An arguably relevant thought experiment here.

Some thoughts here.

The income tax is voluntary.

There’s just no law requiring you to pay federal income taxes.

The Internal Revenue Code is not law.

The federal government can’t tax “free sovereign citizens.”

Have you heard these statements before?  Maybe you have received e-mail or visited web sites making similar claims.  Tax protestors believe that they do not have to pay taxes based on their interpretation of the law.   They come across very authoritative.  If you are wondering if these tax tricks could be true, read on.

I am not an authority on tax laws so I will simply refer to the IRS web site to answer these arguments.  

Some of the top arguments given to avoid paying taxes:

1. Tax Protestor says – Filing a tax return is voluntary.  (I hear this argument all the time.) Variations: there is no law requiring individuals to pay federal income taxes.  The battle cry for this group is “show me the law.”
   IRS says – “The requirement to file an income tax return is not voluntary and is clearly set forth in sections 6011(a), 6012(a), et seq., and 6072(a). See also Treas. Reg. § 1.6011-1(a).”  For more information and a listing of court cases lost using these arguments go here.    See this law professor’s web page for a layman’s explanation of the IRS law.

 

2. Tax Protestor says – “Wages, tips, and other compensation received…” are not income. Variation of this theme: Only foreign-source income is taxable or only income of corporations is taxable.
   IRS says – “For federal income tax purposes, “gross income” means all income from whatever source derived and includes compensation for services. I.R.C. § 61. Any income, from whatever source, is presumed to be income under section 61.”  For more information and a list of cases go here.

 

3. Tax Protestor says – A taxpayer is not a “citizen” and is not subject to federal income tax laws.  Another version of this argument: only employees of the federal government are subject to federal income tax.  (I’ve heard this one before too.)
   IRS says – The Fourteenth Amendment to the United States Constitution defines the basis for United States citizenship, stating that “[a]ll persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.” The Fourteenth Amendment therefore establishes simultaneous state and federal citizenship.  More here with cases cited.

 

4. Tax Protestor says – “All federal income tax laws are unconstitutional because the Sixteenth amendment was not officially ratified, since the State of Ohio was not properly a state at the time of ratification.”  This category of arguments include other Constitutional arguments such as the violation the religious clauses of the First Amendment, violation of due process under the Fifth Amendment, and other issues dealing with the Thirteenth Amendment and the Sixteenth Amendments.  Conspiracy arguments sometimes fall under this category.
   IRS says –   The Sixteenth Amendment was ratified by forty states, including Ohio (which became a state in 1803), and issued by proclamation in 1913. Shortly thereafter, two other states also ratified the Amendment. Under Article V of the Constitution, only three‑fourths of the states are needed to ratify an Amendment. There were enough states ratifying the Sixteenth Amendment even without Ohio to complete the number needed for ratification.    More here.

 Of course, these arguments all failed in court.

“Like moths to a flame, some people find themselves irresistibly drawn to the tax protester movement’s illusory claim that there is no legal requirement to pay federal income tax.  And, like moths, these people sometimes get burned.”

Source: United States v. Sloan, 939 F.2d 499, 499-500 (7th Cir. 1991), cert. denied, 502 U.S. 1060 (1992), reh’g denied, 503 U.S. 953 (1992).

For detailed counter arguments, see recently released IRS report called The Truth About Frivolous Tax Arguments.    The report sites case law, regulations and statutory law.  

