Indiana Law Review The Supreme Court Assaults State Drug Taxes WITH A Double Jeopardy Dagger: Death Blow, Serious Injury, Or Flesh Wound? Charles K. Todd, Jr.* Introduction Accusing the Supreme Court of the United States of a lawless act, especially one of a criminal nature, is an accusation fraught with reservation. This Note suggests that the Court's action on June 6, 1994, warrants such an accusation. In the hallowed halls of the Supreme Court building, five Justices picked up a "dagger" and looked for past Supreme Court cases they could use for "accomplices." Although not all the accomplices were willing, the Justices relentlessly pursued their support in the "attack." The victim was unsuspecting, well-liked, and well-supported by the community. But armed with its "double jeopardy dagger" and a "motive" for the crime,' the Court wounded the victim in a possible fatal slashing attack; the victim—state drug taxes. Although one may find this "crime scene" analogy extreme, this Note suggests that the Court's recent use of the Double Jeopardy Clause to strike down state drug taxes warrants such extremity. Because this Note enters the rocky waters of double jeopardy jurisprudence and its recent application to state excise taxes on drugs, it is only fair to advise the reader of Chief Justice Rehnquist's characterization of the jurisprudence in this area as a "veritable Sargasso Sea which could not fail to challenge the most intrepid judicial navigator."^ In Department of Revenue ofMontana v. Kurth Ranch,^ the Supreme Court held Montana's Dangerous Drug Tax Act'* violative of the Double Jeopardy Clause,"^ and further muddied the already cloudy waters regarding the nature and scope of double jeopardy violations. In Kurth Ranch, Montana's law enforcement officers raided the Kurths' family farm, arrested them, and confiscated marijuana plants. After the Kurths pled guilty to criminal drug charges, Montana's Department of Revenue attempted, in a separate proceeding, to collect a state tax imposed on the possession and storage of dangerous drugs. The Kurths, then in * J.D. Candidate, 1996, Indiana University School of Law—^Indianapolis; B.A., 1984, Ball State University, Muncie, Indiana. This Note would not have been possible without the love, friendship, prayers and encouragement of my wife, Sandy, whose dedication as a wife and a mother helped make this author's participation possible. 1. See United States v. Halper, 490 U.S. 435 (1989) (holding that a civil sanction is punishment for double jeopardy purposes). 2. Albernaz v. United States, 450 U.S. 333, 343 (1981). 3. 114S.Ct. 1937(1994). 4. Mont. Code Ann. §§ 15-25-101 to -123 (1987) (The Act is cited as it existed at the time of the Kurth Ranch decision. It was revised in 1993, with §§ 15-25-103 to -1 10 and §§ 15-25-1 16 to - 1 20 reserved). 5. U.S. Const, amend. V. 696 INDIANA LAW REVIEW [Vol. 29:695 bankruptcy proceedings, objected to Montana's proof of claim for the tax and challenged the tax's constitutionality. The bankruptcy court held the assessment on the marijuana was a form of double jeopardy,^ invalid under the Federal Constitution, and the district court affirmed.^ The court of appeals reasoned that under United States v. Halper^ the sanction or tax imposed must be rationally related to the damages the government suffered and thus the tax was unconstitutional as applied to the Kurths because Montana refused to offer such evidence.^ Montana filed petition for writ of certiorari, which the Court granted.'" The United States Supreme Court, in a five-four decision, with three separate dissenting opinions, held the tax as imposed under Montana's Dangerous Drug Tax Act'' to be "punishment" for purposes of double jeopardy analysis and thus unconstitutional as pursued in separate proceedings.'^ The Supreme Court had only recently tested the elasticity of the Double Jeopardy Clause by expanding double jeopardy protection into civil matters.'^ In the Kurth Ranch decision, the Court again armed itself with the Double Jeopardy Clause and allowed a tax-free playground for those involved in illegal drugs. The Supreme Court for the first time invited tax legislation into its growing arsenal used to defend the ambiguous state of double jeopardy protections, and thereby strengthened their immunity from solid interpretation.'"* The purpose of this Note is to examine the Kurth Ranch decision, the "scene of attack," and the possible harm the Court has inflicted with its "double jeopardy dagger," especially its effect on the future of state excise taxes on illegal drugs. In holding Montana's drug excise tax punishment for the purposes of double jeopardy analysis, the Supreme Court determined that there were "unusual features"'^ that set Montana's tax apart, thereby leaving behind "bandages" that 6. In re Kurth Ranch, 145 B.R. 61 (Bankr. D. Mont. 1990), ajfd. No. CV-90-084-GF, 1991 WL 365065 (D. Mont. Apr. 23, 1991), ajf'd, 986 F.2d 1308 (9th Cir. 1993), cert, granted. Department of Revenue of Mont. v. Kurth Ranch, 1 14 S. Ct. 38 (1993), ajfd, 1 14 S. Ct. 1937 (1994). 7. In re Kurth Ranch, No. CV-90-084-GF, 1991 WL 365065 (D. Mont. Apr. 23, 1991), aff'd, 986 F.2d 1308 (9th Cir. 1993), cert granted, Department of Revenue of Mont. v. Kurth Ranch, 1 14 S. Ct. 38 (1993), affd, 1 14 S. Ct. 1937 (1994). 8. 490 U.S. 435 (1989). 9. In re Kurth Ranch, 986 F.2d 1 308 (9th Cir. 1 993), cert, granted. Department of Revenue of Mont. V. Kurth Ranch, 1 14 S. Ct. 38 (1993), ajf'd, 1 14 S. Ct. 1937 (1994). 10. Department of Revenue of Mont. v. Kurth Ranch, 1 14 S. Ct. 38 (1993), ajfd, 1 14 S. Ct. 1937(1994). 1 1 . MONT. Code Ann. §§ 15-25-101 to -123 (1987) (The Act is cited as it existed at the time of the Kurth Ranch deci.sion. It was revised in 1993, with §§ 15-25-103 to -1 10 and §§ 15-25-1 16 to -120 reserved). 1 2. Kurth Ranch, 1 14 S. Ct. at 1 948-49. 13. United States v. Halper, 490 U.S. 435 (1989). 14. Kurth Ranch, 1 14 S. Ct. at 1945 (acknowledging the Court had "never held that a tax violated the Double Jeopardy Clause"). 15. Id. at 1947. 