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Government Competition Update May 18, 2014

Posted by federalist in Government, Government Regulation, Markets.
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What remains of state sovereignty in this country is both entertaining and heartening.

Of course state competition for business has a long history. Before government became a distinguishing factor businesses would often establish themselves based on access to needed natural resources, labor, and markets. Gradually each state’s tax and regulatory burden became a significant part of that equation. Now the political environment itself is becoming an explicit factor.

For example, the last round of gun control hysteria had quite disparate results. States that enacted draconian new gun laws have found themselves losing firearm businesses to more friendly states.

More recently the CEO of a California company complained publicly that its government is becoming reminiscent of the communist Vietnam he fled 35 years ago. Texas is one of the states that has been reaching out to companies with this compelling invitation from its governor:

Texas’ low taxes, predictable regulations, fair courts and world-class workforce make our state the ideal place for any business looking to relocate or expand….

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Federalism Showdown Looms Over Gun Control July 21, 2009

Posted by federalist in Federalism, RKBA.
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Montana and Tennessee recently passed “Firearms Freedom Act” laws declaring that most firearms manufactured and traded within their respective states are exempt from federal gun laws and regulations.  The most significant implications of these state acts:

  • Federal Firearms Licenses are not required to manufacture or sell locally manufactured guns.
  • Locally manufactured silencers, short-barrelled guns, and man-portable smokeless-powder guns with bore diameters up to 1.5″ are exempt from NFA tax and registration.  Presumably “Any Other Weapon” devices are also NFA-exempt.
  • However, explosive ammunition and fully-automatic firearms are not protected by the Firearms Freedom Acts, and therefore still subject to the federal NFA and GCA.

Last week the BATFE sent letters to Federal Firearms Licensees in both states asserting that these Firearms Freedom Acts do not exempt licensees from any federal requirements.

Granted, there could be an administrative detente to this standoff:  When someone decides to obtain a Federal Firearms License (FFL) they are voluntarily submitting to federal regulations.  Therefore, a separate network of non-FFL manufacturer and dealer entities could stand up to deal in state-protected Firearms Freedom Act items.  In that case the BATFE would have to take the aggressive step of barging in on individuals engaged in state-sanctioned activity to assert that it has jurisdiction over them.  Hopefully the states will resist such an intrusion on their sovereignty.

[Update: FirearmsFreedomAct.com is serving as a clearinghouse for news on this sovereignty movement.]

Federalism Update April 27, 2009

Posted by federalist in Federalism, Taxation.
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The first assertions of state sovereignty occurred early in the history of the United States: Jefferson authored the Kentucky Resolutions and Madison wrote the Virginia Resolution. One generation later was the notable South Carolina “nullification crisis.”  In February I noted the resurgence of state sovereignty movements.  Christian Science Monitor had a good update last month.  This week Randy Barnett proposes a Constitutional “Federalism Amendment” to reign in the federal government, though I much prefer his simpler fix, which is to repeal the 16th amendment:

What sort of language would restore a healthy balance between federal and state power while protecting the liberties of the people?

One simple proposal would be to repeal the 16th Amendment enacted in 1913 that authorized a federal income tax. This single change would strike at the heart of unlimited federal power and end the costly and intrusive tax code. Congress could then replace the income tax with a “uniform” national sales or “excise” tax (as stated in Article I, section 8) that would be paid by everyone residing in the country as they consumed, and would automatically render savings and capital appreciation free of tax.

Will States Restrain the Federal Government? February 15, 2009

Posted by federalist in Federalism, Taxation.
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The United States Constitution reserves all powers, not explicitly delegated to the federal government, to the states and the people.  Since each state is a sovereign entity, why do they tolerate such an enormous federal government?

A state government has real incentives to resist the encroachment of the federal government: Every dollar that the feds take in taxes is a dollar that the state can no longer use for its political purposes.  The feds can take that money and redistribute it for the benefit of other states.  Or the feds can use it as a “carrot,” only remitting the tax revenue to states when they comply with the wishes of the feds.  Either way, federal taxation takes power away from the states.  But the Constitution clearly gives states the authority to retain this power, except insofar as the federal government is spending it on a very limited set of enumerated activities.

If there was any doubt before, the recent “bailout” plans show the federal government plainly exceeding its enumerated powers.  Mark Sanford, Governor of South Carolina, is asserting that point, and suggesting that his state should not take any of this money.

The Pennsylvania state legislature is also considering a resolution that would “put the federal government on notice,” and serve as a preamble to repealing all extra-constitutional federal laws and taxes.

So long as the federal government is taxing and spending outside of its enumerated powers, the states would be justified in nullifying the taxation and prosecution of their citizens.  It would be quite easy for a state like South Carolina or Pennsylvania to simply announce that it is indemnifying its citizens against the claims of the IRS.  If the federal government threatened to send agents into a state to forcibly collect unjust taxes or imprison citizens who did not pay them, the state could not only call out its sheriffs and militia to defend its citizens, but it could also appeal to other states or countries for assistance in maintaining its sovereignty.  If the federal government tried to impound assets held outside of that state, the state could seize the assets of the federal government or its beneficiaries for recompense.

In practice, because the states are in fact sovereign entities, and because the federal government is in fact constitutionally restrained, it is likely that the mere assertion of a state’s rights would be sufficient to put the federal government back in line.  Governor Sanford: It only takes one state to start!

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