Column — Do COVID relief packages violate principles of taxation?

Published 6:00 am Friday, January 1, 2021

The purpose of this column is to provide the readers with some thoughts on three constitutional principles in the hope that they may consider them when developing and voicing their own political opinions on future taxing and spending laws.

Arguably, both Congress and the General Assembly are setting aside these principles for the sake of political and economic expediency, which in turn may have long-term, negative consequences on fiscal stability and the right to property in money. The federal COVID relief stimulus packages and the recent state-level, 5-cents-per-gallon fuel tax law may be among the latest examples of this neglect.

There are at least three principles that impose constitutional limitations on the power of the American legislatures to tax and spend. Although the exact interpretation and application of these principles vary, they remain generally recognized by legal authorities, in the text of American constitutions, and in case law. Unless otherwise excepted for in the constitutions, they are: (1) taxing and spending laws must serve a public purpose, public use, or the general welfare; (2) they must be levied according to some standard ratio of equality, uniformity, or apportionment; and (3) the people burdened with taxation within a particular taxing district must be the ones who benefit from such laws. The first and third are closely related to the principles of eminent domain. Generally speaking, for example, just as the authorities must demonstrate that the seizure of private property in land serves a public use and the owners are provided with just monetary compensation, they must also demonstrate that the seizure of private property in money serves a public purpose and the taxpayers are compensated through some benefit.

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Article I, Sect. 8, of the federal Constitution reads that Congress “shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States.” In other words, spending must be directed toward paying debts, providing for national security, or otherwise serving a national public purpose.

In terms of state-level taxing and spending, Article I, Sect. 3, of the Virginia Constitution reads, “That government is, or ought to be, instituted for the common benefit, protection, and security of the people, nation, or community ….” Article I, Sect. 6, reads, “That all … cannot be taxed, or deprived of, or damaged in, their property for public uses, without their own consent ….” Article X, Sect. 1, reads, “All taxes shall be levied and collected under general laws and shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax ….” These clauses appear to support the three general principles of taxation noted above.

Applying these principles to the COVID relief and fuel-tax laws, one might argue that providing tax-funded COVID relief checks only to certain income-based classes of private individuals violates the public purpose maxim. It seems convincing that the primary purpose of these COVID relief packages is to benefit private parties at the expense of other private parties, particularly if the first group does not pay federal income taxes.

Turning to state law, as State Sen. Frank Ruff pointed out in his Nov. 24 column in The Herald, the 2020 General Assembly secured a statewide, 5-cents-per-gallon fuel tax this year. Ruff mentioned that an “unfair factor” in the statewide 2020 fuel tax was that “most all of that money will be spent in the cities and suburbs” rather than on the roads or other transportation projects in rural areas, even though all Virginia gas-buyers will be required to pay the tax.

If the cities and suburbs are disproportionately benefiting from this law, then it may violate the third principle: those burdened with taxation within a particular taxing district must be the ones who benefit from such laws. The Virginia Supreme Court actually noted this in the 1917 case Watkins v. Barrow, a case that sits rather close to home.

Based on that third principle, the state high court held that the Prince Edward County Board of Supervisors exceeded its authority when it tried to levy and collect a county road tax on real and personal property located within the corporate limits of Farmville.

It remains debatable whether these laws meet the general criteria for taxation. It is certainly arguable that providing economically distressed businesses and families with much-needed funds provides for the general welfare. Perhaps the distribution of fuel-tax funds is proportionate in some way. Regardless, it is important for members of a self-governing republic to be familiar with these and other constitutional principles when taking positions on public policy — they serve as common standards.

Simply ignoring the rule of law for the sake of political or economic expediency is a dangerous practice.

Historically speaking, unhinged fiscal policy is a leading cause in the downfall of nation states. Our national debt now stands at $27.2 trillion. This neglect may also lead to a greater loss of liberty.

As the famed 19th-century jurist and treatise-writer Thomas M. Cooley put it, “An unlimited power to make any and everything lawful which the legislature might see fit to call taxation, would be, when plainly stated, an unlimited power to plunder the citizen.”

Angus McClellan is a resident of Meherrin. He can be reached at