Tag Archive | "taxation"

taxation without representation plate on presidential motorcade

Voting Rights and Wrongs

It is Sunday the 9th of March.  Imagine if today, voting day for Congress in Colombia, Bogotanos could not go to the polls because they live in the Districto Capital (nation´s capital district) and not in a departmento (state); would this violate human rights law?  Imagine this same day if afro descendants, indigenous, women or those with modest incomes that don´t own property could not vote; would that violate human rights law?

former mayor of bogota

Former mayor of Bogota Enrique Penalosa after casting his vote (Guillermo Legaria/AFP)

Today, almost everyone would answer of course, it would violate human rights law and many would think that this just does not happen anymore.  But oddly, these types of violations of political rights are not a thing of the past.  Often, national courts go to great lengths to avoid having to strike down mechanisms and procedures that from an outside observer seem to be a clear violation of the right to vote. Often, those working in human rights organizations are puzzled by how some politicians and judges refuse to see what is a plain and egregious violation and how society has come to grow accustom to a violation.

Human Rights law is quite clear.  The International Covenant on Civil and Political Rights (a treaty to which 167 nations are state parties including all countries of North and South America) in Article 25 states:

Every citizen shall have the right and the opportunity, without any of the distinctions mentioned in article 2 (without distinction of any kind, such as race, color, sex, language, religion, political or other opinion, national or social origin, property, birth or other status) and without unreasonable restrictions:

(a) To take part in the conduct of public affairs, directly or through freely chosen representatives;

(b) To vote and to be elected at genuine periodic elections which shall be by universal and equal suffrage and shall be held by secret ballot, guaranteeing the free expression of the will of the electors;

(c) To have access, on general terms of equality, to public service in his country.”

My own country, the United States, actually excludes people who live in Washington, D.C. (District of Columbia) from voting for members of the U.S. Congress. Residents of Washington, D.C., the nation´s capital, who are citizens of the United States, have no voting representatives in the Senate or in the House of Representatives. The District of Columbia needs assistance from the international community, including Colombia, to fix this clear human rights violation, as here in Bogota, D.C., citizens are busy voting for their Congressional representatives.

Imagine how residents of Bogota, Districto Capital would feel today if everyone else in Columbia was voting for Congress, but they could not?

In fact, Mexico and Brazil, which both borrowed from the U.S. federal system and created capital districts where their citizens residing in the D.C. could not vote in Congressional elections, have both recognized the clear violation and changed the law.

It is hard to understand how this human rights problem persists in the U.S., especially when compared with rhetoric from that country on the importance of voting and how sacred this right is and how important it is to protect the voting rights of the people.

Former President Lyndon B. Johnson, who did a great deal to address race-based problems in voting in the US, stated: “The vote is the most powerful instrument ever devised by man for breaking down injustice and destroying the terrible walls which imprison men because they are different from other men.”

Over the years there have been a number of legal challenges to this restriction of voting rights.  U.S. courts have often decided that exclusion of individuals for race, economic status or gender violated their rights.  As Justice Black said in Wesberry v. Sanders: “No right is more precious in a free country than that of having a voice in the election of those who make the laws under which, as good citizens, we must live.”

It is important to compare this with the cautious language and decisions related to the right to vote of U.S. citizens living in Washington, D.C.

But so far the close to 5 million U.S. citizens that do not live in a state continue to be denied the right to vote and the courts have always prioritized a mechanism found in the  constitution over the rights of the citizens who do not live in a state.

If a U.S. citizen moves from any state to Washington, D.C., or to another non-state U.S. entity (Virgin Islands, Puerto Rico, Guam, Northern Mariana Islands and America Samoa), she will find herself denied the right to vote in federal elections.  If that person moves from that state to Riyadh, or Reykjavik, or Bogota though, she would still able to vote absentee as a state resident. This is an injustice that needs to be fixed.

taxation without representation plate on presidential motorcade

Members of DC Vote demonstrate to get the “Taxation Without Representation” plate on the presidential motorcade, which the administration did in January 2013 (flickr/ekelly80)

In 1998, two complaints (the Adams and Alexander cases) were filed, each alleging, inter alia, that inhabitants of the District of Columbia are being unconstitutionally deprived of their right to vote for representation in the House of Representatives and the Senate.  They note that the citizens of the District pay federal taxes and defend the United States in times of war, yet are denied any vote in the Congress that levies those taxes and declares those wars. This, they continue, contravenes a central tenet of our nation’s ideals: that governments “deriv[e] their just powers from the consent of the governed.” The Declaration of Independent, para. 2.

In its original form, the U.S. Constitution provided: “The Senate of the United States shall be composed of two Senators from each State, chosen by the Legislature thereof, for six Years; and each Senator shall have one Vote.” U.S. Const. art. I, § 3.