1 996] ASSAULT ON STATE DRUG TAXES 697 states might utilize to "patch the wounds" left on state drug taxes. Whether this will be enough for their survival against future double jeopardy attacks is an area of uncertainty. Part I of this Note discusses the history of state drug taxes and the previous constitutional attacks they have incurred, as well as the history and progression of the Double Jeopardy Clause.'^ Part II analyzes and critiques the Kurth Ranch decision; and Part III predicts the possible impact of applying Kurth Ranch both to state drug taxes and to other areas, such as taxation on illegal activities in general. With specific emphasis on the Indiana Controlled Substance Excise Tax (CSET),'^ Part IV recommends some model provisions that states should use to revise existing statutes or to draft new statutes in order to avoid the fate of Montana's drug tax. The proposed revisions to state drug tax statutes emphasize the terminology and elements that have caused constitutional conflict, especially in reference to a double jeopardy attack. This is further highlighted by examining the Indiana Supreme Court's recent decisions concluding that Indiana's drug tax is punishment for purposes of double jeopardy protection.'^ I. History OF State Drug Taxes A. Taxation ofIllegal Activities in General It is well accepted that the states have the power to tax their citizens provided it is done within the confines of the Fourteenth Amendment.'^ Furthermore, legislatures have been given "broad latitude in creating classifications and distinctions in tax statutes."^" The Revenue Act of 1913 imposed taxes on "lawful business carried on for gain or profit."^' The Act was amended three years later by deleting the word "lawful,"^^ which eliminated any explicit distinction between legal and illegal business for tax purposes. Since this amendment, the Court has on several 1 6. This discussion of tiie Double Jeopardy Clause is comparatively brief given that other notes and articles primarily focus on double jeopardy. See generally Donald E. Burton, Note, A Closer Look at the Supreme Court and the Double Jeopardy Clause, 49 OHIO ST. L.J. 799 (1988); Peter J. Henning, Precedents in a Vacuum: The Supreme Court Continues To Tinker with Double Jeopardy, 31 Am. Crim. L. Rev. 1 (1993). 17. IND. CODE §§ 6-7-3-1 to -17 (1993). 1 8. Bryant v. State, 660 N.E.2d 290 (Ind. 1995); Clifft v. Indiana Dep't of State Revenue, 641 N.E.2d 682 (Ind. Tax 1994), aff'd in part, rev 'd in part, 660 N.E.2d 310 (Ind. 1995) (holding that the CSET is punishment for double jeopardy purposes pursuant to the Kurth Ranch decision). See infra discussion Part IV. 19. U.S. Const, amend. XIV. 20. Regan v. Taxation with Representation of Wash., 461 U.S. 540, 547 (1983). 21. See Frank A. Racaniello, Note, State Drug Taxes: A Tax We Can 't Afford, 23 RUTGERS L.J. 657, 658 (1992) (citing Revenue Act of 1913, Pub. L. No. 16, § 2B, 38 Stat. 114, 167 (amended 1916)). 22. Id. (citing Revenue Act of 1916, Pub. L. No. 271, § 2(a), 39 Stat. 756, 757). 698 INDIANA LAW REVIEW [Vol. 29:695 occasions upheld the taxing of illegal activities. In United States v. Sullivan,^^ the Court, looking at a Fifth Amendment challenge to a law requiring the defendant to file an income tax return even though his income was obtained illegally, upheld the taxing of illegal income. ^"^ In James v. United States}^ authored by Chief Justice Warren, the Court embraced the taxing of illegal income, noting that to do otherwise would promote an injustice on the honest taxpayer.^^ The Supreme Court recognized that, in general, it is beyond comprehension to allow an individual to avoid taxes simply because he or she is participating in illegal activities. ^^ The federal government has imposed taxes on specific illegal activities such as gambling^^ and drugs.^^ The Marijuana Tax Act"*^^ required the purchaser of marijuana to report to the Internal Revenue Service, pay an occupational tax, register as someone who deals in marijuana, and pay a one hundred dollar per ounce tax.^' The Supreme Court's earlier views^^ on such laws culminated in the Court's holding in Leary v. United States^^ that the federal drug tax violated a person's Fifth Amendment right against self-incrimination.^"^ The demise of the tax was not due to its taxation of illegal gain, instead it was struck down because the information provided by the taxpayer was made available to and used by law 23. 274 U.S. 259(1927). 24. Id. at 263-64 (Holmes, J.) (noting it would "be an extreme if not an extravagant application of the Fifth Amendment to say that it authorized a man to refuse to state the amount of his income because it had been made in crime")- 25. 366 U.S. 213(1961). 26. Id. The Court noted that failing to tax the illegal income would lead to the "injustice of relieving embezzlers of the duty of paying income taxes on the money they enrich themselves with through theft while honest people pay their taxes on every conceivable type of income." Id. at 22 1 . 27. See United States v. Constantine, 296 U.S. 287, 293 (1935) (noting "[i]t would be strange if one carrying on a business the subject of an excise should be able to excuse himself from payment by the plea that in carrying on the business he was violating the law"). See also Departmentof Revenue of Mont. v. Kurth Ranch, 114 S. Ct. 1937, 1945 (1994) (citing Marchetti V. United States, 390 U.S. 39, 44 (1968), cert, granted and judgment vacated, Picioli v. United States, 390 U.S. 202 (1968); James v. United States, 366 U.S. 213 (1961)). 28. 26 U.S.C.§§ 4401, 4411 (1994). 29. 26 U.S.C. §§ 4741-4475 (1954) (repealed 1970). 30. Id. 31. Id. The tax actually differentiated between those registering as dealers ($ 1 per ounce) and those not registering as dealers ($100 per ounce). 32. See Haynes v. United States, 390 U.S. 85 (1968); Grosso v. United States, 390 U.S. 62 (1968); Marchetti v. United States, 390 U.S. 39 (1968), cert, granted and judgment vacated, Piccioli V. United States, 390 U.S. 202 (1968). 33. 395 U.S. 6(1969). 34. This self-incrimination attack on the federal drug tax has continued to be an area of assault from opponents of state drug taxes. See Ann L. lijima. The War on Drugs: The Privilege Against Self-incrimination Falls Victim to State Taxation of Controlled Substances, *29 Harv. C.R.