Yet More Media

It's been a big media week for Law Prof on the Loose. I was in a story on the local FOX news last night. You can see it here.

The story was about all the money DC is paying out in settlements in lawsuits over alleged police and other public misconduct. As usuall, the 5-second snippet of me consists of the most contentious thing I said. They show me saying that defendants are usually happy to string out cases and maybe wear down the plaintiff. Which is true, but my larger point was that defendants, without doing anything wrong or unethical, make decisions about what to do based on cost-benefit analysis. If setttling a case is cheaper than the expected cost of going forward to trial (and bearing in mind the effect on other cases of either course of action), a defendant will settle. There are lots of considerations, but the main one is figuring out the lowest cost course of action.

Watch What You Say

I am quoted in this week's Newsweek, which has got people e-mailing me about it. It's got me remembering that press quotations can be misleading.

Newsweek's reporter initially contacted me about some bills working their way through the Virginia legislature that would say that no one in the state would be required to buy health insurance. It had previously been reported that these bills, if passed, would "make it illegal to require people to buy health insurance." Federalism is one of my areas of expertise, so he asked me whether a state could prevent Congress from requiring people in that state to buy health insurance. I pointed out that (a) that's not even what the bills say, and (b) of course if they did say that, they would be pre-empted by a federal law that mandated health insurance, if Congress passed one. So any state that passed a bill that purported to protect people in that state from a federal mandate requiring health insurance coverage would just be engaged in meaningless grandstanding, as politicians so often are. (The chairman of the Federation of Virginia Tea Party Patriots said that the bill was a focus of major lobbying by Tea Party volunteers. It says a lot about the Tea Party that one of their major priorities is a bill that wouldn't actually do anything.)

He also asked me more generally about the health care bill working its way through Congress, and whether it would be constitutional for Congress to require people to buy health insurance. I spent a good ten or fifteen minutes explaining that while of course we don't know yet what the final bill, if any, will actually say, it looks to me like it would be constitutional.

I pointed out that (a) health care is commerce, in fact 1/7 of our national economy, and Congress's power to regulate commerce is very broad, and (b) as I understand it, the bill doesn't actually require people to buy health insurance; it just imposes a tax penalty on people who don't, and Congress is constantly using the tax system to impose incentives or disincentives on various behaviors, so that would be commonplace and would probably be OK. I also referred him to the analysis by my old professor Akhil Amar, which supports the bill's constitutionality. And I observed that lots of governments require people to buy things, including insurance (e.g., auto insurance), so that wouldn't be unheard of either.

I even explained why Senator Orrin Hatch's analysis claiming the bill would be unconstitutional is wrong. Hatch doesn't like the fact that the bill provides that if states don't set up "health insurance exchanges," the federal government will do it for them. But this makes the plan constitutionally better, not worse, because this way the states aren't required to set up health insurance exchanges; they have the option to do so or not.

Having said all that, I did say that the federal government would be doing something new, and that whenever that happens, people challenge it. Given that, as far as I know, the federal government has never done this before, I suggested that a constitutional attack on a federal mandate to buy health insurance would not be trivial or frivolous, but that, in my opinion, it would fail.

So out of the whole 20 or 30 minute interview, what got quoted? Naturally, the quote is:

"The federal government would be doing something new," says Jonathan Siegel, a constitutional-law scholar at George Washington University. "It's not a trivial claim" for the states to make. "It's not frivolous."

There you are. I am accurately quoted, and I can't put any fault on Newsweek, but it looks like I am attacking health care legislation, when I spent 99% of the interview defending it.

So watch what you say when you talk to the media. They only have space to quote one thought from you, and you never know which one it will be.

About Time

It's only been 52 years since Congress decreed that corporations are deemed to be citizens of their "principal place of business" for diversity purposes, so it was about time the Supreme Court got around to deciding what that means. The circuits have spent decades debating between the "muscle" test, which considers that the principal place is business is the place where the corporation does its main business activity, and the "nerve center" test, which locates the p.p.o.b. at the corporate headquarters. The statute has meant different things in different parts of the country all this time.

Finally, the Supreme Court has stepped in and settled the debate. The principal place of business is the nerve center -- the corporate headquarters. It was unanimous, and the Court even wrote a pretty good opinion, pointing out that the nerve center test has the virtue of being easier to apply, even though it will lead to occasional anomalies.

The only question is why it took so long!

