May the Massachusetts Senate use the budget process to change the state income tax? If so, why: if not, why not?
This is not a bar exam question, but in future maybe the commonwealth’s law schools should include it in their curricula together with the answer. First, of course, we need to find out what the answer is. I think I know, so when the Supreme Judicial Court (SJC) looks at the amicus briefs it received in response to its call, somewhere in the pile will be mine.
The question is on the SJC’s docket because the House of Representatives put it there, in the form of a request for an advisory opinion. Unlike the Supreme Court of the United States, which can decide only case and controversies – meaning litigation between opposing parties – the SJC has the authority to issue opinions as to whether a proposed piece of legislation would pass constitutional muster, a sort of pre-clearance. It is only the House, the Senate, and the Governor and Council that have the right to request advisory opinions, and then only “upon important questions of law, and upon solemn occasions,” i.e. not upon questions relating to the court’s favorite color.
To know why the House is asking the SJC to opine on the Senate’s ability to vary the tax rate via the budget bill, a précis of the historical background may prove helpful.
Almost 100 years ago, the people of Massachusetts elected a Constitutional Convention, which recommended a series of constitutional amendments. In 1917-18, the voters ratified 22 of them including Article 63, which prescribes the budget-making process. Under Article 63, the Governor recommends to the Legislature a budget containing “all proposed expenditures of the commonwealth for the fiscal year.” The Legislature then incorporates “all appropriations based upon the budget to be paid from taxes or revenues… into a single bill which shall be called the general appropriation bill,” and has the right to “increase, decrease, add or omit items in the budget.” After the Legislature has passed the appropriations bill, the Governor may choose to “disapprove or reduce items or parts of items,” a power commonly known as the line-item veto.
As is the norm, earlier this year the incoming Governor, Charlie Baker, filed his budget bill with the Legislature. The House of Representatives sent its general appropriations bill to the Senate. Then something unusual happened. The Senate replaced a section of the bill with its own section, one that would fix the personal income tax at 5.15%. This, claims the Speaker of the House, violates the origination clause, the part of the State Constitution that says, “All money bills shall originate in the House of Representatives; but the Senate may propose or concur with amendments, as on other bills.” No, replies the President of the Senate, it does not violate the origination clause, because the House bill you sent up contained a couple of tax measures thereby rendering it a money bill.
So is it a straight appropriations bill, or a tax measure trapped in the body of an appropriations bill? It has to be one or the other: the statute book has markedly fewer identity options than Facebook’s current tally of 58.
Those of you following the Obamacare litigation will be familiar with the federal origination clause, which provides: “All bills for raising revenue shall originate in the House of Representatives, but the Senate may propose or concur with amendments as on other bills.” U.S. Const., art. I, s. 7, cl. 1. At issue in the latest Obamacare case is the extent of Senate’s power to amend revenue bills that it receives from the House. Does the prerogative of proposing or concurring with amendments as on other bills give the Senate carte blanche?
By way of an analogy, I ask that you imagine settling down with your youngest for a bedtime story. You turn off the overhead, switch on the lamp, make sure teddy is comfy, and read the words, “In the great green room there was a telephone and a red balloon and,” (turn page) “the wealth of those societies in which the capitalist mode of production prevails presents itself as an immense accumulation of commodities.” You pause, skip ahead, and find more such dross. Where you expect a reference to a cow jumping over the moon you read “just as in the simple circulation of commodities the double change of place of the same piece of money effects its passage from one hand into another, so here the double change of place of the same commodity brings about the reflux of the money to its point of departure.”
Soporific, yes, but not what you had in mind for your little pumpkin’s nightly nudge toward the Land of Nod. And then realization dawns, and you think to yourself: Darn, someone has gone and replaced all but the first few words of Goodnight Moon with Das Kapital. And that, according to the Pacific Legal Foundation, the organization representing the plaintiff in Sissel v. U.S. Department of Health & Human Services, is pretty much what the United States Senate did with the House bill that became the Affordable Care Act (ACA).
The House passed H.R. 3590, a seven-page measure titled “a bill to amend the Internal Revenue Code of 1986 to modify the first-time home buyers credit in the case of members of the Armed Forces and certain other Federal employees, and for other purposes,” of which the Senate retained the first 19 words (“be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled”) deleted everything else (all that stuff about service members and veterans, etc.) and inserted the 1,500-page Affordable Care Act. For a visual demonstration of that substitution, performed by the Rep. Louie Gohmert (R-TX, 1st District), click here and start watching at minute 4:20. For extra fun, hit mute and try to discern from Rep. Gohmert’s facial expressions and gestures whether he (a) approves or (b) disapproves.
The Pacific Legal Foundation argues that the Senate’s cut-and-paste job violated the origination clause. It says that there is a difference between, on the one hand, amending and, on the other, complete substitution. Likewise, here in Massachusetts the Speaker of the House contends that the Senate went too far when it took a section from the House bill relating to tax credits and replaced it with a section that would freeze the income tax rate at 5.15% (rather than let it decline in accordance with the wishes of the voters, a clear majority of whom endorsed the measure on the 2000 statewide ballot to roll back the income tax to 5%). This complete substitution goes beyond the scope of the term “propose or concur with amendments, as on other bills,” suggests the Speaker.
While the Senate’s wish to flout the will of the voters and keep the income tax at 5.15% reflects about as much economic wisdom as the ACA, my opinion, which I hope the justices of the SJC will find persuasive (or, more realistically, at least ask one of the junior clerks or interns to skim), is that complete substitution is constitutional. The merit of the proposed tax hike – or tax-reduction pause, to be more neutral – is not relevant to the question of whether it comports with the Constitution. Similarly, the efficacy of the ACA has no bearing on whether its enactment conformed to the requirements of the origination clause.
If the federal origination clause said “the Senate may propose or concur with amendments as on other bills so long as the amendments are germane,” the outcome should be different. But it says no such thing. Adding those words involves amending the Constitution, and the route is via Article 5 not the judiciary.