The Seventeenth Amendment provides: “The Senate of the United States shall be composed of two Senators from each State, elected by the people thereof, for six years; and each Senator shall have one vote.”

Basically, if you do not live in a state, you have no right to vote in U.S. federal elections. Odd, as human rights law is clear that voting attaches to citizenship.  For years courts have tried to avoid the rights of the citizens and tried to contort their logic to not see how the right of a citizen is violated when they cannot vote for those that make decisions that impact them.

In Ballentine v. United States, Ballentine was born in St. Louis, Missouri on October 22, 1936. After working for a number of years as a deputy United States Marshal in the continental United States, Mr. Ballentine was transferred in 1973 to the U.S. Virgin Islands, where he has remained ever since. Mr. Ballentine brought an action on July 30, 1999, claiming that he has been denied his constitutional right to vote in presidential elections, and his right to be represented in Congress by a regular voting member, because of his status as a United States citizen residing in an unincorporated territory of the United States.

In this case, like so many others, it was decided that “the franchise for choosing electors is confined to ‘states’ cannot be ‘unconstitutional’ because it is what the Constitution itself provides.”  Odd, as the U.S. Constitution also provided for the exclusion of slaves and indigenous peoples from voting.  Rights should trump mechanical sections of the Constitution.

So how did rights override parts of the Constitution but not other parts?  Courts in the U.S. have been unwilling to find the Constitution unconstitutional, so they have done the changes in terms of voting rights within the framework of the Constitution, not touching the mechanism for voting, which is just with the states.

Countries that have integrated human rights law into their constitution have an easier time holding mechanisms within a constitution unconstitutional as they violate a developing notion of rights.  The U.S. has only two choices to bring their current practice into conformity with their human rights treaty obligation.  One, the Courts could read the 9th Amendment , which states: “The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people,”  to conform to current thinking of rights and the right to vote as found in the International Covenant on Civil and Political Rights. The other would be for the U.S. to pass an amendment to the Constitution to create one non-state voting district for all those who are U.S. citizens, but do not have the right to vote in Congressional and Presidential elections.

Importantly, one poll shows approximately 80% of adult Americans are not aware that DC residents pay federal taxes and have no voting representation in the House or Senate. But once aware of this aberration, they overwhelmingly support federal voting rights for the residents of the District of Columbia.

The difficulty with this is that process defined by the Constitution to pass an amendment requires States to pass an amendment.  As this will dilute the voting power of States, there are forces of the status quo that impede this change.

The Fifteenth Amendment (1870) states: “The right of citizens of the United States to vote shall not be denied or abridged by the United States or by any state on account of race, color, or previous condition of servitude.” The Nineteenth Amendment (1920) provides that: “The right of citizens of the United States to vote shall not be denied or abridged by the United States or by any state on account of sex.” Although these amendments seem to indicate that every U.S. citizen has the right to vote, the U.S. Supreme Court holds that this right only applies to residents of one of the fifty states.

There have been six countries that modeled their governments so closely after America’s that they, too, created the “D.C. voting problem” in their countries, including Brazil and Mexico. All six rectified the problem, in recognition of the need for all citizens to vote.

For those that don´t think the U.S. is violating its human rights obligations by excluding about 5 million citizens from voting in Congressional elections, they should come to Bogota and try to convince the people here that those living in Bogota, D.C., should not have the right to vote unless they moved to a departmento or state.  People would find the argument ridiculous.  Discriminating against citizens based on place or birth or residence can no longer be sustained in the U.S.  Allowing all citizens to vote is long past due.


Todd Howland is the Representative of the UN High Commissioner for Human Rights in Colombia and a graduate of the University of Denver Sturm College of Law

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The U.S. Budget Gridlock: An International Perspective

The congressional gridlock over U.S. government funding and the debt limit during the month of October has left the rest of the world both bewildered and alarmed, particularly in Europe where the Euro countries have yet to fully recover from the their own financial crisis triggered by the confluence of the lingering consequences of the U.S. financial collapse of 2007-2008, and the chickens of their own profligate deficit spending over past decades finally coming home to roost. Most alarming to these countries is not so much the gridlock itself—most assume that the deadlock will be resolved—but rather the spectacle of political brinksmanship in which congressional parties seek to gain political gain by threatening each other with financial Armageddon, not just in the U.S., but worldwide,  if the other side doesn’t back down.

