5th Circuit: Feds taxing power cannot be used to control behavior

4,630 Views | 62 Replies | Last: 2 days ago by BusterAg
aggiehawg
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This one flew under my radar. Could have far reaching effects

Quote:

In short, McNutt vs. U.S. Department of Justice focused on a federal law that banned through the government's taxation power the private home distillation of alcohol. But the Fifth Circuit ruled that using the power to tax as a reason to ban something is an improper abuse of power. This line of constitutional thinking could have much larger implications.

Why? Because the ruling would erect new guardrails on how the government can use its authority to impose a tax in such a way that does not raise revenue but instead bans otherwise legal activity. When we consider all the ways the government has done this over the years, it's clear that the energy industry has been a prime target for just such an abuse of power especially in cases where the government used its taxing authority and "necessary and proper" constitutional reasoning to regulate activities.

Quote:

As a Liskow law blog summarized it, "The case originated when a group of hobby distillers challenged an 1868 federal law that effectively criminalized the distillation of spirits in or near a private residence, even for personal use. The plaintiffs, including members of the Hobby Distillers Association, argued that the prohibition exceeded Congress's constitutional powers, particularly where the activity was noncommercial and confined to the home."

The analysis added, "The case underscores that the federal government's broad federal taxing authority does have limits, particularly when it intersects with private, noncommercial conduct. As challenges to federal regulatory regimes continue, McNutt may serve as an important reference point in defining the boundary between taxation and regulation."

LINK
Burrus86
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Time to fire up the still!
cevans_40
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About to get them menthols back under $10/pack
Sharpshooter
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sam callahan
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All taxes influence/control behavior.

aggiehawg
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If SCOTUS agrees, what about Wickard v. Filburn? That's an interstate commerce case but their crops were for personal use, IIRC.
Ag with kids
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aggiehawg said:

If SCOTUS agrees, what about Wickard v. Filburn? That's an interstate commerce case but their crops were for personal use, IIRC.



Because you're a proper lady, I won't post the full meme.

BUT...I'm pretty sure every one will get this...
You can turn off signatures, btw
ToddyHill
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Wow, that's crazy.

I spent the last seven years of my work career in the distilled spirits industry up in Gatlinburg. Couple of my co-workers made their own 'stuff' on the side for personal use. Candidly, I stayed away from it because I just wasn't certain if it was straight ethanol.

Outside of New Zealand, I'm not aware of any developed country that allows home distillation. It will be interesting to see how this proceeds.
Aggie Jurist
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Quote:

If SCOTUS agrees, what about Wickard v. Filburn? That's an interstate commerce case but their crops were for personal use, IIRC.

That's where my mind went immediately. Not sure SCOTUS is ready to take that power away.
aggiehawg
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Aggie Jurist said:

Quote:

If SCOTUS agrees, what about Wickard v. Filburn? That's an interstate commerce case but their crops were for personal use, IIRC.

That's where my mind went immediately. Not sure SCOTUS is ready to take that power away.

Three of them, certainly are not ready. Thomas has been chomping at the bit to get a crack at Wickard however. Can he bring Alito, Gorsuch and Kav with him?
Tex100
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sam callahan said:

All taxes influence/control behavior.


. Exactly.
Mathguy64
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ACA is on line one. They would like a word about this.
rocky the dog
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Elections are when people find out what politicians stand for, and politicians find out what people will fall for.
Picard
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I've got Boss Hogg on line 1

aggiehawg
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Bootlegging can still be outlawed as that is not for personal consumption. Plus there is a legitimate governmental concern for health and safety to the public.
B-1 83
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No more "Revenuers"!
Being in TexAgs jail changes a man……..no, not really
MemphisAg1
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If this legal principle were to be upheld by the SC -- that you can't use the power of taxation to control behavior -- that would have huge impacts. So many of our taxes today are punitive in nature, instead of simply focused on raising revenue. It would have such far-reaching effects that I doubt the SC would go along with it, but as a freedom-lover, I would be thrilled to see it gain more traction.
Mega Lops
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Thought Obama already was given the green light to let this happen.
TAMU1990
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Someone needs to inform John Roberts...
Squadron7
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aggiehawg said:

Bootlegging can still be outlawed as that is not for personal consumption. Plus there is a legitimate governmental concern for health and safety to the public.