- C.L. L.Rev. 101 (1994). 1 996] ASSAULT ON STATE DRUG TAXES 699 enforcement against the purchaser." Prior to Kurth Ranch, the constitutionality of taxing illegal gains and activities was beyond serious question. Although the Court in Kurth Ranch recognized prior holdings that supported the taxation of illegal activities, it ignored the practicality of doing so and ultimately used the illegality of the activity as an unusual feature to support its finding that the tax was a punitive measure. ^^' B. Development ofState Excise Taxes on Drugs With the Supreme Court's decision in LearyT the taxing of illegal drug trafficking was put on hold. As the use and sale of illegal drugs escalated to epidemic proportions and progressively became a political football, the various branches and agencies of government increased their assault on illegal drugs with both rhetoric and concrete action. These increased efforts have been accompanied, not surprisingly, by increased costs. ^^ Despite Ronald Reagan's "war on drugs" in the early 1980s, the United States has seen the illegal drug trade grow into a multi-billion dollar business.''^ Whether an advocate for punishment and law enforcement oriented solutions or for a treatment-oriented approach, all involved would agree that the monetary cost of the war is high. Some states began enacting their own state drug taxes in the 1980s,'*" while others have done so only recently,"*' and still others have elected not to enact state drug taxes at all."^" Arguably, state drug taxes gained in popularity due, in part, to 35. Leary, 395 U.S. at 28-29. 36. Department of Revenue of Mont. v. Kurth Ranch, 1 1 4 S. Ct. 1 937, 1 945-47 ( 1 994). 37. 395 U.S. 6 (1969) (federal drug tax violative of the self-incrimination protection of the Fifth Amendment). 38. See John A. Powell & Eileen B. Hershenov, Hostage to the Drug War: The National Purse, the Constitution and the Black Community, 24 U.C. DAVIS L. REV. 557, 567 (1991) ("[I]n its fiscal 1991 budget, the Bush Administration sought $10.6 billion and received $10.4 billion to continue the war on drugs."). See generally Larry Gostin, An Alternative Public Health Vision for a National Drug Strategy: "Treatment Works, " 28 HOUS. L. REV. 285 (1991) (discussing many health associated costs in the use of illegal drugs). 39. See Powell & Hershenov, supra note 38, at 566 (noting that common estimates of annual black market sales range from $80 to $100 billion a year). See also Kurth Ranch, 1 14 S. Ct. at 1953 (O'Connor, J., dissenting) ("The State and Federal Governments spend vast sums on drug control activities," indicating approximately $27 billion spent in fiscal 1991.) (citing U.S. Dept. OF Justice, Bureau of Justice Statistics, Fact Sheet: Drug Date Summary 5 (Apr. 1994)). 40. Arizona (1983); South Dakota (1984); Florida (1984); and Minnesota (1986). See Christina Joyce, Expanding the War Against Drugs: Taxing Marijuana and Controlled Substances, 12 Hamline J. Pub. L. &Pol'y 231, 231 (1991). 41. IND. Code §§ 6-7-3-1 to -17 (1993). Effective in 1992, Indiana's drug tax places Indiana as one of the more recent states to pass some form of drug tax legislation. 42. States choosing not to enact state excise taxes on drugs include Alaska, Arkansas, and Ohio. 700 INDIANA LAW REVIEW [Vol. 29:695 the federal government's efforts in collecting drug related tax revenues."*^ Although states use various schemes of taxation/"* most statutes provide that certain persons pay assessments, normally taking the form of excise taxes, on specified types and amounts of controlled substances based on possession or sale.'*'* While many states have imposed excise taxes on illegal drugs,**^ some have relied only on a general sales tax statute."*^ Of the states that have specific drug taxes, some states levy excise taxes on controlled substances, while others require a licensing fee. Still other states have required drug possessors or dealers to purchase tax stamps that are to be permanently placed on the controlled substances. Of the three different taxation methods, a licensing fee, a flat excise tax, or an excise tax paid by purchasing stamps, the purchasing of stamps is the most common."*^ In 1983, Arizona became the first state to legislate a controlled substance tax.'*^ Other states have followed by requiring that drug stamps be affixed to the drugs. Still others have chosen instead to levy state excise taxes. One example of the latter is Indiana, whose Controlled Substance Excise Tax^^ went into effect on July 1, 1992.^' Indiana's CSET imposes a tax that is dependent upon both the weight and the type of the controlled substance.^^ Although only recently passed by the Indiana legislature, the CSET has already come under attack. The attacks are based on historical approaches to attacking drug taxes" as well as the double jeopardy attack encouraged by the Kurth Ranch decision.^"* 43. For example, section 280E of the federal tax code denies income tax deductions for expenses incurred in conducting illegal drug activity. 26 U.S.C. § 280E (1994). State drug taxes also provide a means to increase tax revenues and offset the tax burden created by the various aspects of drug enforcement and treatment. 44. See generally Alan D. Gould, Criminal Law and the Fifth Amendment: Taxation of Illegal Drugs, 1989 AhfN. SURV. AM. L. 541 (1991) (comparing various approaches states have taken in taxing illegal drugs). 45. See generally liiima, supra notQ 34. 46. Department of Revenue of Mont. v. Kurth Ranch, 114 S. Ct. 1937, 1954 (1994) (O'Connor, J., dissenting) (citing 22 states that have taxed at approximately the same rate as Montana). See also lijima, supra note 34, app. at 136 (comparing the various statutory violations on state drug taxes). 47. Mich. Comp. Laws Ann. §§ 205.51 to .78 (West 1986 & Supp. 1994). See generally Gould, supra note 44. 48. See Racaniello, supra note 21 , at 664. 49. Ariz. Rev. Stat. Ann. §§ 42-1203.01 to -1212.02 (West 1991 & Supp. 1994). See also Joyce, supra note 40, at 23 1 . 50. IND. Code §§ 6-7-3-1 to -17 (1993). 5 1 . Indiana's CSET does not require the purchase of stamps. Id. 52. Id. § 6-7-3-6(a). 