Thus, conservatives, after giving up proposals to defund Obamacare, have been blamed for demanding, as a price of passing a government funding bill, that individuals be given the same one year grace period under the Obamacare mandate that Big Business has already received, and demanding that members of Congress be required to live by the same Obamacare rules as those imposed on the rest of the country.  Meanwhile, those on the left, particular those who control the U.S. Senate, have been blamed for denouncing all such proposals as “blackmail”, an attempt to hold the country “hostage”, and so outrageous as to prompt the President both to refuse to negotiate and to predict a stock market meltdown and economic catastrophe if the government is not fully funded and the debt not raised because of such demands.

the fed

The Federal Reserve Bank

While the stock market has mostly shrugged off the government shutdown—especially after the overhyped predictions of catastrophe under the “sequester”, which resulted in only a rather modest decline in the increase in government spending—the threat of default of U.S. government debt does carry significant economic risks. Indeed, the very threat of such a default has already caused the cost of insuring U.S. debt to rise dramatically. More alarmingly, the use of U.S. debt around the world as collateral for international obligations means that a default, especially if extended, could indeed threaten international economic collapse.

In order to take this risk out of the equation and deprive any party of using it as a threat in the game of economic brinksmanship, the U.S. House last passed the McClintock—Toomey bill, which would have guaranteed U.S. debt by requiring that U.S. debt be paid from incoming tax revenues even during a period of shutdown. This proposal, which would have greatly alleviated international concerns over the possibility of U.S. default, was subsequently denounced in the Senate Majority leader as the “Pay China First” bill, where it subsequently died. (This despite the fact that China hold only about 7% of U.S. debt, while Americans hold about two thirds).

So, how, might an ignorant but intelligent man from Mars might ask, did we ever get to this point?

The answer may be traced back in large measure to the Great American Housing Bubble and subsequent collapse in 2007-2008.*  In 2008 alone, American consumers suffered a catastrophic loss of sixteen trillion dollars in purchasing power. Much of that loss came in the form of six trillion dollars in lost home equity when the housing bubble collapsed. In the name of expanding home ownership, the bubble had been created by a deliberate government policy of encouraging banks to lend money to unqualified buyers with low or no money down and low interest rates. Banks were only too eager to comply since they could unload most of their loans on taxpayers via Freddie and Fannie, or on hapless investors through the government promoted vehicle of “securitization”, by which loans are sliced and diced and sold to unsuspecting investors worldwide.

At the height of the bubble, consumers became accustomed to using the equity in their homes as personal piggy banks, creating an illusion of wealth that could be used to buy vacations, cars, second homes, and other consumer goods. Thus when that equity was destroyed, it had much the same effect as bank failures had in the depths of the Great Depression. The loss of such purchasing power reduced the demand for goods and services, resulting in unemployment, bankruptcies, stock market collapse, and extreme financial distress.

The first chapters of Econ 101 explain that there are two ways to replenish such catastrophic losses in purchasing power caused by either bank failures or the collapse of a housing or stock market bubble.  The first is through monetary policy by the simple act of printing more money. The second is through fiscal policy, reducing taxes and thereby increasing the take home pay of consumers and leaving them with increased purchasing power to demand goods and services and thereby put people to work.


Large, expensive piggy banks

The latter policy is the much preferred method of replenishing purchasing power because its application can be spread more broadly across the entire economy, whereas monetary policy tends to have a disproportionate effect on more narrow sectors of the economy such as housing or the stock market in ways that risk the creation of yet another bubble cycle in those sectors. Indeed, the current extreme application of monetary policy by the Fed—reducing short term interest rates to absolute zero and printing money to buy long term securities—is already showing signs of creating yet another such bubble cycle in the housing and stock market.

Unfortunately, the reality of America’s political system is such that fiscal policy can rarely be employed as a method of replenishing lost purchasing power. Over the past several decades, politicians have won votes by relieving almost half of all Americans of the duty of paying any federal income taxes at all. This had resulted in an economy in 2013 in which the top 20% of Americans now pay 71.8% of all taxes, and the 1% pays almost one third of all U.S. federal income taxes. This in turn has created a voter population in which 47% of all Americans have no stake in their government other than that of receiving government benefits. Like the populace of ancient Rome, whose support could be won by the promise of bread and circuses without any concomitant duty to contribute, many U.S. voters today see no benefit to themselves if taxes are reduced, and thus have no reason to vote for politicians who propose to reduce taxes as a means of replenishing purchasing power in the economy as a whole.

Thus any proposal to reduce income taxes is likely to be denounced as “tax breaks for the rich”—the” rich” apparently being defined as anyone among the hapless 53% of Americans who are asked to bear the entire federal income tax burden.

But while politicians are reluctant to reduce the tax contributions imposed on those who pay taxes, they are often much more enthusiastic about employing the second prong of classic Keynesian fiscal policy—namely spending, which has the political advantage of catering to those who either pay no taxes or who receive more in government benefits than they pay in taxes. The politicians who endorse such spending, rather than tax-reduction policies, often claim that they are only employing tried and true “Keynesian” policies of replenishing purchasing power by financing vast  government programs, thereby introducing money into the economy in the same way as if they had reduced taxes. They conveniently forget that Keynes recognized that purchasing power could be replenished by either increasing spending or reducing taxes.

