A unique feature of the Swiss Federal Constitution is the fact that the central government’s power to impose direct taxes on citizens expires every decade or so.
In fact, the current taxing authority expires at the end of 2020. Fortunately for the Swiss republic’s central government, voters approved an extension (the “New Financial Regime 2021“) for another fifteen years in a March 2018 election. This was not a big surprise, since voters have approved extensions of this sort several times since 1958, including the most recent reapproval in 2006.
Direct taxation from the Swiss central government is a relatively new thing. Prior to the First World War, the confederation (i.e., central) government was funded primarily through customs duties. Collecting and spending taxes remained overwhelmingly the business of the municipalities and the cantons—similar to US states. Through the mid-twentieth century, the central government gained more taxation powers, including a direct income tax and the value added tax. But the voters never quite trusted the politicians, and they insisted on both a time limit and numerical caps to tax rates written into the constitution itself.1
This time around, the measure passed with a comfortable majority of 84 percent of voters opting for “yes,” but the measure was not totally without controversy. Some politicians on the left argued that the time limit ought to be abolished altogether, and on the right some argued for a tax cut before an extension could be approved. Had the extension not been approved, the central government would have lost more than sixty percent of its tax revenue, the income tax and value added tax would have both disappeared, and the central government would have had to largely shut down.
Since the call to abolish the time limit met with little enthusiasm, the “compromise solution was to extend the deadline for both levies to 2035.”
Federal Taxes Need a Time Limit
It is likely that the United States and its beleaguered taxpayers would benefit quite a bit from similar provisions toward federal taxes.
After all, when it comes to the US federal government’s direct taxes—including the income tax and the payroll taxes—the feds have constitutional carte blanche to raise tax rates as high as they like. The Swiss constitution, on the other hand, stipulates that “The Confederation may levy a direct tax…of a maximum of 11.5 per cent on the income of private individuals.”
One wonders how differently things might look if any tax increase required a constitutional amendment, and if federal politicians had to politely request every decade that the voters mark “yes” on their ballots to renew the federal authority to impose taxes.
This would certainly not guarantee that taxes would never be raised again. After all, the constitutional amendment process has been successfully used to raise taxes in the past in both Switzerland and the US.
But a “yes” vote would not be a picnic for pro-tax advocates either. After all, were “tax reauthorization,” as we might call it, to follow the process of constitutional amendments set out in the US Constitution, it would require approval from majorities in thirty-eight states. For context, consider that in 2016Â Donald Trump won a majority in thirty states, and in 2012Â Barack Obama won a majority in only twenty-six states.
A lower hurdle for passage could be the Swiss “double majority” required for constitutional provisions: approval from a majority of the whole population overall and from a majority of cantons. Or we might use the electoral college formula.
Just imagine: the federal government’s taxing power is set to expire in 2022. As the date approaches, politicians launch a campaign to remind us of all the reasons they absolutely must be able to keep taxing, and at the current rate. And, of course, it wouldn’t be enough to convince just a majority of Americans of this. They’d have to convince a majority of Americans in a majority of states, or maybe even a supermajority of states, to go along with it.
Needless to say, the “Let us tax you ’22!” campaign would be an excellent time to extract concessions from desperate politicians looking for a “yes” vote.
Why Stop with Taxation Power Only?
Certainly, there are many areas of federal law that would benefit from expiration dates just as much as the power to tax would.
The obviously unconstitutional so-called Patriot Act, of course, should never have been law at all and is in dire need of a hard deadline pending reapproval from a supermajority.
It would also be interesting to have a national debate on the Federal Reserve Act as its date of expiration approached.
Unlike the Swiss, who were wise enough to reject the creation of national police and antiterrorism forces (in 1978 and 1982 referenda, respectively), Americans have unfortunately had the FBI and other federal cops foisted upon them.2
The legislation creating these agencies ought to expire as well. If the FBI is so essential—as it is clearly not—let them beg the voters to authorize another ten years of the agency’s existence. (As is the case in Europe with Interpol (International Criminal Police Organization), individual states are more than capable of working together to address criminal activity without the FBI.)
Jefferson Explains Why Expiration Dates Are Better Than Repeal
It’s certainly reasonable to expect a government to have to seek reauthorization of its powers at certain intervals. Thomas Jefferson wrote to James Madison in 1789 that “succeeding generations are not responsible for the preceding” and that “no society can make a perpetual constitution, or even a perpetual law.” Contending that nineteen years is long enough for any law or constitution to last without the need for reapproval, Jefferson reasoned that if a law “be enforced longer, it is an act of force, and not of right.”
Moreover, it was not enough that the voters have the theoretical ability to repeal a law. The power to repeal, Jefferson realized, puts the status quo on the side of the politicians. The better solution is to provide for expiration dates, and to force the need for reauthorization. It should be the politicians who have to ask for an extension of their power; the voters who should not have to ask to limit it. Jefferson concludes: “a law of limited duration is much more manageable than one which needs a repeal.”
Ultimately, there’s no reason why the entire US Constitution should not have to face an expiration date. In the spirit of Jefferson, let the entire compact come up for reapproval every dozen years or so. A lack of an overwhelming yes vote would simply dissolve the Union, and member states would be free to form a new compact, or none at all.
Naturally, this would present technical challenges, such as what to do with federal property and military equipment. But the presence of repeal as a viable option would also emphasize the need to crate a more flexible union in which powers are more centered around member states and individual communities rather than an immense (and apparently fragile) central government. The proponents of union will insist that federal powers are too complex and too numerous to even risk a repeal of federal powers. But if this is the case, then perhaps federal powers are simply too complex and too numerous.
Nevertheless, opponents of reauthorization and legal expiration dates will insist that the US government must exist forever—without any option to ever vote on the matter—or the world will collapse into chaos.
But if the US government is so very essential, then why fear giving the taxpayers who pay all the bills a chance to vote on the matter? Surely, all reasonable people will see how amazing the US government is, and approve it along the lines of what the voters’ betters in Washington tell us is best.
We all know what those people in Washington really think, though. They hate the fact that they themselves have to stand for reelection ever, and they certainly don’t want to have to subject the institutions they love to a vote of the rabble. Of course, the permanent government of bureaucrats and secret police don’t stand for reelection at all. And they want to keep it that way.
- 1. For more, see Thomas Fleiner, Alexander Misic, Nicole Töpperwien, Swiss Constitutional Law (Bern: Staempfli Publishers, 2005), p. 224: “The most important federal taxes are the direct taxes (income of natural persons, profit, cap[ital and reserves of legal entities] and the Value Added Tax (VAT). As the constitutional federal power to levy direct taxes and the VAT expires in 2006…the Federal [levy] is only accorded with a provisional power and its federal taxing power is additioanally limited insofar as the constitution sets maximum tax rates (Articles 128(1) and 130(1)–(2) of the Constitution).”
- 2. Gregory A. Fossedal, Direct Democracy in Switzerland (Livingston, N.J.: Transaction Publishers, 2005).
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