53. See discussion infra Part I.C. 54. Clifft V. Indiana Dep't of State Revenue, 641 N.E.2d 682 (Ind. Tax 1 994), aff'd in part, rev'd in part, 660 N.E.2d 310 (Ind. 1995) (holding that the CSET does not violate the privilege 1 996] ASSAULT ON STATE DRUG TAXES 701 C. Previous Attacks on State Drug Taxes State drug taxes have undergone various attacks since their inception. The most common attack, which has met with some success and much support,^^ has been the Fifth Amendment privilege against self-incrimination.''^ 7. Self-incrimination Attack.—Self-incrimination protection has two main components: first, it prohibits the government from coercing individuals to furnish self-incriminating statements; and second, it forbids the government from using any coerced, self-incriminating information in a criminal trial. ^^ In three cases decided on the same day, the United States Supreme Court held that although taxation of illegal activity was not unconstitutional, the requirement that the taxpayer provide incriminating information, which may be passed on to prosecutors and law enforcement, is unconstitutional under the Fifth Amendment.^^ In Leary v. United States,^^ the Supreme Court stnick down the Federal Marijuana Tax Act^^ because it required the individual taxpayer to provide information about the planned illegal drug transaction. The Court held that obtaining incriminating information and distributing it to prosecutors and law enforcement authorities brought the Tax Act under the Fifth Amendment protection against self-incrimination.^' Many state drug tax statutes have been challenged under this self- incrimination theory. Some state courts have upheld their drug tax statutes from this challenge,^^ although others have not.^^ However, many states have heeded the implicit warning of the Court's decisions^"^ and developed confidentiality against self-incrimination, the right of equal protection, or the right of due process, but is punishment for double jeopardy purposes pursuant to the Kurth Ranch decision). See discussion infra Part IV. 55. See generally Gould, supra note 44; Racaniello, supra note 21 ; lijima, supra note 34. 56. U.S. Const, amend. V (the relevant portion reads "nor shall [any person] be compelled in any criminal case to be a witness against himself . . ."). 57. Gould, supra note 44, at 542 (citing Murphy v. Waterfront Comm'n of New York Harbor, 378 U.S. 52, 57 n.6 (1964)). 58. See Haynes v. United States, 390 U.S. 85 (1968); Grosso v. United States, 390 U.S. 62 (1968); Marchetti v. United States, 390 U.S. 39 (1968), cert, granted andjudgment vacated, Picolli V. United States, 390 U.S. 202 (1968). See also Racaniello, supra note 21. 59. 395 U.S. 6(1969). 60. 26 U.S.C. §§ 4741-4475 (1954) (repealed 1970). 61. Leary, 395 U.S. at 28-29. 62. See State v. Davis, 787 P.2d 517 (Utah Ct. App. 1990); Sisson v. Triplett, 428 N.W.2d 565 (Minn. 1988). 63. See State v. Roberts, 384 N.W.2d 688 (S.D. 1986); Florida Dep't of Revenue v. Herre, 634 So. 2d 618 (Fla. 1994) (overruling Harris v. State Dep't of Revenue, 563 So. 2d 97 (Fla. Dist. Ct. App. 1990)). 64. See supra note 58. 702 INDIANA LAW REVIEW [Vol. 29:695 provisions within their statutes,^^ as well as criminal sanctions for any violations of such confidentiality.^^ Although this is only a brief introduction to this challenge, it is important to recognize that until the Kurth Ranch decision the self- incrimination attack had been the strongest challenge to state drug taxes, and must still be addressed in the drafting or revising of any statute.^^ 2. Due Process Challenge.—State drug taxes have also faced due process challenges, but to a much lesser degree and with little success. The portion of the Due Process Clause requiring that punishments be within the bounds established by the legislature is not implicated by drug tax statutes. The challenges in this area relate to jeopardy assessment.^^ The Court has held that "[t]he fundamental requirement of due process is the opportunity to be heard 'at a meaningful time and in a meaningful manner. '"^^ The element necessary to avoid this challenge is the provision to taxpayers of an administrative hearing and judicial review prior to deprivation of their property. 3. Excessive Fines Challenge.—The excessive fmes challenge has been a growing attack on state drug taxes in light of the Supreme Court's holding in Austin V. United States.^^ In Austin, the defendant pled guilty to possession of cocaine with intent to distribute and was sentenced to imprisonment. Thereafter, the United States filed an in rem action against his home and body shop pursuant to federal law.^' The Court held that the Eighth Amendment's Excessive Fines Clause^^ applies to in rem civil forfeiture proceedings.^^ The Court referred to the history of the Excessive Fines Clause in justifying its application to civil proceedings.^"* It simply did not matter whether the action was labeled criminal or civil;^^ if the government's action had the effect of punishment, the Eighth Amendment's strictures apphed.^^ 65. iNfD. Code §§ 6-7-3-8 to -9 (1993); Neb. Rev. Stat. § 77-4315-1415 (1991) (providing confidentiality provision, but no punishment for violations of such provision). 66. Ga.CodeAnn. §48- 15-10 (Supp. 1994); N.C. Gen. Stat. § 105-113.112(1992) (each containing confidentiality provisions as well as a penalty for disclosure). In 1990, Idaho amended its statute, which already contained a confidentiality provision, to include a penalty for disclosure. Idaho Code § 63-4206(2) (Supp. 1995). 67. Much has been written on the self-incrimination challenge to state drug taxes. For more in-depth analysis, see Racaniello, supra note 21; lijima, supra note 34; Gould, supra note 44. 68. See IND. CODE § 6-7-3-13 (1993) (example of a jeopardy assessment provision). 69. Mathews v. Eldridge, 424 U.S. 319, 333 (1976) (quoting Armstrong v. Manzo, 380 U.S. 545,552(1965)). 70. 113S.Ct. 2801 (1993). 71. Id. at 2803 (citing 21 U.S.C. §§ 881(a)(4), 881(a)(7) (1988)). 72. U.S. Const, amend. VIII ("Excessive bail shall not be required, nor excessive fines imposed . . . ."). 73. Austin, 1 13 S. Ct. at 2812. 