A tax by any other name….

In Biggs v. Betlatch, the Arizona Supreme Court will decide whether a Medicaid expansion tax is, in fact, a tax – or whether it is some other kind of non-tax revenue raising device, such as a fee or assessment. While a rose by any other name would smell as sweet, a tax is misidentified as a fee or assessment for only one reason: to avoid the state constitution’s supermajority vote requirement for tax increases. In this case, a bare majority of the Arizona Legislature passed a law requiring the state Health Care Cost Containment System to levy an “assessment” on hospitals to pay for Medicaid expansion. PLF, joined by the Howard Jarvis Taxpayers Association, filed an amicus brief urging the court to consider this case in the context of the tug-of-war between government officials who wish to raise revenue for an ever-increasing array of projects and services and the taxpayers who are bound to pay for it.

As many states have learned, voters and taxpayers resent the “creativity” of government officials, validated by court decisions that effectively evade procedural requirements for tax increases. Elected officials pushing the boundaries is not a recent phenomenon, but some courts seem to have lost the will to enforce constitutional limitations. The perennial struggles in California and Michigan provide cautionary tales, as judicial decisions permitting government to dig into taxpayer pocketbooks in apparent violation of a constitutional provision specifically designed to prevent such assessments serve only to weaken the pillars of the constitutional structure. When voters and taxpayers have little faith in the judiciary to put a stop to legislative overreach, they become increasingly jaded about their governing institutions, to detriment of the body politic.