Penalties Add Up

Pay attention to the penalties section here for those who attempt to make these frivolous arguments.  Posing the same arguments over and over even after the courts reject the arguments is categorized as filing frivolous claims.  Trying to use these frivolous claims against the IRS actually gets you harsher penalties.

~~~~~~~~~~~~~~~~~~~~~

Tax Scams  

Internet-based thieves and schemers have contributed to the increase in tax scams.  The scam artists make out but the taxpayer faces fines, penalties and still owes their taxes (with interest).

“Don't fall victim to tax scams. Remember that if it sounds too good to be true, it probably is. If you think you're being scammed, you can report suspected tax fraud activity by sending completed Form 3949-A, Information Referral, to Internal Revenue Service, Fresno, CA 93888. You can download the form or call 1-800-829-3676 to order by mail.”  Source. 

Some of the common scams the IRS sees include:

• Phishing Scams, Frivolous Arguments (and identify theft) Top the 2008 “Dirty Dozen” Tax Scams
• IRS Identifies 40 Frivolous Positions for Taxpayers to Avoid 
• Fraudulent Telephone Tax Refunds, Abusive Roth IRAs Top Off 2007 “Dirty Dozen” Tax Scams 
• Employment Tax Schemes
• Misuse of "Corporation Sole" Laws for Religious Organizations 
• Offering to Help Obtain Tax Benefits — targets have included military families 
• Schemes involving Medical Professionals
• Schemes Promoting Use of Disabled Access Credit
• Home-Based Business Tax Avoidance Schemes
• Slavery Reparation Scams and court cases involving such scams

Related Items:

• Tax Return Errors and Frivolous Tax Arguments — an overview of IRS warnings and technical guidance on frivolous positions
• Criminal Investigation's Tax Fraud Alerts 
• Beacon Journal Tax Tips 2010
• Don’t get scammed at tax time
• Jon Siegel, Professor of Law, George Washington University Law School, Income Tax Protestors Page
• Daniel B. Evans, Attorney at Law, Tax Protester FAQ
• Tax Protesters Dossiers   – lists of tax protesters and summaries of their theories.

Right?

It all started when Ashby Jones opened her WSJ Law Blog post with this: "Cornell is the Lady Gaga of the law-school world. Both are white hot, but the explanations behind each’s popularity don’t don’t fully add up." Then Above the Law's David Lat joined in with (among others): "If Cornell is Lady Gaga, maybe Harvard is Madonna — older, wealthier, and who Cornell aspires to be." Leading to the obvious question–if Cornell is Lady Gaga, who is the UA School of Law? See my answer after the break.

I would say Akron is early Bonnie Raitt–working hard, well reiewed, but not yet a broadly recognized success. Before the alcohol. Or maybe after? Destined to go platinum.

You can play, too, in the comments.

The University of Akron School of Law’s Joseph G. Miller and William C. Becker Center for Professional Responsibility will offer its inaugural Journalism and the Law Lecture titled “Covering the Roberts Court in the Obama Era: A Reporter’s Reflections.” The lecture will be given by Adam Liptak, Supreme Court Correspondent and columnist for The New York Times. The lecture, which is free and open to the public, will be held Tuesday, April 6  at 4 p.m. at The Quaker Square Inn at The University of Akron, 135 South Broadway, Akron, Ohio. One hour of free CLE credit will be offered.

In his presentation, Liptak will discuss the Supreme Court in a time of rapid change. After a decade without new justices in the final years of the Rehnquist Court, the Roberts Court has welcomed three new justices and it may well see a fourth appointment in the near future. Liptak will also consider the leadership of Chief Justice John G. Roberts Jr., the impact of Justice Sonia Sotomayor and the implications for the Court of the fact that it has become, given Democratic control of Congress and the Presidency, the most conservative of the three branches of government.

The lecture is offered free of charge, however registration is required. Click here to register.

Deep thoughts on the issue here.

Income Tax Forms, free tax filing and other tax information on government web sites.

Everyone can now file their federal taxes online for free!  There are more options this year and no income limitations.

Federal Taxes- United States Internal Revenue Service

First, there is the traditional Free File that has step-be-step help.  This is available for those who made $57,000 or less in 2009.    At the Free File web page you will have two choices.  One button allows you to Choose a Free File Company yourself from a list and the second button helps you to Find a Free File Company by answering a few short questions.    

Second Option.  A new option this year allows anyone to file online for free.  There are no income limitations!  This includes 1040EZ, 1040 and 1040A and a variety of other tax forms. Click on the Choose Free File Fillable Forms button on this page.

The Free File program has partnered the IRS with the Free File Alliance LLC, a group of private sector tax software companies. 

Other IRS services and Help

At the Internal Revenue Service (IRS) web site you can also download tax forms, check on the status of your tax refund, get a copy of your submitted tax return, and pay your taxes online.  The IRS site provides lots of help and instructions for the forms and for individuals with tax questions.

Questions about federal taxes?  Contact your local IRS office in Ohio.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

State Taxes- Ohio Department of Taxation

Get copies of state tax forms, file income taxes online FREE (use I-File option; no special tax software is needed), and check on your refund, or use ePayment to pay taxes online. More services and information is available at the site.

Questions concerning your state taxes?  Contact the Ohio Department of Taxation.

 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

 City Taxes – City of Akron Income Tax Division

Free E-Filing online (no special tax software is needed), City Income Tax Forms, JEDD (Joint Economic Development Districts) Income Tax forms, and an estimate payment worksheet.  See the web page for more information.  For tax forms from other cities go here.

Questions? Contact the Akron Income Tax Division with questions about the forms or the JEDD forms. 

 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Regional Income Tax Agency (R.I.T.A.)

R.I.T.A. is a non-profit agency that collects income tax for 157 municipalities in the State of Ohio.  Does this include your town? 

Municipalities in Summit that participates in R.I.T.A.:

• Boston Heights
• Hudson
• Lakemore
• Macedonia
• Mogadore
• New Franklin
• Reminderville
• Silver Lake
• Tallmadge
• Twinsburg

This site allows you to make a payment, register as a new RITA taxpayer, E-File the R.I.T.A. tax (FREE and no special tax software is needed), and more.  For a list of towns outside of Summit County that participate in R.I.T.A. go to this map and then click on your county for a list of towns and villages.

Questions about RITA tax collection, contact information can be found here.  

~~~~~~~~~~~~~~~~~~~~~~~~~~~

For more information, see the Akron Beacon Journals Tax Tips for 2010.

Get one barista's POV here.  Also, the University of Cincinnati School of Law hosts a symposium entitled: The Globalization of Securities Regulation: Competition or Coordination?

     Jeff Skilling, former Enron CEO, has challenged his conviction for fraud and taken his appeal to the Supreme Court of the United States, raising two constitutional issues.  He contends that one of the laws under which he was convicted is unconstitutionally vague, and that his trial should have been moved out of Houston because of adverse pretrial publicity.  In this post I set forth the facts of the case.

    In their brief to the Supreme Court, federal prosecutors claim that Skilling lied to shareholders, federal regulators, and the investing public about Enron's finanacial condition:

1. Petitioner was the president, chief operating officer, and, for several months in 2001, the chief executive officer of Enron Corporation. Between 1999 and the end of 2001, petitioner orchestrated a massive scheme to deceive Enron's shareholders, federal regulators, and the investing public about the company's financial condition and performance. Pet. App. 1a-18a.

a. Enron was formed by the merger of two natural gas pipeline companies in 1985. R. 15066. It enjoyed steady growth through the 1990s due largely to earnings from energy trading in the company's wholesale division. R. 15228. By early 1999, Enron's stock was trading at about 25 times its per-share earnings. R. 17227. Petitioner, whose compensation was tied directly to the value of the company's stock, wished to increase the share price even further. But petitioner also knew that revenue from Enron's existing trading business could not support a higher price-to-earnings multiple (or P/E ratio); as he told his managers, “[t]here ain't no more ‘E’ in the earnings.” R. 17228. Petitioner therefore sought to increase the P/E ratio by convincing the market that Enron was poised for steady and significant growth.

As part of that strategy, petitioner portrayed as bright and promising the prospects of two newer businesses: Enron Energy Services (EES), which sold energy at retail, and Enron Broadband Services (EBS), which represented Enron's effort to enter the telecommunications industry. R. 15226-15229, 17229-17232, 19920-19921. Instead of showing promising results, however, EES and EBS suffered substantial losses. By early 2001, Enron internally predicted that EES would eventually lose more than $1 billion as a result of deteriorating conditions in the California utilities markets. R. 19398. Similarly, EBS lost money in every quarter that it existed. R. 17215, 17232-17233, 17239-17241.

Petitioner responded by systematically concealing the financial condition of EES and EBS from investors. In March 2001, instead of truthfully disclosing EES's poor first quarter numbers, petitioner hastily arranged a “reorganization” of that business two days before the quarter ended. R. 19979-19982. The sole purpose of the reorganization was to hide the losses in EES by shifting all of its money-losing components into the larger balance sheet of Enron's wholesale division. R. 15556, 19446-19448, 19775-19781. The head of EES later testified that petitioner's approval of the reorganization was the worst corporate conduct he had ever experienced, R. 20257, and said of the meeting at which it took place, “I wish on my kids' lives I would have stepped up from that table and walked away.” R. 20338.

