we broadly position workers, regardless of how they may be categorized, to best respond to issues of monopsony in their relevant markets
Does Strengthening the Property Rights of Employee-Inventors Spur Innovation? Empirical Evidence on Freedom-to-Create Laws Passed by US States
Get PDFThe incompleteness of employment contracts may leave inventors vulnerable to ex post opportunism by their employers, which could curtail their innovative effort. We use passage of freedom-to-create laws by seven US states as a natural experiment to investigate whether laws strengthening the property rights of inventors against employers’ opportunism can foster innovation. We employ a difference-in-differences design that includes a rich set of state, technology, and time fixed effects to compare the quantity and quality of patenting in these seven states vis-à-vis synthetic control states. The laws increased both the number of patents (by 14 percent) and their quality (according to various measures, including citations and the extent of pathbreaking innovation). The increase in innovation was broad, observed for both firm-specific and generic innovation and in firms with and without prior patents
Unshackling Cities
Get PDFScholars have long demonstrated that cities are constrained by states and the federal government in the exercise of their power. While important, the emphasis on these “vertical” constraints on cities does not account for the “horizontal” constraints on city power from private actors. This Article suggests that the emphasis on vertical constraints on city power is due to a misunderstanding of the history of local government law that describes its sole function as the vertical distribution of power between cities and different levels of government. I revise the history of Dillon’s Rule, the doctrinal cornerstone of local government law’s vertical distribution of power, by arguing that local government law also distributes public and private power, between private capital and cities. Correcting the historical misunderstanding helps to show how private power still shackles cities in their efforts to address important challenges.
Dillon’s Rule is a rule in local government law holding that localities wield only the powers expressly granted to them by states and no others. In this Article, I suggest that this view rests on a misinterpretation of the Rule’s origins narrowly centered on nineteenth-century jurist John Forrest Dillon’s hostility toward local power and his faith in state power. I put Dillon’s Rule back into the historical path from which it emerged, the evolution of U.S. public debt and economic development in the nineteenth century. I argue that this new historical contextualization reveals that Dillon’s Rule also distributes public and private power.
Dillon and his Rule emerged during a critical moment in the evolution of U.S. public debt and economic development, after federal and state debt-financed economic-development projects failed, and localities took up the task. Iowa was the epicenter of local debt finance, and it was where Dillon, then a state court judge, saw a wave of defaults in the 1860s as evidence of cities’ inherent wastefulness and susceptibility to public corruption. Dillon believed, left to their own devices, cities and their mismanagement of debt would repeatedly deprive creditors and investors of their property. In response, Dillon authored the doctrine that would become known as his Rule. But Dillon did not give states the task of disciplining fiscally irresponsible cities. The Rule’s empowering of states was largely procedural. Dillon made cities fiscally powerless so that they could only borrow and spend in a narrow way that would convince municipal creditors that their debts would be repaid. This constraint on local power by private capital was at the core of the Rule’s design.
In closing, I explore the contemporary ramifications of the Rule’s distribution of public and private power. Today, in the name of attracting and shielding capital against city power as Dillon intended, the Rule shackles cities to a limited range of market-consented options with which to address shortages in local economic development, affordable housing, and climate change. Critically, these burdens fall disproportionately on people of color. I argue that seeing the Rule in this new light should impact how we view the project of revitalizing city power moving forward
Politics by Other Means: The Jurisprudence of “Common Good Constitutionalism”
Get PDFProfessor Adrian Vermeule proposes an alternative to what he sees as the two dominant schools of constitutional interpretation in the United States: originalism and what he usually calls “progressivism”1 (by which he means what others call “living constitutionalism”2 ). Against these approaches, he advocates for what Freudians might call a “return of the repressed”3: a recognition of the extent to which the “classical” natural law tradition’s concern with the “common good” has continued to animate our public law—explicitly for much of our history, he says, and implicitly more recently.