Go Fish

Let me get this straight. As you're eating a filet o' fish sandwich at McDonald's, the company wants you to be thinking, "you know, what I'm eating used to be an actual fish, swimming around happily in the water somewhere. I'm eating something that used to be alive. And how would I like it if some fish were eating me?"

What else could explain the strangely macabre ad series that McDonald's is using to push this sandwich? A man buys a filet o' fish sandwich at a drive thru, but before he can take a bite, he gets a call on his cell phone from -- a fish! And the fish, which is stuffed and mounted on a wall, sings to him, "Give me back that filet o' fish! Give me back that fish! What if it were you hanging up on this wall? If it were you in that sandwich you wouldn't be getting this call!"

The man dumps his cell out the window and takes a big bite out of the sandwich, but is that what you would do? If you're not a vegetarian, presumably you've made your peace with eating fish and animals, but do you really want to think about it as you're eating?

Sheesh, what a weird ad.

Tax Protestor Redux

Was Andrew Joseph Stack, allegedly the man who flew a plane into a building containing IRS offices, a "tax protestor"? Some commenters on Saturday's post say yes, and some news organizations follow suit. But I disagree.

Of course, anyone is free to use any definition they want -- it's not as though these matters are regulated by some Tax Protestor Standards Board -- but in my view Stack lacked the essential qualities I have in mind when I call someone a tax protestor.

Let's consider the things Stack apparently did, as revealed in his alleged suicide note. As I noted on Saturday, he doesn't give all the details, so we don't really know what he did, but apparently he (1) tried to shield his income from taxes by creating a fake church, (2) failed to report distributions from his IRA as income, and (3) failed to report some of his wife's income, allegedly because of mistakes by his accountant. Does that make him a tax protestor?

There's a difference between a tax protestor and an ordinary tax cheat. Lots of people cheat on their taxes. Certainly, not reporting income does not by itself make someone a tax protestor.

In my mind, the first essential element of being what I call a tax protestor is that the person believes, or at least claims to believe, that what he is doing is lawful. Tax protestors claim that they're not evading taxes. They claim that there's no law requiring them to pay taxes, or that the tax law is unconstitutional, or that some obscure section of the tax code makes all domestic income nontaxable, or some such nonsense. So again, just failing to report income (as in items 2 and 3 above) doesn't qualify.

Second, in my view, tax protestor arguments are not just about pushing the envelope with regard to ambiguous loopholes in the tax code. When I call someone a tax protestor, I mean that their argument is so outlandish that no reasonable person could entertain it.

That's why I exclude Stack's escapade with the fake church. That comes closest to the flavor of tax protest -- Stack says he joined "a group of people who were having 'tax code' readings and discussions" and that they "carefully studied" the code and did everything necessary to make it legal not to pay taxes. That's the kind of thing that goes on at the absurd "seminars" offered by prominent tax protestors.

But what's different here is that the position doesn't seem nearly so outlandish as tax protestor positions. Again, it's hard to judge without knowing more detail about what Stack actually did. But churches are tax exempt. And the question of what constitutes a "church" is pretty complicated. The question of what constitutes a genuine religious belief is obviously delicate, and some organizations that initially arose in a secular context have successfully transformed themselves into tax-exempt religions (e.g., the Church of Scientology).

So either Stack believed that he and his buddies could successfully declare themselves to be a religion, or he was deliberately scamming. Either way, it's just not what I would call a tax protestor argument. There's a difference between trying to exploit one of the genuinely ambiguous loopholes in the tax system and having a crazy argument that most people don't have to pay taxes. I would feel the same way about someone who tried to claim most of their home as a home office, or who claimed their hobby expenses as business expenses, or who got involved in some sophisticated but phony tax shelter.

Finally, I would say that Stack's manifesto, and his life story as revealed in it, just don't have anything like the flavor of tax protest. Stack argues about whether it was right for the tax code, as changed in 1986, to forbid companies from treating software engineers such as himself as independent contractors. He says this change in the tax code made it impossible for him to succeed in business. He also says that one year he "decided that it would be irresponsible not to get professional help" with his taxes, so he gave all his information to an accountant and got screwed because the accountant failed to report some of his wife's income.

These are not the actions of a tax protestor. A tax protestor would be saying that income tax is entirely optional, that wages are not income, that you don't have to file because Form 1040 doesn't have an OMB control number, or crazy stuff like that. A tax protestor wouldn't get screwed by an accountant's mistake because a tax protestor wouldn't turn to a real professional for help with his taxes. A tax protestor wouldn't complain that the 1986 tax changes had doomed his business, because a tax protestor wouldn't recognize that there was any obligation to pay taxes to begin with.