As a result of the reorganization scheme, Enron reported first quarter earnings for EES of $40 million, when in fact the business should have recognized a $350 million loss. R. 19988-19989. In the second quarter, Enron announced that EES's earnings had increased 30% to $60 million, although in reality EES had lost $495 million by that time. R. 15567-15568, 15572-15573; Gov't C.A. Br. 17. On analyst calls, petitioner assured investors that “first quarter results were great,” that EES “had an outstanding second quarter,” and that the reason for the shift of certain aspects of EES's business to the wholesale division was “to get more efficiency out of management.” Id. 33; R. 15579.

     In his brief to the Supreme Court, Skilling puts a different spin on things.  He contends that he was simply trying to increase the value of his company's stock as any good manager would:

Petitioner Jeffrey Skilling was a longtime Enron executive, serving as its President and COO for several years before assuming the position of CEO from February to August 2001. Id. He was indicted in 2004 along with Enron Chairman and CEO Ken Lay and Enron CAO Richard Causey. PA18a. The cornerstone of the indictment was the conspiracy count, which alleged an overarching conspiracy to commit wire or securities fraud. Id. The remaining counts – securities fraud, making false statements to Enron's auditors, and insider trading – alleged conduct flowing from that conspiracy. Id.; JA322a-357a.

The Government took time to settle on what crimes, if any, occurred at Enron, R:13292 – other than secret looting by company CFO Andrew Fastow. Critically, Skilling was in no way implicated in Fastow's theft, R:21622-27, 21685, and the Government has never suggested that Skilling shifted or used company funds for his own personal purposes. Prosecutors later admitted that the case against Skilling was plagued by “fundamental weaknesses,” because he “took steps seemingly inconsistent with criminal intent,” there were “no ‘smoking gun’ documents,” and prosecutors relied heavily on cooperating witnesses who had “marginal credibility.” Hueston, Behind the Scenes of the Enron Trial, 44 Am. Crim. L. Rev. 197, 197-98, 201 (2007).

Skilling challenged the Government's case at every turn, presenting evidence showing, for example, *3 that the subject transactions and business decisions were lawful, the risks were fully vetted by outside advisors and Enron's Board, his alleged misstatements were accurate, and all relevant information was disclosed to investors. Pet. C.A. Br. 24-58. The Government responded by emphasizing its theory of honest-services fraud – as opposed to securities or money-or-property wire fraud – as the basis for the alleged fraud conspiracy. It told the jury that this case was “not about what caused the bankruptcy of Enron,” R:36449, or even about “greed,” R:37006-07, 37065. Rather, prosecutors argued, Skilling took inappropriate measures to maintain or improve Enron's stock price, in violation of his fiduciary duties. R: 14784, 14799-800.[FN2] The allegedly improper actions included business decisions that ostensibly exposed Enron to an irresponsible level of long-term risk in exchange for short-term stock-price benefits. JA1044a, 1046a, 1047a. In closing argument, the Government declared that Skilling and Lay committed honest-services fraud because they violated a duty to Enron's “employees” – one prosecutors described as “a duty of good faith and honest services, a duty to be truthful, and a duty to do their job … and do it appropriately.” R:37065.

FN2. JA1052a-53a (“we're here to decide” whether Skilling “breached [his] duties and obligations to [Enron's] shareholders and employees”); R:21224-25 (“fiduciary responsibility”); R:32262-64 (duty of “honesty, candor, and fairness”); R:36568 (“duty” of “honest services”); R:37013-14, 37043 (duties of “loyalty, “honesty,” “honest services”); accord 14751, 14757-58, 14784, 15864-67, 22769-70, 37065.

The Government argued that Skilling committed every alleged act of misconduct with the specific intent to advance Enron's interests – by increasing reported *4 earnings, maintaining an investment-grade credit rating, and improving the price of Enron's stock. JA275a-76a, 282a-83a, 286a-88a. Government witnesses agreed that Skilling was utterly dedicated and loyal to Enron. JA1048a (“had the best interests of Enron in mind” and was “fighting for [his] company”), JA1042a (“a true believer in Enron”), id. (“very committed to the company”), JA1047a-48a (“[r]eally dedicated to the company”). Indeed, Skilling declined $50 million in guaranteed compensation shortly before the alleged conspiracy began, to set an example for management, R:28481-86, and offered to invest $70 million of his own funds – effectively his entire net worth – to keep the company operating when it was on the brink of collapse in late 2001. R:28238-43. In the Fifth Circuit's words, “Enron created a goal of meeting certain earnings projections,” and Skilling's actions were intended to achieve that goal. PA27a.

The Government did not argue on appeal or at the certiorari stage that Skilling sought private gain at the expense of Enron. To the contrary, its consistent position in this case has been that the evidence needed only to show – and did only show – “a material violation of a fiduciary duty that defendants owed to Enron and its shareholders.” R:41327-28.

     A Houston jury convicted Skilling on 19 counts: one count of conspiracy to commit  securities fraud and wire fraud, 12 counts of securities fraud, five counts of making false representations to auditors, and one count of insider trading.  On appeal he contends that the conspiracy count should be reversed because the law under which he was prosecuted – 18 U.S.C. 1346 - is unconstitutionally vague.  I will discuss that claim in the next post.

And engaging in some name-calling along the way.

The online edition of Cardozo Law Review de● novo has an entire issue devoted to the latest Second Amendment Supreme Court cases.  The title of this special issue is called Firearms, Inc. and it includes essays and articles on: 

• The legal and historical American right to bear arms.
• The right of self-preservation and resistance.
• The Second Amendment, the Fourteenth Amendment and the Privileges or Immunities Clause.
• District of Columbia v. Heller case- “The 2008 Supreme Court case Heller v. District of Columbia ruled that Washington D.C. gun control laws that effectively banned the possession of handguns violated an individual’s Second Amendment right to self-defense.  After Heller, the federal government cannot prohibit the possession of handguns in the home.” 
• What about applying this to the states?  See upcoming McDonald v. City of Chicago Supreme Court case, oral argument schedule for March 2, 2010.   “McDonald argues that the right to bear arms is a fundamental right that states should not be able to infringe. Chicago argues that states should be able to tailor firearm regulation to local conditions.”  Several of the articles try to predict the outcome of the McDonald case. 

