Editorials and Opinion Pieces

Taxation through litigation

BY: Damon B. Ansell, special to the Washington Times
DATE: June 22, 1999
SECTION: PART A; COMMENTARY; OP-ED; Pg. A19
LENGTH: 885 words

"The era of big government may be over, but the era of regulation through litigation has just begun." - Robert Reich, former Clinton Labor Secretary (USA Today, Feb. 11).

Taxpayer activists had been emboldened by recent victories: a federally balanced budget, state and federal surpluses and supermajority requirements to raise taxes in 14 states. The remaining states and the federal government still need to pass such legislation before declaring victory. However, before that could happen big government and its most powerful ally, trial attorneys, discovered a new fountain of money - litigated taxation! Given the Reich statement and recent successes by anti-tax activists it should come as no surprise to see President Bill Clinton and Vice President Albert Gore step up their attacks on corporate America. This administration has been very busy ensuring that taxes are to be forced upon consumers by litigation, rather than a vote of the Congress.

Last February the federal government filed an antitrust suit against software giant Microsoft amid much brouhaha over Microsoft's integration of Internet-browsing technologies into its Windows operating system. Administration claims that this lawsuit is based on an interest of protecting consumers from a monopoly ring hollow. Computing costs during the last several decades have plummeted. Today, far more powerful and easy-to-use database applications are available at a fraction of the cost.

In January, Mr. Clinton ordered a federal lawsuit against cigarette manufacturers to recover the alleged costs paid by Medicare to treat smoking-related illnesses. This follows an initial joint suit by the states against these companies to recover the alleged smoking related costs of Medicaid. That suit resulted in a settlement with cigarette manufacturers agreeing to pay almost $250 billion to the states over the next 25 years. The settlement effectively imposed a tax increase on smokers of $250 billion over a 25-year-period, as the cigarette prices paid by smokers are the only source of funds to finance these settlement payments.

Mr. Clinton ordered Attorney General Janet Reno to sue the tobacco companies and in response the Department of Justice (DOJ) complied by asking for the funds to do so - requesting $20 million so far.

It is interesting to note that when asked by fellow Democrats Sens. Edward Kennedy and Richard Durbin on April 30, 1997, about the possibility of a federal lawsuit, Miss Reno said, "What we have determined was that it was the state's cause of action and that we needed to work with the states, that the federal government does not have an independent cause of action." Meanwhile, DOJ spokesman Joe Kirovsky said, "Right now, it would seem we do not have the authority to sue." It seems Janet Reno and the DOJ disagree with their boss but have been told to shut up and toe the line.

The Clinton/Gore team also is actively supporting its allies, the trial attorneys, in their efforts targeting the handgun manufacturing industry. Similar to the attack on tobacco manufacturers this litigation accuses the industry of being responsible for actions committed by individuals, in this case criminals. Claiming that this industry is responsible for the deaths and injuries sustained during criminal or negligent activity is a frivolous charge. Nevertheless a verdict in favor of the trial attorneys would likely result in a settlement paid for by an increase in product prices, i.e. a federally mandated tax.

This liberal cry for gun control grows out of the recent horrible high school tragedies that took place in Georgia and Colorado. Ironically, the establishment fails to note that a dozen gun control laws and a locked gun cabinet failed to halt those assaults, another law would have done little more to help.

Most recently, in a surprise lawsuit filed by the Clinton administration, the DOJ alleges anti-competitive behavior by American Airlines. Industry analysts say this is surprising because the DOJ and the airlines had been negotiating on a settlement policy. The department is claiming that American Airlines deliberately forced smaller airlines out of business in order to drive up ticket prices.

However a report by the Washington Post demonstrated the opposite occurred in most cases. According to the May 14 article, fares to Colorado Springs were listed at $180 prior to low-cost airline competition and dropped to $133 post competition.

The airlines are puzzled by these allegations. "The government can't be asking us to not compete," said Trey Nicoud, a senior attorney for American Airlines. "That is the essence of the lawsuit - that we cannot compete with new entrant carriers."

These recent actions, coupled with recent decisions by state supreme justices resulting in new or higher taxes have forced taxpayer activists to stand and face their enemy. A conference on June 11th at the Capitol by Americans for Tax Reform hopes to heighten the awareness of the efforts of this administration to target American businesses. The Clinton administration must discontinue its strategy of persecuting and prosecuting the makers of legal and non-defective products.