Nonprofit firms may earn profits, but they may not distribute them to any affiliated persons. If a nonprofit firm has a “charitable” purpose under § 501(c)(3) of the tax code, the firm receives numerous tax advantages. For example, donors may deduct their donations to the firm from their taxable personal income. For-profit firms may distribute profits to affiliated persons, but receives no tax advantages for engaging in “charitable” activities. We argue that the law should not link tax benefits to corporate form in this way. There may be good arguments for recognizing the nonprofit form and good arguments for providing tax subsidies to charitable firms, but there is no good argument for making those tax subsidies available only to charities that adopt the nonprofit form. Indeed, there are reasons to think the ability to distribute profits to affiliates may both increase and improve charitable activities. Moreover, the extensive charitable activities of many for-profit commercial firms suggest that in the absence of discriminatory tax treatment for-profit charities would flourish. Therefore, the current tax benefits offered to charitable nonprofits should be extended to for-profit charities, and to the charitable activities of for-profit commercial firms.
Ideological Voting on Federal Courts of Appeals: A Preliminary Investigation
For many decades, the United States has been conducting an extraordinary natural experiment: Randomly assigned three-judge panels on courts of appeals produce extensive evidence of the effect of judicial ideology on judges’ votes. If the political party of the appointing president is treated as a rough proxy for ideology, then it becomes possible to test three hypotheses: (a) a judge’s votes, in ideologically contested areas, can be predicted by the party of the appointing president; (b) a judge’s ideological tendency, in such areas, will be amplified if the panel has two other judges appointed by an appointing president of the same political party; and (c) a judge’s ideological tendency, in such areas, will be dampened if the panel has no other judge appointed by an appointing president of the same political party. All three hypotheses are confirmed in many areas, including affirmative action, campaign finance, sex discrimination, sexual harassment, piercing the corporate veil, disability discrimination, race discrimination, and review of environmental regulations. An important implication is that panel composition has a strong effect on likely outcomes, thus creating extremely serious problems for the rule of law. Taken as a whole, the evidence suggests that judges frequently issue collegial concurrences, that is, concurrences produced by the unanimous views of the other judges on the panel, and that judges are subject to group polarization, by which groups of like-minded people go to extremes. Notably, all three hypotheses are rejected in the areas of federalism, criminal appeals, and takings of private property, because Republican and Democratic appointees vote essentially alike. In the areas of abortion and capital punishment, the first hypothesis is confirmed, but the second and third are rejected, because judges vote their convictions, and are not affected by the composition of the panel. Disaggregating the data by circuit allows courts of appeals to be ranked along an ideological spectrum; it also shows striking differences between Republican appointees and Democratic appointees on different circuits. Normative implications are briefly explored.
The Federal Common Law Origins of Judicial Jurisdiction: Implications for Modern Doctrine
The Supreme Court’s attempt in Pennoyer v. Neff to graft federal common law jurisdictional rules onto the Due Process Clause has proven problematic. Although the jurisdictional rules have changed significantly since that decision, contemporary federal limitations on state court jurisdiction continue to reflect their common law origins. Oblivious to the origins of such jurisdictional rules, the Supreme Court has struggled in recent years to explain them in due process terms, unable to construct a due process model that can adequately explain the elements of interstate federalism in current jurisdictional doctrine. Nor will the Court ever be able to fully explain in due process terms rules formulated primarily to vindicate structural values rather than individual rights.
Several commentators have suggested that the Court resolve this dissonance by taking seriously due process as the sole source of authority for the jurisdictional rules and jettisoning all elements that do not fit within the due process model. Such a solution would, however, unnecessarily deny the Court the flexibility to formulate optimal jurisdictional rules. This Article argues that the better course would be to recognize constitutional structure as the primary source of authority for federal common law restrictions on state court jurisdiction, with due process imposing only “modest” restrictions akin to the constitutional restrictions on state choice of law authority. Either of these alternatives is far superior to current doctrine, which erroneously assigns interstate federalism content to a due process source of authority. This mismatch is primarily responsible for the incoherence that plagues personal jurisdiction doctrine. More significantly, because the core restrictions on state court jurisdiction are mistakenly thought to be mandated by a constitutional provision protecting individual liberty interests, current doctrine illegitimately prevents Congress from remedying serious deficiencies in our interstate system of justice, such as the difficulty in obtaining and enforcing child-support judgments.