Here is the list of articles.  Click on the titles to read the essays.  All are written by experts and scholars.  Do you agree with them?

Here is an earlier posting I did on the Ohio Castle Doctrine: self-defense in the home.

All is explained in the top 2 posts here.

     Amy Sullivan of Time Magazine published an article yesterday counting votes in the House of Representatives on the abortion funding issue.  Her conclusions are summarized below.

     Health care reform passed the House by a vote of 220 to 215.  One Republican voted for the bill and 39 Democrats voted against it.  Furthermore, 64 House Democrats voted in favor of the Stupak Amendment which would require women to purchase separate policies for abortion coverage.  The Senate bill contains language proposed by Senator Nelson which requires the segregation of public and private funding in the purchase of health insurance, with abortion coverage paid for with private funds.  The President's proposal does not mention abotion funding, but it is expected that he would favor the language of the Nelson Amendment.  How many of the 64 representatives who voted for the Stupak Amendment will be willing to vote for the Senate bill or the President's proposal?

     In her Time Magazine article published Wednesday entitled "Could Abortion Still Sink Health Care Reform," Sullivan breaks down the different categories of representatives based upon how they cast their votes on both the Stupak amendment and the final House bill:

Yes on Stupak Amendment, No on the Health Care bill = 23 Democrats, mostly from southern states.  Not only are they pro-life, but they did not like the House bill even with the Stupak Amendment.  Very few, if any, of these representatives are likely to vote for the President's proposal.

Yes on Stupak Amendment, Yes on Health Care bill = 41 Democrats.  Of these, 17 are not members of the House pro-life caucus, and will probably be satisfied with the Nelson language.  Of the remainder, many of them supported Brad Ellsworth's compromise measure that was similar to the Nelson Amendment.  (Brad Ellsworth is a member of this group of 24).  The leadership hopes that several of these representatives will vote for the Senate bill or the President's proposal. 

No on Stupak amendment, No on health care bill = 16 Democrats.  These relatively pro-choice representatives may have voted against the bill because of the inclusion of the Stupak Amendment or because of the inclusion of a public option, and may be willing to vote for a bill that is more moderate on both counts like the Senate bill or the President's proposal.

     If the President can persuade the 16 relatively pro-choice / anti-House bill Representatives in the final group to vote for the Senate bill or for his compromise proposal, and gain the support of at least four more pro-life members such as Representative Ellsworth, the health care reform bill will pass the House.

Visit Professor Huhn's website on health care financing reform for links to information about proposed legislation, studies and reports, public agencies, and private organizations concerned with this issue. 

     In yesterday's post I described the legal reasoning that Jay Bybee and John Yoo used to justify subjecting prisoners under American control to slow drowning, the cold cell, shackling in a standing position for days at time, and confinement in a small box.  Today I describe why David Margolis, Deputy Assistant Attorney General, does not consider their memos authorizing these actions to constitute "professional misconduct."

     The Justice Department's Office of Professional Responsibility found that Yoo and Bybee were guilty of "professional misconduct" because of the secret memos they issued authorizing the administration to engage in actions that many legal authorities regard as torture.  In his memorandum of January 10, 2010, David Margolis overruled OPR, and finds instead that Yoo and Bybee are guilty of "poor judgment" – not "professional misconduct."  How did he reach this decision?

     Margolis' memorandum is well-written, carefully crafted, and tightly reasoned.  It is, on the whole, a persuasive document.  I do not agree with his conclusion, but it is an impressive response to this matter.

     Margolis begins with the rules of professional responsibility.  Under Rule 1.2 of the Rules of Professional Conduct that were in effect in the District of Columbia when these memos were written, "a lawyer shall abide by a client's decisions concerning the objectives of representation:"

(a) A lawyer shall abide by a client’s decisions concerning the objectives of representation, subject to paragraphs (c), (d), and (e), and shall consult with the client as to the means by which they are to be pursued. A lawyer shall abide by a client’s decision whether to accept an offer of settlement of a matter. In a criminal case, the lawyer shall abide by the client’s decision, after consultation with the lawyer, as to a plea to be entered, whether to waive jury trial, and whether the client will testify.

(b) A lawyer’s representation of a client, including representation by appointment, does not constitute an endorsement of the client’s political, economic, social, or moral views or activities.

(c) A lawyer may limit the objective of the representation if the client consents after consultation.

(d) A government lawyer’s authority and control over decisions concerning the representation may, by statute of regulation, be expanded beyond the limits imposed by paragraphs (a) and (c).

(e) A lawyer shall not counsel a client to engage, or assist a client, in conduct that the lawyer knows is criminal or fraudulent, but a lawyer may discuss the legal consequences of any proposed course of conduct with a client and may counsel or assist a client to make a good-faith effort to determine the validity, scope, meaning, or application of the law.

      Note that under paragraph (c), government attorneys may be held to a different standard.  By statute or rule, government lawyers may not be primarily responsible to the wishes of their client (a government official or public agency), but rather they may be required to exercise independent judgment in the conduct of their duties.  In this case, there was a long tradition in the Office of Legal Counsel of just such independence – Justice Department lawyers are supposed to follow the law, not the President's orders.  However, Margolis points out that the regulation governing the Office of Legal Counsel (28 C.F.R. 0.25) does not mandate independent judgment.  Instead, this regulation states:

The following-described matters are assigned to, and shall be conducted, handled, or supervised by, the Assistant Attorney General, Office of Legal Counsel:

(a) Preparing the formal opinions of the Attorney General; rendering informal opinions and legal advice to the various agencies of the Government; and assisting the Attorney General in the performance of his functions as legal adviser to the President and as a member of, and legal adviser to, the Cabinet. …

     In short, Margolis concluded that under the law Yoo and Bybee were permitted to take the wishes of their client – the President – into account in framing arguments about the legality of waterboarding and other interrogation techniques.  Margolis found that their actions were inconsistent with the "high standards" of objectivity and candor expected of Justice Department attorneys, but that they did not constitute "professional misconduct."

     Margolis quoted Jack Goldsmith of the Justice Department as framing the issue in this way:

The issue is, are attorneys in the Justice Department required to give objective advice as to their best opinion, or are they permitted to act as attorneys for the President, advising him on how much he can get away with?

