The Purported Chaotic Mess of Tariff Refunds

Mark Tushnet

 Will refunding the unlawfully collected tariffs be a chaotic mess? Yes and no. Yes, on the assumption, which everyone is making, that the refunds have to be paid dollar-for-dollar to the people who were unlawfully required to pay them, taking into account the fact that some of the immediate payers—the importing corporations—passed on some of the increased costs to consumers. (I think people are assuming that as a legal matter such consumers are also entitled to refunds because they were the ultimate victims of the administration’s unlawful actions. I think one can question that assumption, but will accept it here.)

As far as I can tell the overall assumption rests on two premises: the applicable statutes require dollar-for-dollar refunds, as does the Due Process Clause. (It would be easier for nonlawyers to understand the second premise if we could frame the failure to refund unlawfully collected taxes as an uncompensated taking, but for doctrinal reasons the challenge is more easily framed in due process terms.)

In a competent administration (or government), lawyers would already be working to eliminate the statutory premise by drafting legislation that would replace the assumed dollar-for-dollar statutory refund. I can spin out a lot of possibilities. One would be a Pritzker fund: a barrel of money from which checks would be issued to every household, providing rough compensation for the increased costs each was unlawfully required to pay. The precedents are clear that what I’m calling “rough” compensation satisfies due process/“takings” requirements (though of course someone would litigate the due process question—and most likely lose).

What about the unlawful payments importers made and didn’t pass on? You could create a second spigot for the barrel. It would be opened when a claimant alleged that it had paid unlawfully extracted tariffs that weren’t compensated and established that claim in a proceeding, with due process afforded, before an administrative agency or Article I court, with appropriate review in an Article III court.

That’s just one top-of-the-head possibility. Good lawyers could come up with others—if they or the people who employed them wanted to. But the “chaos/mess” story plays well politically, I suppose—or, put another way, political actors aren’t serious about actually providing compensation for unlawful government actions (sound familiar?).