Our Runaway Government

The Wall Street Journal offered a remarkable detail in its news story today about the IRS targeting of “icky” conservative groups:

Internal Revenue Service officials considered imposing a tax on large donations to many tax-exempt political organizations in 2011, recently released emails show, a move that could have disproportionately hurt conservative activists. . .

Establishing such groups as tax-exempt entities is attractive, because it allows organizers to keep donors’ identities secret. Imposing a gift tax on those donations could discourage them, advocates fear. The top gift tax rate was 35% in 2011 and is now 40%.

IRS audits of donors to these tax-exempt entities came to light around May, 2011. At the time, the IRS had sent audit notices to a handful of donors. Word quickly spread among lawyers who handle gift tax matters, because the IRS effort was unusual. The agency generally hadn’t sought to impose the gift tax on donations to tax-exempt groups in at least 20 years, perhaps longer, following an unfavorable court ruling and changes in the law by Congress, according to lawyers and IRS documents…

The Wall Street Journal later reported that all the donors who received audit notices had contributed to a now-defunct conservative entity called Freedom’s Watch. [Emphasis added.]

How conveeeenient that only the donors to one organization received audit notices.

But there’s a more fundamental question here: what gives the IRS the authority to change the application of tax law in such a broad way on its own initiative? As the WSJ story explains further:

In May 2011, an attorney in the IRS chief counsel’s office wrote to his superiors that the “plan is to elevate the issue of asserting gift tax on donors to 501(c)(4) organizations,” and seek a decision from the commissioner and the IRS chief counsel.

This is the runaway administrative state in action. Hardly the first instance of this from the Obama Administration. Lawrence Tribe, who is the chief of the “living Constitution” tribe, writes elsewhere in the WSJ today that Obama’s greenhouse gas regulation plan is unconstitutional. (Don’t forget that Tribe thanks Harvard Law student Barack Obama for his research help on one of his most radical articles ever, “The Curvature of Constitutional Space: What Lawyers Can Learn from Modern Physics.” You need to read it, not to believe it.) Anyway, take it away Tribe:

In my view, coping with climate change is a vital end, but it does not justify using unconstitutional means. . . After studying the only legal basis offered for the EPA’s proposed rule, I concluded that the agency is asserting executive power far beyond its lawful authority. . .

Even more fundamentally, the EPA, like every administrative agency, is constitutionally forbidden to exercise powers Congress never delegated to it in the first place. The brute fact is that the Obama administration failed to get climate legislation through Congress. Yet the EPA is acting as though it has the legislative authority anyway to re-engineer the nation’s electric generating system and power grid. It does not. [Emphasis added.]

I don’t think Tribe has any appreciation for how much Obama—an epigone of Woodrow Wilson—thinks taking action without lawful authority or Congressional action is a feature, not a bug. That’s why I highlight “every administrative agency” in Tribe’s quote above. Obama is merely trying to complete Wilson’s ambition of rendering Congress completely subordinate to the president, if not functionally obsolete. This means every administrative agency is now set up to govern on its own. (Phil Hamburger, call your office.) And who might Obama have learned this from (in addition to Wilson)? Why, Tribe and his colleagues at elite law schools. Still, better late than never.

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