     In effect, Margolis interprets the Rules of Professional Conduct as permitting Justice Department attorneys to advise the President on "how much he can get away with," even though the Department itself holds its attorneys to a higher standard.   

     Furthermore, Margolis does not believe that Yoo and Bybee authored these memos for the purpose of facilitating criminal conduct.  Yoo, he noted, has long held a sincere belief that the President's power is nearly absolute in these matters, and Bybee was guided by Yoo in this matter.  Margolis' key finding appears on page 67 of his report:

“I am not prepared to conclude that the circumstantial evidence much of which contradicted by the witness testimony regarding Yoo’s efforts establishes by a preponderance of evidence that Yoo intentionally or recklessly provided misleading advice to his client. It is a close question. I would be remiss in not observing, however, that these memoranda represent an unfortunate chapter in the history of the Office of Legal Counsel. While I have declined to adopt OPR’s findings of misconduct, I fear that John Yoo’s loyalty to his own ideology and convictions clouded his view of his obligation to his client and led him to author opinions that reflected his own extreme, albeit sincerely held, views of executive power while speaking for an institutional client. These memoranda suggest that he failed to appreciate the enormous responsibility that comes with the authority to issue institutional decisions that carried the authoritative weight of the Department of Justice. I do not believe the evidence establishes, however, that he set about to knowingly provide inaccurate legal advice to his client or that he acted with conscious indifference to the consequences of his action.”

     I agree that it is a "close question," and I am reluctant to charge another attorney with misconduct simply because I disagree with the conclusions he reached about the proper interpretation of the law.  By that standard every person I have ever debated as well as many of my readers could accuse me of being unethical.  But Yoo and Bybee held people's health and lives in their hands, and they owed this country not partisan loyalty or ideological purity but rather their best effort to present a balanced and objective review of the law.  They were not writing acacemic articles or designing a tax shelter for a client  – they were helping to run the government.  Just as we hold prosecutors to a higher standard than defense attorneys – we expect prosecutors to be more beholden to the truth than to winning – we may reasonably expect Justice Department attorneys to at least mention Youngstown Sheet & Tube when advising the President about the constitutionality of laws affecting his exercise of war powers.

     The Yoo and Bybee memos as well as other materials may be accessed from this page on Treatment of Detainees at my website on Constitutional Law.  In addition, here some essays I have previously written on this subject:

    The Justice Department's investigation into the role of Justice Department lawyers John Yoo and Jay Bybee in the approval of conduct that many people regard as torture has come to a close.  The Office of Professional Responsibility recommended that Yoo and Bybee be referred to disciplinary committees for their role in this matter, on the theory that the lawyers' conduct was "unethical."  However, Associate Deputy Attorney General David Margolis has overruled that recommendation, and instead concludes that Yoo and Bybee were guilty of "poor judgment," not "professional misconduct."  In this post I discuss what Yoo and Bybee said in their memos.  In the following post I will discuss Margolis' findings and conclusions.

     In their memos of August 1, 2002, (here and here) and March 14, 2003, (here and here), Jay Bybee and John Yoo go to great lengths in arguing that the "enhanced interrogation techniques" that the government was considering using on prisoners were lawful.  According to Jay Bybee's memo of August 1, 2002, these techniques included the following:

    1.  Confining the prisoner in a dark box for up to 18 hours at a time.  Because the prisoner was afraid of insects, interrogators planned to include an insect in the box;

     2.  Forcing the prisoner to stand, sit, or kneel in uncomfortable positions – for example, standing or sitting on the floor with arms extended or kneeling back at an angle for unspecified periods of time;

     3.  Depriving the prisoner of sleep for up to 11 days at a time;

     4.  Waterboarding the prisoner (drowning him slowly) for up to 20 minutes at a time.

     Bybee and Yoo concluded that this conduct did not violate the Torture Act, the War Crimes Act, the Convention Against Torture, the Geneva Convenion, or any other laws prohibiting torture or "cruel, inhuman, or degrading treatment" of prisoners for a variety of reasons - these laws and treaties did not apply; the conduct did not amount to torture or cruel, inhuman, or degrading treatment; the conduct was justified under the common law doctrines of necessity or self-defense; and the laws and treaties were unconstitutional.

     The extent to which Bybee and Yoo went to justify these actions is apparent from the arguments that they made with respect to three points – the definition of torture under the Torture Act,  the defenses available in a prosecution under the Torture Act, and the constitutionality of the Torture Act.

Definition of Torture

     The Torture Act (18 U.S.C. 2340) defines torture as follows:

“torture” means an act committed by a person acting under the color of law specifically intended to inflict severe physical or mental pain or suffering (other than pain or suffering incidental to lawful sanctions) upon another person within his custody or physical control ….

     Both Bybee and Yoo interpret the term "severe physical pain" by refering to similar language in a federal statute that describes when hospitals have a duty to render emergency medical care.  According to Bybee and Yoo, because "severe pain" is evidence that there may be a medical emergency leading to organ failure or death under federal statutes regulating the duty to provide medical care, therefore interrogation techniques that do not threaten organ failure or death do not constitute torture.  Here is the relevant paragraph from their memos on this point: 

These statutes define an emergency condition as one "manifesting itself by acute symptoms of sufficient severity(including severe pain) such that a prudent lay person, who possesses an average knowledge of health and medicine, could reasonably expect the absence of 'immediate medical attention to result in placing the health of the individual … (i) in serious jeopardy, (ii) serious impairment to bodily functions, or (iii) serious dysfunction of any bodily organ or part." Id. § 1395w-22(d)(3)(B) (emphasis added). Although these statutes address a substantially different subject from section 2340, they are nonetheless helpful for understanding what constitutes severe physical pain. They treat severe pain as an indicator of ailments that are likely to result in permanent and serious physical damage in the absence of immediate medical treatment. Such damage must rise to the level of death, organ failure, or the permanent, impairment of a significant body function. These statutes suggest that to constitute torture "severe pain" must rise to a similarly high level – the level that would ordinarily be associated with a physical condition or injury sufficiently serious that it would result in death, organ failure, or serious impairment of body functions.