As I see it, Stack may have tried to cheat on his taxes with his fake church scam. He may have failed to report income. And he certainly had a lot of disagreements with the tax code. But he's not what I have in mind when I use the term "tax protestor." Of course anyone else can use a different definition. But that's what I mean by the term.

As I remarked on Saturday, this result is somewhat ironic and shows that the term "tax protestor" is not a very good term. Someone who flies a plane into a building to protest his disagreement with income taxes is certainly what you would call a "tax protestor" if you didn't know the meaning that the term has developed. And someone who claims to agree completely with the tax code but who denies that it requires payment of income taxes would better be called a "tax denier." But for whatever reason, the term "tax protestor" has come to mean someone who has an outlandish theory about why the law doesn't require payment of income taxes. Stack may have been a tax cheat, but I wouldn't call him a tax protestor.

A Real Tax Protestor

By now you've all seen the terrible story of the man, apparently Andrew Joseph Stack, who flew a plane into a building housing some IRS offices because he was furious over various tax issues.

Faithful readers know that I have an eccentric interest in tax protestors. Curiously enough, as I explained to a Dow Jones reporter yesterday, Stack was not really a "tax protestor" as that term is commonly used. The term "tax protestor" is generally used to refer to people who, for various absurd and ridiculous reasons, claim that most Americans have no legal duty to pay income taxes. Stack, by contrast, understood that the law required him to pay taxes; he was just damned upset about it.

As tax protestors themselves plaintively point out, the term "tax protestor" is not really apt for use in describing them. They are not "protesting" taxes; they are just claiming (absurdly) that the law doesn't require them to pay tax. They might more accurately be called "tax deniers," a term coined by Dan Evans on the analogy of "Holocaust deniers." But even Dan himself calls them "tax protestors." That's just the term most people use.

Now Stack was a real tax protestor. He took action to protest his tax obligations. His terrible story shows what can happen when the country is filled with people spewing hateful anti-government rhetoric. I'm sure most people who do so don't ever plan to use violence and don't even particularly wish it to happen. But you can only call government agents so many horrible names, of which "jack-booted thugs" is one of the less caustic examples, before some crazy people will go over the edge. Hate groups are indirectly responsible for these terrible crimes.

Stack's suicide note, incidentally, shows that while he was not, as I say, a "tax protestor" in the usual sense, he wasn't exactly an upstanding taxpayer either. He doesn't give all the details of his past tax problems, so one can't be sure exactly what happened, but it seems like (1) he tried to take advantage of the special tax treatment of churches by organizing a fake church, (2) he claimed to have no income in a year in which he cashed out an IRA, which counts as receiving income, and (3) he claims to have been screwed over by the tax law changes made in 1986. The second point sounds like it could be an honest mistake that might happen to anyone, but the first point sounds like a deliberate scam, so I'm less inclined to give him the benefit of the doubt (and that's before we consider that he later flew an airplane into a building full of innocent people). As to the third point, I'm not up on all the details of the tax change Stack complained about, but I will say that the 1986 law had a big impact on my own family, as it basically made the previous line of work of some members of the family impossible. But no one in my family flew an airplane into a building. They just shifted their line of work.

So Stack was a terrible man and his story has a terrible ending. But just in case you thought you'd seen the stupidest thing a tax protestor could ever say, surf on over to Larken Rose's website (he's a convicted criminal, tax protestor, and self-described anarchist), and check out this statement in which he discusses Stack and says "generally I have to praise him for what he did."

Tape Delayed Frustration

Michael Rosenberg of Sports Illustrated complains that it's impossible to enjoy the Olympics because so much of the coverage is tape-delayed (even though the games are being held in our own longitude this year) and it's impossible to avoid finding out the results of the events before seeing them.

I agree that this is a big frustration -- it's hard to enjoy a sporting event if you already know the result. I'm kind of upset at my favorite news websites for telling me results before I want to know them. But the same technology that brings us instant results could easily shield us from them if only editors would use a little intelligence.

It's simple: news websites, instead of splashing "Vonn Takes Gold" across their home page, should have a prominent link marked "Olympic Results." Then people who want to see results instantly wouuld only be one click away from them, and people who don't want results thrust upon them involuntarily wouldn't click the link.

Sheesh, is that so hard? News websites don't publish spoilers in the headlines of their movie reviews. When a story or a review contains a spoiler pretty much everybody follows the convention of giving a spoiler warning. So why not do it for Olympic results?