How would this differ from home brewing or even home cooking in regards to food safety?
AlaskanAg99
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Squadron7 said:

aggiehawg said:

Bootlegging can still be outlawed as that is not for personal consumption. Plus there is a legitimate governmental concern for health and safety to the public.


How would this differ from home brewing or even home cooking in regards to food safety?


The issue is with toxic chemicals "wood alcohols" in the final run that can have serious bad effects. Homebrewing cant produce those concentrations unless you had a really crappy ferment and then freeze distilled.

Only real diehards will probably distill, its a Lot of work for little return unless youre working with larger equipment. Aging anything in barrels (espnthe smaller ones),you lose so much to angels share the roi really gets bad.

There is a lot more info available now vs 2 clowns in the hills with poor practices making something harmful.
aTm '99
aggiehawg
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Squadron7 said:

aggiehawg said:

Bootlegging can still be outlawed as that is not for personal consumption. Plus there is a legitimate governmental concern for health and safety to the public.


How would this differ from home brewing or even home cooking in regards to food safety?

If sold to anyone outside of family, safety and health codes apply. Say I want to start making pies in my kitchen to sell at our local grocery stores. My kitchen would be subject to inspection same as a restaurant's kitchen would be. Some cottage industries are more subject to regulation than others but drink or foodstuffs will be regulated.
Squadron7
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aggiehawg said:

Squadron7 said:

aggiehawg said:

Bootlegging can still be outlawed as that is not for personal consumption. Plus there is a legitimate governmental concern for health and safety to the public.


How would this differ from home brewing or even home cooking in regards to food safety?

If sold to anyone outside of family, safety and health codes apply. Say I want to start making pies in my kitchen to sell at our local grocery stores. My kitchen would be subject to inspection same as a restaurant's kitchen would be. Some cottage industries are more subject to regulation than others but drink or foodstuffs will be regulated.


I get that. I was concentrating on the idea being true personal use.
doubledog
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Is not the income tax all about controlling behavior through tax credits for things like EVs?
aggiehawg
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Squadron7 said:

aggiehawg said:

Squadron7 said:

aggiehawg said:

Bootlegging can still be outlawed as that is not for personal consumption. Plus there is a legitimate governmental concern for health and safety to the public.


How would this differ from home brewing or even home cooking in regards to food safety?

If sold to anyone outside of family, safety and health codes apply. Say I want to start making pies in my kitchen to sell at our local grocery stores. My kitchen would be subject to inspection same as a restaurant's kitchen would be. Some cottage industries are more subject to regulation than others but drink or foodstuffs will be regulated.


I get that. I was concentrating on the idea being true personal use.

True personal use is fine. Not regulated at all. Most people have contracted food poisoning at one time or another, such as potato salad or deviled eggs that go bad after sitting in the sun on the 4th of July.

My Mom was a great baker and cake decorator. She would make multi-tiered wedding cakes for family members just for the cost of the ingredients.
flown-the-coop
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One of the best Rocky!
aggiehawg
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The key here is the "control" is becoming criminal behavior. From my OP:

Quote:

"The case originated when a group of hobby distillers challenged an 1868 federal law that effectively criminalized the distillation of spirits in or near a private residence, even for personal use.

ToddyHill
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Just my two cents. In my career, I've worked with USDA, FDA, and finally, the TTB. The first two are all about food safety. The TTB is all about revenue. They don't give a rats arse about Food Safety, because anything over 14% alcohol (28 proof) is not an environment that will support the growth of pathogenic bacteria.