The question therefore is which of the two prongs of fiscal policy—reducing taxes or increasing spending—is more likely to revive a moribund or unemployed economy.

Reducing taxes allows taxpayers to keep more of their earnings, and spend it on such consumer items as food, lodging, gas, and refrigerators. Those who provide such goods and services are soon employed. Increased spending, on the other hand, as if so often does when politicians get to spend other people’s money, is more likely to be spent on more speculative ventures that most people, when spending their own money, would never dream of spending it on—think SolyndraFisker, bailing out inefficient companies or cities being strangled and bankrupted by unrealistic defined contribution pension plans, unsustainable  entitlement programs which blithely ignore the demographic changes of an aging population,  or even fancy cars for millionaires.

mitt romney and solyndra

Presidential Candidate Mitt Romney publicized Solyndra which was funded under a program during the Bush administration (Justin Sullivan/Getty Images)

Not surprisingly, such spending has had far less effect on reducing unemployment than its sponsors hoped for. Indeed, since the government launched its most extravagant spending programs in the aftermath of the housing collapse in 2007-2008, the labor participation rate has actually decreased from 64% to 55.8%, as millions give up hopes of ever finding a job—a disastrous result only exacerbated by government policies of drastically reducing the wages of poverty-stricken minorities and legal immigrants by–at the instigation of Big Business seeking higher profits– the import of cheap foreign labor encouraged by lax immigration law enforcement.

With the option of sound fiscal policy off the table, or used counter-productively, virtually the entire burden for replenishing purchasing power has fallen on the unelected Federal Reserve and reliance on its vast monetary powers. Taking a cue from Chapter One of Econ 101, the Fed has flooded the economy with newly printed money in a process known as “quantitative easing” (i.e. buying long term government bonds that no one else in their right mind would even consider buying) in hopes of reducing interest rates to such a low level that businesses will want to borrow money cheaply and use it to expand and hire more workers. Not surprisingly, the billions so created out of thin air have thus far had a depressingly modest effect on employment, though it has greatly benefitted the rich who own the biggest houses (and thus get the biggest tax deductions), and own the most stocks and bonds, not to mention inducing the government to go even deeper in debt since it need pay almost nothing on the money it borrows in the short term, and very little in the long term. (If one wonders who really believes that long term interest rates will not increase in the next thirty years and is thus willing to risk substantial principle by buying a 30 year bond, the answer is that virtually no rational investor is willing to do that except the government itself in the form of the Fed).

The reason for the lack of success of quantitative easing can be found in the later chapters of Econ 101 which describe Keynes’s “liquidity trap”, and also explains why low long term interest rates may not spur business expansion, and may even slow it and exacerbate unemployment: investors who buy a company’s long term bonds risk a catastrophic losses of principle when super-low long term interest rates inevitably rise. They are far more likely to wait until long term rates do rise before buying these long-term bonds, thus depriving those companies of capital when they are most needed—namely now, when the economy is struggling, and employment participation rates are at historic lows.

In the aftermath of the housing bubble collapse in 2007-2008, and the subsequent destruction of six trillion dollars in consumer purchasing power, the government had a once in a lifetime opportunity to replenish the money supply by reducing taxes without risking inflation, and putting new purchasing power into the hands of consumers to buy consumer goods and thus stimulate employment.  Instead it has squandered that opportunity by instead printing money by the trillions, and reducing interest rates to the point where potential investors risk catastrophic loss of capital when they invest in business expansion. The tragedy is that the longer the present addictive low interest policies are pursued, the more investors will, out of desperation, risk that catastrophic loss and contribute to yet another cycle of stock market and housing bubble and burst.

We tolerate politicians whose time horizons do not extend beyond the next election, because we understand the realities of politics, elections, and demagoguery. It is also tempting to tolerate members of the Fed, upon whom has been cast virtually the entire burden of saving the economy in the absence of sound fiscal policy by the politicians. The pressures of that burden no doubt accounts for such catastrophic decisions as the one made by Fed Chairman Alan Greenspan to fuel the housing bubble with artificially low interest rates, and Chairman Bernanke’s later failure to discern the dangers of such a bubble as when he said, on May 17, 2007:” (W)e believe the effect of the troubles in the subprime market will be limited…Importantly, we see no serious broader spillover to bank or thrift institutions from the problems in the subprime markets”.)

But without resisting these temptations, the lesson of the final chapter of Econ 101 is that we have yet another cycle of bubble, burst and economic catastrophe to look forward to, including another round of international economic distress.


Robert Hardaway is Professor of Law at the University Of Denver College Of Law, and the author of twenty two published books on law and public policy, including “The Great American Housing Bubble” (ABC-CLIO Publishers, 2012)



See Hardaway, The Great American Housing Bubble: The Road to Collapse (2012).

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University of Denver Sturm College of Law