Bench Memos

Taking Stock of the Takings Clause

In his column today, George F. Will is exercised about a case he thinks the U.S. Supreme Court should hear on certiorari from the Illinois supreme court.  It concerns an act of the Illinois legislature mandating a transfer of 3% of the gross receipts from the wealthiest of the state’s riverboat casinos to the state’s five racetracks, in an effort to bolster Illinois’s flagging old horse racing industry with proceeds from its booming new casinos.

The state supreme court, in a unanimous ruling last June in Empress Casino v. Giannoulias, upheld the act against various challenges, including under the “takings” clause of both the state and federal constitutions.  Will thinks the U.S. Supreme Court should take the case, and hold the law is an unconstitutional taking, because it seizes money from A and gives it to B–”without even laundering the money through the state treasury,” he points out.  (The casinos make daily payments to a “Horse Racing Equity Trust Fund,” which disburses those daily contributions to the racetracks within 10 days.)  In high dudgeon, Will declares “the U.S. Supreme Court should take the Illinois case and reject the preposterous idea that money is not property within the scope of the takings clause.”

But there is a very good reason why “money is not property” where the takings clause is concerned.  The clause makes no sense otherwise.  The Illinois scheme is a form of taxation.  First, consider if the funds had been “laundered” through the treasury–i.e., collected like any other tax in payment to the state’s general funds, then paid out to the racetracks as a state subsidy via ordinary appropriations, exactly matching whatever amount was received from the casinos.  How would this be any less a transfer of A’s money to B?

Now, consider the takings clause: “nor shall private property be taken for public use, without just compensation.”  Adjudication under the clause poses three questions: Is a public act a taking of private property?  Is it for a public use?  And is the taking compensated?  The questions cannot be posed in isolation from one another.  If a taking has occurred, and is not for a public use, then a court may invalidate it.  But if a taking has occurred, and the property will be put to public use, then the taking must be justly compensated, with money from the treasury equaling the value of the thing taken.

Do you begin to see the problem?  A tax cannot be the subject of a takings suit, because if the answer to the “public use” question is that the taking was valid, then there still must be compensation–and that will mean that the tax money, to the last penny, must be returned.  This would mean that every valid tax would be cancelled out as a taking, and that is an intolerable absurdity.  So, if a tax meeting the public use requirement cannot be subjected to the strictures of the takings clause without an absurd result, then it follows that it is an error to pose the “public use” question about a tax in the first place.  Hence it is an error to bring any part of the takings clause to bear on a state’s use of its power to tax and to spend, and no tax, however blatant it is as a wealth transfer, can be subject to the clause at all.

There is another angle of attack on wealth transfers of this kind, resting on the due process clause, which was classically understood as forbidding the forced giving of A’s property to B as not law, but a decree that fails the test of a generally applicable law.  For a number of reasons, I don’t think that kind of challenge would work in this instance.  But it’s dead certain that the takings clause has no proper application to a case of this kind.

Matthew J. Franck — Matthew J. Franck is the Director of the William E. and Carol G. Simon Center on Religion and the Constitution at the Witherspoon Institute in Princeton, New Jersey.

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