      Yoo also argues that waterboarding and other "enhanced interrogation techniques" do not even constitute acts that are "cruel, inhuman,or degrading" because they were not being undertaken with the "specific intent" of causing harm, but rather because our agents were seeking to protect this country from attack.  This argument confuses "motive" with "intent."  My motive in stealing bread might be to feed the poor, but it does mean that I lacked the intent steal the bread.  Nevertheless, Yoo confidently asserts that this would constitute a barrier to prosecution under the law.

Defenses to the Torture Act – Necessity and Self-Defense

     Bybee and Yoo both argue that C.I.A. agents could assert, as a legal defense, that their actions were "necessary" to protect Americans from attack, or that their treatment of prisoners constituted "self-defense."  None of the relevant statutes sets forth these defenses, and the relevant treaty – the Convention Against Torture, which the Torture Act was enacted to implement – explicitly strips away these defenses.  Article 1 of the Convention Against Torture, signed by President Reagan and ratified by the first President Bush, states that it applies specifically in situations where government agents are interrogating prisoners who are accused of crimes or who may have information that the government seeks to discover:

For the purposes of this Convention, the term "torture" means any act by which severe pain or suffering, whether physical or mental, is intentionally inflicted on a person for such purposes as obtaining from him or a third person information or a confession, punishing him for an act he or a third person has committed or is suspected of having committed, or intimidating or coercing him or a third person, or for any reason based on discrimination of any kind, when such pain or suffering is inflicted by or at the instigation of or with the consent or acquiescence of a public official or other person acting in an official capacity. It does not include pain or suffering arising only from, inherent in or incidental to lawful sanctions.

     Furthermore, Article 2.2 of the treaty provides that "no exceptional circumstances whatsoever" can justify acts of torture by government agents, including war or insurrection:

No exceptional circumstances whatsoever, whether a state of war or a threat of war, internal political in stability or any other public emergency, may be invoked as a justification of torture.

     Yoo and Bybee both argue the common law of necessity and self-defense would nevertheless be available to defendants charged with torture under the Torture Act.  In my opinion, this is not even a plausible interpretation of the statute and treaty.

Constitutionality of Torture Act and Convention Against Torture under Separation of Powers

     It was well-known that John Yoo has long believed that the President has more or less absolute power to act in time of war.  Both Yoo and Bybee repeat this position in these memos.  They do so without once mentioning the case of Youngstown Sheet & Tube v. Sawyer, which is not only the leading Separation of Powers decision ever decided by the Supreme Court, but it concerns the President's exercise of war powers in the absence of statutory authority.  It is simply inconceivable that any lawyer – or even a first-year law student – would attempt to analyze the constitutionality of a law limiting the President's authority to deal with prisoners without a thorough discussion of this case.   But Bybee and Yoo do just that.

    The legal memoranda authored by Bybee and Yoo were used to justify the use of these techniques on prisoners.  Nevertheless, David Margolis, Deputy Assistant Attorney General, has found that their conduct and advice does not constitute "professional misconduct" and he has recommended that Bybee and Yoo not be referred to disciplinary committees.  Tomorrow I will explain Margolis' reasoning.

     Each of these memos and other materials may be accessed from this page on Treatment of Detainees at my website on Constitutional Law.  In addition, here some essays I have previously written on this subject:

     President Barack Obama has released his proposal merging the House and Senate health care reform bills and adding some Republican ideas.  Links and analysis below:

     Here is the President's new website called "Putting Americans in Control of Their Health Care."  The President's proposal itself – consisting of a lengthy summary, not legisative language – may be accessed either here at whitehouse.gov or here from Talking Points Memo.  The President's site also contains a description of several Republican-supported ideas that are contained in the final package. 

     The President's proposal retains the principal features of the health care reform bills adopted by the House and Senate.  Individuals will be reuquired to purchase health insurance, and in return health insurers may not turn down persons with pre-existing conditions nor may insurers place annual or lifetime limits on the amount of coverage a person qualifies for.  The bill will create an Exchange for the sale of non-group policies, and the government will have the power to regulate insurance sold through the Exchange.  One new provision – in light of the recent sharp increases in health insurance premiums, the President's proposal would empower both state insurance commissioners or the Secretary of Health and Human Services to determine whether increases in insurance premiums are justified.

     On the revenue side, the President reduces reliance on taxing expensive health insurance plans (the approach taken in the Senate bill) in favor of increasing the Medicare tax on persons earning over $200,000 annually – and it extends that tax for the first time to persons receiving unearned income (interest, dividends, and the like).

      Here are the other principal changes that the President has made in reconciling the House and Senate bills:

1.  The President reconciled the differing schedules in the House and Senate bills for government reimbursement for health care.  Families earning less than $88,000 annually will qualify for tax credits to help pay for health insurance purchased through the non-group market;

2.  The President's proposal closes the "donut hole" for prescription drugs under Medicare by the year 2020;

3.  The President would allocate $11 billion more than current law for community health centers over the next ten years – this splits the difference between the House and Senate bills;

4.  Like the Senate bill, the President's proposal does not contain an employer mandate but it does increase the penalty on employers who do not.  Businesses with fewer than 50 employees do not have to provide health insurance, and businesses with more than 50 employees will have to either provide health insurance  or pay a fine of $2000 per employee.  The President's proposal allocates $40 billion in tax credits to encourage employers to provide health insurance for their employees.

5.  Persons who earn more than $200,000 annually in passive income (dividends, interest, annuities, royalties, or rents) will have to pay a tax of 2.9% which will be contributed to the Supplemental Medical Insurance Fund.

     The President's proposal largely merges the House and Senate bills.  Like Democrats in Congress, the President has decided to address the problems of cost, access, and quality of medical care by enacting an individual mandate and publicly-subsidized purchase of private health insurance.  I see nothing in the President's proposal that will ameliorate Republican opposition to the bill.  If this package is not enacted as a whole, I predict that significant portions of it will be enacted separately.  But let's see what happens at the bipartisan health care summit on Thursday!

Visit Professor Huhn's website on Health Care Financing Reform for information about proposed legislation, studies and reports, advocacy organizations, and more.

Deep thoughts here.

There has been a swift response by Congress to the Citizens United v. Federal Election Commission Supreme Court ruling on January 21.   Concerns focus on unregulated “big money” in politics leading to conflicts of interest and corruption.  Corporations, Unions and contractors can now directly fund advertising calling for the election or defeat of federal and state candidates.   Additionally there is much discussion of foreign owned corporations, and those with U.S. subsidiaries, influencing American elections. To understand the effects of the United Citizens decision, see Wilson Huhn’s post here.