If you want to ferment to make wine or beer you are good to go. But home distillation for personal use is not allowed.

Kinda crazy, but my sister has my grandmother's 2 1/2 gallon copper pot still. Didn't know grandma was a moonshiner, but she was in the 1930's on their farm in Connecticut.
IIIHorn
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flown-the-coop said:

One of the best Rocky!

Agreed.


( ...voice punctuated with a clap of distant thunder... )
Over_ed
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Who needs meth labs to explode when you have stills next door (or in your basement)? :-)

Ethanol is explosively combustible at a very low concentration. And one stray spark (like from a thermostat) or plug could rock your world more than MD 20/20.

Still would be legally prohibited by almost every local governmental agency. And would likely render your insurance worthless if associated with a loss.

flown-the-coop
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Over_ed said:

Who needs meth labs to explode when you have stills next door (or in your basement)? :-)

Ethanol is explosively combustible at a very low concentration. And one stray spark (like from a thermostat) or plug could rock your world more than MD 20/20.

Still would be legally prohibited by almost every local governmental agency. And would likely render your insurance worthless if associated with a loss.



This line of thinking is why gas cans to fill your lawn mower have you rethinking life and buying an EV mower and a soy latte.

Again, lots of very flammable things in your house. But a still is out of the question.

Probably should go back to banning gas stoves and grills. Simply too much risk.
doubledog
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ToddyHill said:

Just my two cents. In my career, I've worked with USDA, FDA, and finally, the TTB. The first two are all about food safety. The TTB is all about revenue. They don't give a rats arse about Food Safety, because anything over 14% alcohol (28 proof) is not an environment that will support the growth of pathogenic bacteria.

If you want to ferment to make wine or beer you are good to go. But home distillation for personal use is not allowed.

Kinda crazy, but my sister has my grandmother's 2 1/2 gallon copper pot still. Didn't know grandma was a moonshiner, but she was in the 1930's on their farm in Connecticut.

The distillation process can potentially produce methanol rather than ethanol. Ethanol gets you drunk, methanol can blind you.

Old moonshiner trick, burn a tablespoon of ethanol and it will produce a yellow flame (depending on water concentration). Methanol will burn a light blue.

https://www.reddit.com/r/chemicalreactiongifs/comments/5cw7zj/burning_pure_methanol_left_and_pure_ethanol_right/
BusterAg
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I think this is a gross misreading of the case.

The issue is that ATF banned home distilling because that would keep ATF from collecting taxes.

Its not that you cant use taxes to influence behavior, it's that you cant ban behavior just so you can collect taxes elsewhere. There is a difference.
jtkk
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aggiehawg said:

Bootlegging can still be outlawed as that is not for personal consumption. Plus there is a legitimate governmental concern for health and safety to the public.

Yep. My wife and I recently listened to a Criminal podcast (excellent podcast series by the way with Phoebe Judge) about this that happened during Prohibition. A lot of people died and had serious injuries due to it.
For anyone interested, it's the episode titled "The Formula".
It was pretty amazing what lengths people went to in order to get liquor during that time.
aggiehawg
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The ranch has been in my family for 115 years. Baptists so a still was out of the question but wild muscadine grapes grew on the property. They made "grape juice" that was wine just never called it that. Wink/wink. Just like the old adage, never go fishing with only one Baptist because he'll drink all of your beer.

True story time. The Hubs and I would attend his summer family reunions at Kentucky Dam Village for several years running. We always flew into Nashville and drove into Kentucky stopping to get a styrofoam cooler, ice and a case of beer (don't judge, for both of us for a week) because where Kentucky Dam Village was located was dry.

Kept the cooler in the back of our rented SUV. So after dinner (and I had helped clean up the kitchen) we'd go outside to have a beer. It was dark. Not a lot of streetlights. But one by one, here all of the "good Baptists" would come out to drink our beer. We'd have to go to Paducah to buy more at least once, if not twice, per trip.
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