74. Id. at 2804 (citing Browning-Ferris Industries v. Kelco Disposal, 492 U.S. 257 (1 989)). 75. Id. at 2806. 76. "The notion of punishment, as we understand it, cuts across the division between civil and criminal law." Id. at 2805-06 (quoting United States v. Halper, 490 U.S. 435, 447-48 (1989)). 1 996] ASSAULT ON STATE DRUG TAXES 703 Interestingly, the Austin decision, combined with a similar holding in Alexander v. United States^^ demonstrates the Excessive Fines Clause's potential use in preventing a disproportionate tax without barring subsequent proceedings or involving the Double Jeopardy Clause. For that reason, the argument could be made that it is the most sensible weapon to curtail a drug tax that becomes too disproportionate. D. A History of the Double Jeopardy Clause^^ The Double Jeopardy Clause provides that no person shall "be subject for the same offence to be twice put in jeopardy of life or limb."^^ Although there is much doubt as to the historical support and application of double jeopardy protection, there does appear to be some historical basis for the concept of protecting an individual from repeated prosecution. However, this is a far cry from the distortion of the doctrine in the modern American context. Regardless of the obscurity of its origin, some form of double jeopardy protection has been in existence "in almost all systems of jurisprudence throughout history."^" Because of the ambiguous legislative history surrounding the double jeopardy concept, it has been the courts, and not Congress, that have been the driving force in the formulation of its definition and role in the American system of justice.^' Over the years, the Supreme Court has inconsistently expounded its double jeopardy jurisprudence. The Court has been critical of itself in reference to its lack of definitive structure in double jeopardy decisions.^^ Justice Rehnquist noted in his dissent in Whalen v. United States^^ that the Double Jeopardy Clause is "one of the least understood . . . provisions of the Bill of Rights. [The] Court has done little to alleviate the confusion . . . ."^"^ At early common law, a defendant was "put in jeopardy of life and limb" when he was on trial for an offense that carried the punishment of death or 77. 1 13 S. Ct. 2766 (1993) (noting forfeiture can be an excessive fine in violation of the Eighth Amendment). 78. Double Jeopardy jurisprudence is an enormous area with much comment. It is beyond the scope of this Note to describe this area of jurisprudence in detail. See supra note 16. 79. U.S. Const, amend. V. Although the exact origin of the double jeopardy concept is a topic of debate, some scholars have traced the origin to as early as 355 B.C. Nelson T. Abbott, United States v. Halper: Making Double Jeopardy Available in Civil Actions, 6 B. Y.U. J. PUB. L. 551 (1992). 80. Burton, supra note 16, at 800 (quoting Marc Martin, Heath v. Alabama — Contravention ofDouble Jeopardy and Full Faith and Credit Principles, 17 LOY. U. CHI. L.J. 721, 723 (1986)). 81 . Hon. Monroe G. McKay, Double Jeopardy: Are the Pieces the Puzzle?, 23 Washburn L.J. 1,9-10(1983). 82. Albemaz v. United States, 450 U.S. 333, 343 (1981) (calling the decisional law in the area "a veritable Sargasso Sea which could not fail to challenge the most intrepid judicial navigator"). See also supra text accompanying note 2. 83. 445 U.S. 684(1980). 84. Id. at 699 (Rehnquist, J., dissenting). 704 INDIANA LAW REVIEW [Vol. 29:695 physical mutilation. ^^ This had the practical effect of extending double jeopardy protections only to crimes that involved death or physical mutilation. The Court expanded this early common law view in Ex parte Lange}^ In Lange, the Court held that the words "life and limb" should include all punishments for all felonies and misdemeanors, and jeopardy attaches after a previous conviction or a previous acquittal.^^ In Green v. United States,^^ the Supreme Court discussed the Double Jeopardy Clause's underlying ideas stating: [T]he State with all its resources and power should not be allowed to make repeated attempts to convict an individual for an alleged offense, thereby subjecting him to embarrassment, expense and ordeal and compelling him to live in a continuing state of anxiety and insecurity, as well as enhancing the possibihty that even though innocent he may be found guilty. ^^ Historically, the Double Jeopardy Clause shielded defendants from a second prosecution for the same offense after acquittal or after conviction. It did not protect against multiple punishments for the same offense. It was not until the American law developed that the area of multiple punishments was afforded similar footing as the other two protections.^^ The Court has also held that the guarantees of the Fifth Amendment apply to the states through the Due Process Clause of the Fourteenth Amendment.^' In Helvering v. Mitchell,^^ a fifty-year old case involving a sanction sought in a civil proceeding subsequent to a criminal acquittal, the Court held that "Congress may impose both a criminal and civil sanction in respect to the same act or omission; for the double jeopardy clause prohibits merely punishing twice, or attempting a second time to punish criminally, for the same offense."^^ The Court stated "[t]he question for decision is thus whether [the civil statute in question] imposes a criminal sanction. That question is one of statutory construction."^'* 85 . Joy a. Sigler, Double Jeopardy , The Development ofa Legal and Social Poucy 60(1969). 86. 85 U.S. 163(1873). 87. Id. at 176-78. 88. 355 U.S. 184(1957). 89. Id. at 187-88. See Burton, supra note 16, at 803. 90. North Carolina v. Pearce, 395 U.S. 7 11 , 7 1 7 ( 1 969). See also United States v. Halper, 490 U.S. 435, 440 (1989) ("This Court many times has held that the Double Jeopardy Clause protects against three distinct abuses: a second prosecution for the same offense after acquittal; a second prosecution for the same offense after conviction; and multiple punishments for the same offense."). The prohibition against multiple punishment does not mean that a legislature may not prescribe two types of penalties for the same offense. See, e.g., United States v. DiFrancesco, 449 U.S. 117, 139(1980). 