On Vermeule’s proposed alternative, courts (and other institutional actors4) should explicitly interpret5 the text of the Constitution, statutes, and administrative decrees with an eye to promoting the “common good” as understood in what he calls the classical tradition, meaning that it should be understood in distinctly nonutilitarian and nonindividualist terms.6 Officials should do so using something like philosopher Ronald Dworkin’s method of “constructive interpretation” (CI),7 in which the aim is to reach the decision that would follow from legal principles that enjoy some degree of explanatory “fit” with prior official acts (court decisions, legislation, etc.), but in which the inevitable explanatory gap is filled by reliance on those principles that provide the best moral justification for the institutional history of the legal system. For Vermeule, those moral principles are ones that embody the natural law’s idea of the “common good” rather than Dworkin’s “moral commitments and priorities . . . which [are] of a conventionally left-liberal and individualist bent.”8 As the last remark implies, Vermeule’s own moral commitments and priorities are of a decidedly anti-liberal (or illiberal) and anti-individualist bent.9 Even more importantly, by allying himself with Dworkin, he wants to emphasize that judges who follow this approach are doing what the law requires, not simply exercising discretionary power to make new law.10
There are nuances to Vermeule’s “common good constitutionalism” (CGC) that I will discuss in Part I, below, but this bracing proposal, even in summary form, raises a host of interesting theoretical questions, of which three stand out: (1) Is there really a natural law? That is, are there, as Vermeule puts it, “principles of objective natural morality (ius naturale)”11 and “objective principles of legal justice accessible to [ ] reason”?12 (2) Why should the “common good” be conceived in nonutilitarian and nonliberal terms? (3) Is Dworkinian CI severable from Dworkin’s own moral commitments (as Vermeule supposes), and is it more plausible as an account of law than the legal positivism Vermeule opposes throughout?
Disappointingly, there are few arguments in this book in support of answers to these interesting questions, although answers are presupposed—or sometimes asserted dogmatically—throughout the text.
In lieu of arguments in response to the first two questions, the phrase “in the classical tradition [or conception]” does most of the work: the “classical tradition” takes there to be a natural law; the “classical tradition” conceives the common good in nonutilitarian and nonliberal terms; and so on.13 No reasons, alas, are ever given for thinking that the “classical conception” speaks univocally or that it is even plausible or defensible. As we will see, it is neither univocal nor plausible.
On the third question, Vermeule makes clear that he takes himself to side with Dworkin against legal positivists, although he also, alas, takes over Dworkin’s well-known mistakes about legal positivism.14 Vermeule, to be sure, is explicit that his audience is not “the professional student of jurisprudence”15 like me, although the book is nonetheless full of ambitious jurisprudential claims16—about the nature of law17 and legal positivism,18 for example—and stakes out clear (and sometimes astonishing19) positions on many of them. Not writing for the professional jurisprudent does not, of course, excuse an author from making mistakes about a subject matter. Some of Vermeule’s mistakes about jurisprudential issues are fairly inconsequential, and I let most of those pass in silence.20 Some others, however, are actually central to his entire project, and I will address them most fully in Part III below.
I proceed as follows. In Part I, I describe Vermeule’s idea of CGC in more detail, including his conception of the “common good” and his contrast of CGC with both originalism and progressive constitutionalism. In Part II, I take up the question of whether there is a “natural law,” or even a univocal tradition of claims about “natural law.” In Part III, I consider his use of Dworkin (including, in particular, in connection with the strongest section of his book, on administrative law), and Vermeule’s dispute with legal positivism. In the Conclusion, I suggest that given that there is no natural law, that Vermeule’s idea of the “common good” is idiosyncratic and objectionable, and that there is not a clear reason to prefer Vermeule’s jurisprudential picture to that of the positivists, CGC is best understood as a kind of crude, results-oriented legal realism,21 in which the judiciary and the administrative agencies are to be enlisted on behalf of a political agenda that is unlikely to win democratic support