In a stunning turn of events, according to news reports from The Tico Times, on January 27th, the Constitutional Chamber of the Supreme Court ruled that it is possible for a tax law to be unconstitutional. The Constitutional Chamber of Costa Rica, informally known as Sala IV (Fourth Chamber) is the highest reviewing body of constitutional law in Costa Rica and has shocked the legal community with its latest opinion calling for a national tax to actually be struck down. For readers still not able to fathom the above, repeated and simplified: A tax. Struck. Down.
Is it me or is my 50 colones piece shining a bit brighter today?
For over a hundred years, many legal scholars and jurists have believed with few exceptions, any federal tax no matter how passed, no matter for what purpose, was automatically constitutional. Directly opposing this well-established conventional wisdom, L. Arias, writing for The Tico Times reports:
"According to the ruling, a procedural error occurred in the approval of the law, which created the tax in question in 2011. A version of the approved bill was published in the official newspaper La Gaceta, but lawmakers amended several articles and the changes were never published, the Sala IV stated. "
Justices found the drafting of articles 1, 3 and 5 unconstitutional. Those articles outline the implementation of the tax, its rates and sanctions for tax .
The tax law that was ruled unconstitutional was rather narrow, it was not nearly as invasive or all encompassing as other tax laws, like the US income tax, for example. This Costa Rica corporation tax imposed a small ₡201,700 ($380) on any corporation registered in the National Registry and because it was passed incorrectly, it was overturned. But still. A tax. Struck. Down.
The full impact of this landmark decision is not yet known — but as this news that it is possible for a nation's Supreme Court to find that a nationally-imposed tax is unconstitutional is already making waves. Eyes turn to the US Supreme Court which on June 28, 2012 adjudged the Affordable Care Act (aka ObamaCare) in National Federation of Independent Business v. Sebelius to be a tax that is constitutional despite many underlying procedural and substantive questions.
"Federal taxes always are good," Chief Justice John Roberts, who wrote the majority opinion (and possibly the minority opinion as well), is rumored to have thought to himself.
The issue stems from long-standing perceptions that any kind of federal tax automatically passes constitutional muster: The last time the US Supreme Court found any major problems with a federal tax was in Pollock v. Farmers' Loan and Trust Company, 157 U.S. 429 (1895). And that was before they had computers. Well, the electric kind. You know what I mean.
What does this mean for ObamaCare?
The next most serious legal challenge to the ObamaCare Tax arrives on March 5th, when litigants in King v. Burwell are scheduled for oral argument in front of the US Supreme Court. This
la decisión de Costa Rica is sure to only add fuel to the already white-hot fire (white hot is really hot, hence my use of "white" in this metaphor; if there was fire that is hotter than the color white, then please let me know cause that's the color I would want to replace "white" with).
Although the laws of Costa Rica are not binding on the US Supreme Court, there has been a move in the last 20 years for the US Supreme Court to employ legal decisions in foreign lands as precedent. Seriously!
Will this news from one of the most enchanting lands in the world be enough to convince some US Supreme Court justices to rethink their rumored internal monologues? Time will certainly tell. But until then, it is just fun to type these words in 2015 and not be lying: "a Supreme Court found a tax unconstitutional."
It is this writer's hope that he will be able to type it again, in the near future, with the same level of veracity. Or they can just overturn ObamaCare on whatever grounds necessary. I'm fine with that too.