91 . Benton v. Maryland, 395 U.S. 784, 795 (1969). 92. 303 U.S. 391(1938). 93. Id. at 399. 94. Id. See also One Lot Emerald Cut Stones v. United States, 409 U.S. 232, 237 (1972). k 1 996] ASSAULT ON STATE DRUG TAXES 705 In Mitchell, the Commissioner of Internal Revenue determined a taxpayer had fraudulently declared certain tax deductions. The taxpayer was acquitted in a criminal prosecution for tax evasion, and the Government brought a subsequent civil action to collect the tax deficiency plus a fifty percent penalty for fraud. The Supreme Court rejected the defendant's argument that the civil action subjected him to double jeopardy because the penalty was designed to be punishment and was therefore criminal and not civil in nature. The Court held the "remedial character of sanctions imposing additions to a tax has been made clear by this Court in passing upon similar legislation."^^ The Supreme Court emphasized that the additions to the tax were "intended by Congress as civil incidents of the assessment and collection of the income tax."^^ In a subsequent decision, United States ex rel. Marcus v. Hess,^^ the Supreme Court reaffirmed its statutory construction approach in Mitchell by holding that only actions intended to authorize criminal punishment to vindicate public justice subject a defendant to jeopardy within the meaning of the Double Jeopardy Clause. ^^ In Hess, the defendants were contractors who had been indicted for fraud against the Government and fined subsequent to a nolo contendere plea in the criminal matter. The lower court awarded a judgment against the defendants of $315,000 ($203,000 for double damages plus an additional $1 12,000 for fifty- six frauds at $2,000 each). The Supreme Court noted, "[t]he statutes on which this suit rests make elaborate provision both for a criminal punishment and a civil remedy,"^^ and, further, the "remedy does not lose the quality of a civil action because more than the precise amount of so-called actual damage is recovered."^^ The Court further commented that "Congress could remain fully in the common law tradition and still provide punitive damages."^^^ The Court noted "the general practice in state statutes of allowing double or treble or even quadruple damages"'"^ and also stated that "[i]t is . . . well accepted that for one act a person may be liable both to pay damages and to suffer a criminal penalty."'^^ In Rex Trailer Co., Inc. v. United States, ^^^ a case involving a civil sanction pursued subsequent to a criminal conviction, the Court again relied on the Mitchell statutory analysis. Rex Trailer involved the fraudulent purchase of five vehicles under the Surplus Property Act of 1944, which gave veterans a priority for the 95. Mitchell, 303 U.S. at 401. The remedy provided by the statute "protect[ed] ... the revenue and reimburse[d] the Government for the heavy expense of investigation and the loss resulting from the taxpayer's fraud." 96. Id. at 405. 97. 317 U.S. 537 (1943), reh'g denied, 318 U.S. 799 (1943). 98. Id. at 548-49. 99. Id. at 549. 100. Mat 550. 101. Id 102. Id. at 550-51 (citing Missouri Pacific Ry. Co. v. Humes, 115 U.S. 512, 523 (1885)). 103. Id. at 549. 104. 350 U.S. 148(1956). 706 INDIANA LAW REVffiW [Vol. 29:695 purchase of certain surplus property. '^^ The defendants had already been fined $25,000 in the criminal case when the government brought a subsequent civil action under the same Act seeking $2,000 for each fraud plus double damages and costs. The Supreme Court upheld this as a civil penalty even though "the record [did] not show petitioner's gain from the fraud"'"^ and the government failed to allege specific damages for recovery. '°^ The Court held "there is no requirement, statutory or judicial, that specific damages be shown, and this was recognized by the Court in Marcus^^^^ In what appeared to be a departure from the Mitchell analysis, the Court created in United States v. One Assortment of89 Firearms^^ a possible sharpening stone for its future "double jeopardy dagger" by deviating from its past formalistic statutory approach. The Supreme Court determined that it should look not only to whether Congress had expressly or impliedly indicated the sanction to be criminal or civil, but to whether the sanction was so punitive in purpose or effect to make it criminal, notwithstanding the civil label. However, the Court in limiting this application noted that "'only the clearest proof" could suffice to establish the unconstitutionality of a statute on such a ground.'*" This severe limitation and strong deference to legislative purpose, along with Mitchell and its progeny, would still seem to protect civil sanctions from being held so punitive as to violate the Double Jeopardy Clause. The Court, through this development of cases starting over fifty years ago, appeared to establish, as a general rule, that civil sanctions would not be held to violate the Double Jeopardy Clause without a finding that the statute itself was criminal in purpose or effect, requiring the tremendous burden of "only the clearest proof"' '* Further, this development of cases recognized that even recovery in excess of actual damages did not cause a civil action to lose its remedial nature and that civil sanctions with deterrent components''^ did not punish for purposes of a double jeopardy analysis. Then, the Supreme Court, with a vengeance never shown before, bared its double jeopardy dagger, slashed at fifty years of precedent, and pivoting upon the Halper decision,"^ brought civil proceedings clearly under the double jeopardy umbrella of protection."" Having further sharpened its weapon with Halper, and 105. Id. at 148 (citing Surplus Property Act of 1944, ch. 479, § 1, 58 Stat. 765 and § 26, 58 Stat. 780 (1944), § 26 codified 50 U.S.C. app. § 1635 (1946), repealed July 1, 1949). 106. Id. at 150. 107. Id. at 152. 108. Id. at 152-53. 109. 465 U.S. 354(1984). 1 10. Id at 365 (quoting United States v. Ward, 448 U.S. 242, 249 (1980)). See also One Lot Emerald Cut Stones v. United States, 409 U.S. 232, 237 (1972); Flemming v. Nestor, 363 U.S. 603, 617 (1960); Rex Trailer Co., Inc., 350 U.S. at 154. 