A recent report by the Congressional Research Service advises Congress on ways it can respond to the decision.  Here are the options for Congress.

1.  Maintain the Status Quo by doing nothing.  This allows the court’s decision to stand. 

2.  Amend the United States Constitution to permit Congress to regulate campaign finance.  Two Constitutional amendments have been proposed so far.    The bills below are linked to the text of the legislation, bill summaries and status in the Thomas database (Library of Congress web site).
H.J. Res.  13 (sponsor Kaptur) proposes a Constitutional Amendment that gives Congress and the states the power to set limits on campaign contributions and expenditures.           
H.J. Res. 68 (sponsor  Boswell) would amend the Constitution to prohibit corporations or labor organizations from using operating funds from their general treasuries to pay for campaign advertising.      
See Wilson Huhn’s post for a list of what Congress currently cannot do under the U.S. Constitution. 

3.  Enact Public Campaign Financing.  Public financing offers matching funds to cover campaign costs.  In exchange for using public campaign funds the candidates agree to limit their private fundraising.  It has been in place since 1976 for Presidential campaigns and about 16 states offer public financing for state elections.  Under current law, there is no public financing available for House or Senate elections.   Since January 21, four pieces of legislation has been proposed to strengthen public campaign financing and to make it available for House and Senate candidates. 
H.R. 158 (sponsor Obey)- amends law to allow public financing for House elections. 
H.R. 1826 (sponsor Larson)- amends law to allow public financing for House elections, and much more.  It is a fairly comprehensive bill.  
H.R. 2056 (Tierney) – amends law to allow public financing for House elections and creates a Clean Elections Review Commission. 
S. 752 (Durbin)- amends law to allow public financing for Senate elections.  

 4.  Restrict Election Spending by Foreign Corporations.  Congress may amend current law to restrict U.S. subsidiaries of foreign corporations or add restrictions on Political Action Committees (PAC) of foreign owned corporations.  The House and Senate have been very busy proposing legislation in this category.
H.R. 3859 (sponsor Kaptur)- restricts PACs of foreign entities from making expenditures or contributions in federal elections. The following bills restrict political contributions and expenditures by foreign entities:
H.R. 4517 (sponsor Hall)  
H.R. 4522 (sponsor Pascrell)   
H.R. 4523 (sponsor Perriello)
H.R. 4540 (sponsor DeLauro)
S. 2954 (sponsor Menendez)   
S. 2959 (sponsor Franken) 

5.  Restrictions on Corporations with Government Contracts and Lobbyists
H.R. 4434 (sponsor Grayson)   Prohibit corporations receive government contracts from making political contributions and limit the amount of political donations from employees of these corporations.
H.R. 4511 (sponsor Grayson)  Proposing restrictions on political advertising by companies that employ lobbyists. 

6.  Give Shareholders additional voice in corporations’ political spending.  This can be accomplished by either requiring corporations to get shareholder’s permission before engaging in political spending or require corporations to provide advance notice of political expenditures.  The intent here is to increase the likelihood that corporations’ political spending will be consistent with a majority of the shareholders.
H.R. 4487 (sponsor Grayson)  This bill requires the approval of a majority of shareholders for any corporate expenditure to influence public opinion on matters not related to the company’s products or services.
H.R. 4537 (sponsor Capuano)   Requires the express authorization of a majority of shareholders of a public company for certain political expenditures. 
H.R. 4527 (sponsor Driehaus)  Requires corporate and union backed campaign advertising to identify the sponsors in the advertisement itself as it is now for candidates’ committees.

