Tyranny By Regulation

Posted on August 8, 2009
Filed Under Uncategorized |

Here is why people, average people, don’t trust government to be involved in something as personal as healthcare. Time and again the Federal and state governments demonstrate that being a participant and a rule maker is impossibly conflicted and the result is byzantine regulations and processes that constitute a form of tyranny on the citizenry. The majority opinion in a tax case recently reviewed by the D.C. Appeals Court sums up nicely how this works.

Comic-strip writer Bob Thaves famously quipped, “A fool and his money are soon parted. It takes creative tax laws for the rest.” In this case it took the Internal Revenue Service’s (“IRS” or “the Service”) aggressive interpretation of the tax code to part millions of Americans with billions of dollars in excise tax collections. Even this remarkable feat did not end the IRS’s creativity. When it finally conceded defeat on the legal front, the IRS got really inventive and developed a refund scheme under which almost half the funds remained unclaimed. Now the IRS seeks to avoid judicial review by insisting the notice it issued, acknowledging its error and announcing the refund process, is not a binding rule but only a general policy statement.

[From TaxProf Blog: D.C. Circuit Slams IRS, Opens Door to Billions of Dollars Telephone Excise Tax Refunds]

Another example of this is governments invoking redevelopment, eminent domain, or environmental regulation to strip property owners of their rights. The city of Half Moon Bay faced bankruptcy, until the state intervened to give them a lifeline, after using environmental laws to forestall development of a housing project. The $37 million judgement for the plaintiff against the city was greeted with dismay and threats by city officials that police officers would no longer patrol the streets and house fires would burn unrestrained… it would appear that the last bastion of scoundrels is not patriotism but public safety.

The reaction of the Half Moon Bay City Council to the $36,795,000 judgment was a mixture of shock, mystification and dismay – akin to a 16-year-old being given the keys to his first car and realizing for the first time the cost of gasoline, insurance and maintenance. In addition to compensating Ms. Yamagiwa for the loss of private property, it is hoped that Chief Judge Walker’s opinion will remind all government decision makers at the state and local levels, when considering the implementation of environmental policies, to first ask the question: “What about the Constitution?”

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