111. See supra note 1 10 and accompanying text. 1 12. Such as liquidated, double, treble, or quadruple damages. 113. United States v. Halper, 490 U.S. 435 ( 1 989). 1 14. This is especially ironic given the Court's dual sovereignty doctrine. See Bartkus v. 1 996] ASSAULT ON STATE DRUG TAXES 707 impervious to the future carnage that its holding could cause, the Court proceeded on to Kurth Ranch,^^^ confident it could draw fresh double jeopardy blood. "^ II. The Kurth Ranch Decision ("The Attack") A. Factual and Procedural Background (Events Leading up to the "Attack ") The Kurth family''^ for years had operated a mixed grain and livestock farm in Montana."^ In 1986, they began to cultivate and sell marijuana. In the latter part of 1987, shortly after the effective date of the Dangerous Drug Tax Act,"^ Montana law enforcement officers raided the farm, arrested the Kurths, and confiscated the marijuana plants, materials, and paraphernalia. The State filed criminal charges against all six family members in a Montana district court, charging each with conspiracy to possess drugs with intent to sell,'^" or in the alternative, possession of drugs with intent to sell.^^' After initially pleading not guilty, the Kurths eventually pled guilty to possession of illegal drugs with intent to sell or conspiracy to possess illegal drugs with intent to sell.'^^ In a second proceeding, the Kurths settled a state forfeiture action by agreeing to forfeit $18,016.83 in cash and various items of equipment. The Department of Revenue of Montana, in a third proceeding, attempted to collect approximately $900,000 in taxes, interest, and penalties based on the statute assessing taxes on dangerous drugs, the various plants, harvested marijuana, hash tar, and hash oil. After contesting the assessments, the Kurths petitioned for Chapter 11 bankruptcy protection. ^^^ In bankruptcy court, the Kurths challenged the constitutionality of the Illinois, 359 U.S. 121 (1959) (allowing state criminal prosecution subsequent to federal trial and acquittal based on same acts); Abbate v. United States, 359 U.S. 187 (1959) (allowing subsequent federal criminal prosecution after state prosecution and conviction based on same acts). See generally Kenneth M. Murchison, The Dual Sovereignty Exception to Double Jeopardy, 14 N.Y.U. Rev. L. & SOC. Change 383 (1986); Michael A. Dawson, Note, Popular Sovereignty, Double Jeopardy, and the Dual Sovereignty Doctrine, 102 YALE L.J. 281 (1992). 115. Department of Revenue of Mont. v. Kurth Ranch, 1 14 S. Ct. 1937 (1994). 1 16. The Halper decision, although not used as a direct holding, is vital to the Supreme Court's Kurth Ranch analysis. The Halper case will be discussed in greater detail in Part II.B. See infra notes 143-156 and accompanying text. 1 17. The Kurth family consisted of Richard Kurth; his wife, Judith Kurth; their son, Douglas Kurth; their daughter, Cindy Halley; Douglas' wife, Rhonda Kurth; and Cindy's husband, Clayton Halley. Kurth Ranch, 1 14 S. Ct. at 1942 n.6. 1 1 8. Id. at 1955-56 (the factual context is taken from the Kurth Ranch opinion). 1 19. MONT. Code Ann. §§ 15-25-101 to -123 (1987) (revised 1993). 120. W. §45-4-102(1987). 121. W. §45-9-103. 122. Only Richard Kurth was adjudged guilty of possession, the other five pled guilty to a conspiracy charge. 123. In re Kurth Ranch, 145 B.R. 61 (Bankr. D. Mont. 1990). 708 INDIANA LAW REVIEW [Vol. 29:695 Montana tax. After reducing the amount of the assessment authorized by the Act to $181,000, the bankruptcy court still held the assessment invalid under the Federal Constitution. The bankruptcy court rehed primarily on Halper in concluding the assessment, because of its retributive nature, constituted a form of double jeopardy. '^"^ The district court affirmed.'^^ The court concluded that the Montana Dangerous Drug Tax "simply punishes the Kurths a second time for the same criminal conduct."'^^ The Ninth Circuit Court of Appeals also affirmed,'^^ but based its conclusion largely on the State's refusal to offer evidence justifying the tax, not because the tax was unconstitutional on its face.'^^ The court held that under Halper, a disproportionately large civil penalty can be punishment for double jeopardy purposes. '^^ While the Kurth's case was on appeal, the Montana Supreme Court reversed two lower court decisions that held the Dangerous Dnig Tax to be a form of double jeopardy.'^" Because the Montana Supreme Court decision stood in conflict with the Court of Appeals decision, the United States Supreme Court granted certiorari. '^^ It is at this point that the Supreme Court used its double jeopardy dagger to attack a community supported victim and it did so with an instrument inappropriate for the task at hand.'^^ B. The Supreme Court 's Attack ( "Scene of the Attack ") In holding Montana's Drug Tax in violation of the Double Jeopardy Clause, the Supreme Court made some less than graceful strides around and over prior cases. The Court also compelled the strained support of prior cases in reaching its conclusions. In part, this prompted four Justices to register their dissent in three separate opinions. This portion of the Note will first point to the problem areas of the majority opinion as well as the possible "bandages" the opinion left behind to help heal the wounds of its attack. '^^ 1. Double Jeopardy Interpretation (An "Element of the Attack'').—T\\q majority in Kurth Ranch was comfortable in continuing the questionable 124. Department of Revenue of Mont. v. Kurth Ranch, 1 14 S. Ct. 1937, 1943 (1994). 125. In re Kurth Ranch, No. CV-90-084-GF, 1991 WL 365065 (D. Mont. Apr. 23, 1991). 126. Id. Ml. In re Kurth Ranch, 986 F.2d 1308 (9th Cir. 1993). 128. Id. at 1312. 129. Id 1 30. Sorensen v. State Dep't of Revenue, 836 P.2ci 29 (Mont. 1 992). 131. Department of Revenue of Mont. v. Kurth Ranch, 1 14 S. Ct. 1937, 1944 (1994). 132. Other weapons in the Court's arsenal arguably would have been better suited for this attack. 