Read the entire report here –  Campaign Finance Policy after Citizens United: Issues and Options for Congress (published Feb. 1, 2010); By R. Sam Garrett. 

~~~~~~~~~~~~~~~~~~~~~

Related Links

Hearing on the First Amendment and Campaign Finance Reform after Citizens United, held on Feb.  3   

House Committee on House Administration, Summary of the Feb. 3 hearing   

Summary of Citizens United Legislation (proposed in the House)  (H.R. 1826)  

Republican Study Committee, Policy Brief: Citizens United v. Federal Election Commission   

Democrats’ response

Campaign Finance: Potential Legislative and Policy Issues for the 111^th Congress (published a year ago on Jan. 29, 2009, before Citizens United); By R. Sam Garrett.

     The  United States Supreme Court decisions in Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal, decided in 2007 and 2009, respectively, seem to create a sea change in what is minimally acceptable pleading to survive a motion to dismiss.       Though seemingly a technical issue, if a plaintiff can't plead enough in the complaint to stay in court, the plaintiff loses before even having an opportunity to explore or make her case. 

     Twombly is generally recognized for having changed the sufficiency of pleading requirement from "notice" to "plausibility."  That is, a plaintiff need not simply give the defendant notice of the claim, but must now plead enough facts for the claim to be "plausible."  Iqbal clarified the "plausibility" requirement and also clarified that it extends to all pleadings, not just complex cases.

     Now for the big debate — are the changes wrought by Twombly and Iqbal semantic only, or do they really keep more plaintiffs out of court?   Some argue that the pleading "changes" are not really changes at all, except perhaps, changes in terminology.  Others argue that, for particular categories of cases, the change in standard will matter and will matter consistently in those categories.  I subscribe to the latter view.

     A primary objection to the Twombly and Iqbal pleading changes is the way in which the changes were accomplished — the changes to the construction of Fed. R. Civ. P. 8(a)(2) and its standard for the sufficiency of pleading a claim –  were made by Supreme Court opinion, rather than through the Rules Enabling Act process for promulgating new procedural Rules or amending existing procedural Rules. 

     The federal rulemakers are now monitoring the impact of Twombly and Iqbal.  At the federal rulemaking website, you can now access (1) a caselaw study on post-Iqbal cases; and (2) statistical information on motions to dismiss based on Twombly and  Iqbal.

     Do Twombly and Iqbal matter?   You can be the judge.

     Following reports of Wellpoint's 39% increase for individual health insurance coverae in California comes news of even larger increases in other states – up to 56%, according to this article by Ricardo Alonso-Zalvidar of the Associated Press.  Which way will this cut in the current debate over health care reform?

     According to Alonso-Zalvidar:

Proposed premium increases of as much as 39 percent by WellPoint's Anthem Blue Cross in California set off a wave of criticism and forced the company last week to announce a postponement. President Barack Obama seized on Anthem as Exhibit A to make his case for sweeping change before a bipartisan White House health summit next week. California officials said more than 700,000 households face increases averaging 25 percent overall and as high as 39 percent for some.

In a briefing for reporters, WellPoint executives blamed their rate increases on rising medical costs and a pool of customers that is gradually becoming older and sicker, as younger, healthier people drop coverage. They insisted that their competitors are raising rates in much the same way.

     The President and the Democratic majority contend that these increases demonstrate the necessity for requiring everybody to pay for health insurance so that the cost of injury and illness are spread evenly across society.  Republicans, on the other hand, may argue that it is unfair to require healthy persons to subsidize medical care for unhealthy persons, and they may point to the exodus of healthy persons from the system as evidence of this.  They may also contend that the method of reform chosen by Democrats is futile – that it is simply too expensive to attempt reform by requiring all persons to purchase health insurance from private companies.

     If people become convinced of that final argument – that the system of private health insurance is simply too inefficient and too unwieldy to be brought within the reach of the middle class – then we may see reformers turn away from the current Democratic bills and towards a public option.

Link to a link that explains why some people think so here (personally, I think my witty title alone is worth the click).  Also, why regulatory capture still matters.

The 12th Annual Richard C. Sughrue Symposium on Intellectual Property Law and Policy will be held in Akron on March 8, 2010.  The featured luncheon speaker will be the newly-appointed Commissioner for Patents Robert L. Stoll.  The program will include presentations by leading practitioners and academics on the major issues of the day affecting intellectual property law.  Presenters will discuss, among other topics, the Bilski case, the proposed Google Books Library Project settlement, the doctrines of inequitable conduct and fraud, and the host of ethical and other issues associated with the practice of outsourcing work.

This event is FREE to students.  Online registration is now available.  Register on or before Feb. 22 to save and receive the early bird registration fee.  Visit www.uakron.edu/law for further information. 

     Below is a description of and links to the House Republican health care plan.

     Minority Leader John Boehner (R-OH) has sponsored the Common Sense Health Care Reform and Affordability Act, which appears to have the support of the House Republican caucus.  Boehner describes his position on health care at this page of his website.  On November 4, 2009, the Congressional Budget Office released its estimate of the likely effect and cost of Boehner's bill.

     Representative Boehner and the President agree on what the problems are: the high cost and limited availability of health insurance.  However, they do not agree as to the causes of those problems.  Rep. Boehner blames "burdensome mandates" and "unlimited lawsuits" for the high cost of health insurance:

Like many Americans, I am concerned with the rising cost of health care. These costs have increased because of the burdensome mandates placed on providers.

Nearly 130 million Americans – almost 80% of all workers in the United States – get their health coverage through their workplace. Another 43 million have no health coverage at all. Any legislation must offer the millions of uninsured Americans increased access to affordable health coverage by making it easier for small employers to offer more benefits while protecting employers from unlimited lawsuits.

     Rep. Boehner opposes expanding Medicaid or reducing payments under Medicare:

Some have proposed expanding government-provided health benefits created to help children of low-income families have access to affordable healthcare to families who already can afford private insurance. Equally as bad as expanding government-run health care is that it would be paid for by slashing Medicare for seniors who depend on these valuable benefits to provide affordable healthcare and prescription drugs.

     Rep. Boehner would address the problems of coverage and cost by making it easier for small employers to provide health insurance:

[S]ince small business employees make up more than 50 percent of those without health coverage, we need to make it easier and more affordable for small businesses to offer health benefits. One proposal that deserves consideration involves association health plans that allow small businesses to pool their resources with other small businesses to purchase insurance at a better rate. In turn, the premiums paid by their employees will remain affordable.

Innovative proposals like association health plans and health care tax credits for employers – another idea under consideration – will assist us in solving the “uninsured problem."

     Unlike the Democratic bills, the House Republican bill does not contain an "individual mandate" requiring people to purchase health insurance; nor does it prohibit insurance companies from excluding coverage for preexisting conditions; nor does it include a widespread program for subsidizing the purchase of health insurance for low-income persons.  Here is a summary of the provisions of the House Republican bill from the CBO report: 

• • Regulatory reforms in the small group and nongroup markets, including establishing AHPs and individual membership associations, and allowing states to establish interstate compacts with a unified regulatory structure;
  • A State Innovations grant program to provide federal payments to states that achieve specified reductions in the number of uninsured individuals or in the premiums for small group or individually purchased policies; 
  • Federal funding for states to use for high-risk pools in the individual insurance market and reinsurance programs in the small group market; and
  • Changes to health savings accounts (HSAs) to allow funds in them to be used to pay premiums under certain circumstances, to make net contributions to HSAs eligible for the saver’s credit, and to provide a 60-day grace period for medical expenses incurred prior to the establishment of an HSA.

     On November 5, 2009, I published this post comparing the Democratic and Republican proposals.  The bottom line is that the Republican bill would spend far less than the Democratic bill, and it would achieve much less as well.  According to the CBO, the Republican bill would reduce the number of uninsured Americans by 3 million persons, instead of the more than 30 million additional citizens who would receive coverage under the Democratic bill. 

     In my next post on this subject I will identify the separate elements of each plan so that you can "keep score" going into the bipartisan health care summit.

Visit Professor Huhn's website on health care financing reform for links to information about proposed legislation, studies and reports, public agencies, and private organizations concerned with this issue.

I was struck recently by the contrast between individuals discussing the personal moral obligation to keep paying the mortgage on a home that is "under water" (they owe much more to the bank than the home is currently worth) and business advice encapsulated in this New York Times Headline:

Fire Your Relatives. Scare Your Employees. And Stop Whining.

So this business consultant's approach is to be clear-eyed, unsentimental, and focus always on bottom line business principles. In contrast, we have a discussion about consumers strategically defaulting on a home loan, and part of the topic is whether it's morally wrong to do so. Meanwhile, the entire financial system is depending on all of those homeowners continuing to make their payments, feeling bound by more than a clear-eyed, unsentimental focus on bottom line principles. (Last November it was estimated that nearly one in four American homes are underwater.) Here's an analysis by Richard Thaler. Should banks be guided by different principles than people? If so, is that in some way unfair?