5ee jM/^ra Part I.C.3. See also infra Part IV. 1 33. Kurth Ranch, 1 14 S. Ct. at 1949 (Rehnquist, C.J., dissenting). Chief Justice Rehnquist notes in his dissent that "the Court goes astray and the end result of its decision is a hodgepodge of criteria—many of which have been squarely rejected by our previous decisions—to be used in deciding whether a tax statute qualifies as 'punishment.'" Id. 1 996] ASSAULT ON STATE DRUG TAXES 709 interpretation of Ex parte Lange^^^ that has possibly been reinforced in too many cases' ^^ to be overcome at this point. In Ex parte Lange, at the trial level, a jury found Edward Lange guilty of appropriating mail-bags to his own use and the court sentenced him to both one year imprisonment and a $200 fine although the statute authorized a maximum sentence of only one year imprisonment or a fine not to exceed $200, but not both. Justice Scalia, in his dissenting opinion in Kurth Ranch, properly pointed out that Justice Miller's opinion in Ex parte Lange purposefully avoided relying exclusively on the Double Jeopardy Clause. '^^' Scalia further stated that the Due Process Clause alone could support the decision because the penalty imposed exceeded legislative authorization.'^^ Scalia' s dissent, while noting that the Double Jeopardy Clause has since been applied with frequency to both successive prosecutions and punishment,'^^ emphasized that "the repetition of a dictum does not turn it into a holding, and an examination of the cases discussing the prohibition against multiple punishments demonstrates that, until Halper, the Court never invalidated a legislatively authorized successive punishment. "'^^ The Court commented in Whalen v. United States^^^^ that no double jeopardy problem would have been presented in Ex parte Lange if Congress had provided that the offense was punishable by both a fine and imprisonment, even though that is multiple punishment.^^' Although this Note does not explore in-depth whether the issue of multiple punishments, in the context of the Kurth Ranch decision, has been properly brought into the breadth of the Double Jeopardy Clause, to assume it as a foregone conclusion would be ignoring the very abuse that allowed the Court to proceed 134. 85 U.S. 163(1873). 135. 5ee North Carolina V. Pearce, 395 U.S. 711 (1969) (stating that although the text of the Double Jeopardy Clause only mentions harm to life or limb, it is well settled that the Amendment covers imprisonment and monetary penalties). 1 36. Kurth Ranch, 1 14 S. Ct. at 1955-56 (Scalia, J., dissenting). The opinion went out of its way not to rely on the Double Jeopardy Clause, in order to avoid deciding whether it applied to prosecutions not literally involving "life or limb." It is clear that the Due Process Clause alone suffices to support the decision, since the guarantee of the process provided by the law of the land assures prior legislative authorization for whatever punishment is imposed. Id. at 1956 (quoting Pacific Mutual Life Ins. Co. v. Haslip, 499 U.S. 1, 28-29 (1991) (Scalia, J., concurring in judgment) (citations omitted). 137. Id. 138. Id. "Between Lange and our decision five Terms ago in United States v. Halper, our cases often stated that the Double Jeopardy Clause protects against both successive prosecutions and successive punishments for the same criminal offense." Id. (citing North Carolina v. Pearce, 395 U.S. 711,717 (1969); lUinois v. Vitale, 447 U.S. 410, 415 (1980); Ohio v. Johnson, 467 U.S. 493, 498-99 ( 1 984)) (citations omitted). 139. Id. 140. 445 U.S. 684(1980). 141. /^. at 688. 710 INDIANA LAW REVIEW [Vol. 29:695 with its double jeopardy attack in the first place. '"^^ 2. Classifying a Tax as Punishment (An "Element of the Attack").—The Supreme Court, in holding Montana's Drug Tax to be punishment for double jeopardy analysis, has met another disturbing element of the crime. Although the majority and dissenting opinions agree that the Halper mode of analysis does not directly apply to taxes in the Kurth Ranch decision, '"^-^ on its face, this holding appears somewhat of a rational jump from the Court's holding in Halper}^^ However, the Halper decision was instrumental in pushing the Court to the brink of double jeopardy, insanity and in part, it gave the Court the motive it needed for the attack on Montana' s state drug tax. In United States v. Halper, the Supreme Court for the first time held that a disproportionately large civil penalty can be punishment for double jeopardy purposes. '"^^ Halper was convicted of sixty-five separate violations of the Criminal False Claims Statute,'"*^ each involving a demand for $12 in reimbursement for medical services worth only $3.'"*^ After Halper' s sentencing on the criminal matter, the government took action in a separate proceeding to recover a $2,000 civil penalty for each of the sixty-five violations. The district court held that the total recovery sought of $130,000 failed to bear a rational relationship to the government's minimal loss of $585, even including the cost of investigation and prosecution.'"*^ The court concluded that the civil penalty, which was over 220 times greater than the government's measurable loss, was punitive and was therefore barred by the Double Jeopardy Clause. The Supreme Court, accepting the district court's findings, held that "under the Double Jeopardy Clause a defendant who already has been punished in a criminal prosecution may not be subjected to an additional civil sanction to the extent that the second sanction may not fairly be characterized as remedial, but only as a deterrent or retribution."'"*^ The Court, however, limited its decision by noting that "[w]e cast no shadow on these time-honored judgements. . . , [W]hat we announce now is a rule for the rare case."'^" Halper is important to the Kurth Ranch decision in that the Supreme Court 1 42. For a more in-depth analysis of multiple punishments being included in the scope of the Double Jeopardy Clause, see supra note 16. 143. Kurth Ranch, 1 14 S. Ct. at 1948. The majority notes that "as The Chief Justice points out, tax statutes serve a purpose quite different from civil penalties, and Halper's method of determining whether the exaction was remedial or punitive simply does not work in the case of a tax statute.'" Id. Subjecting Montana's drug tax to Halper's test for civil penalties is therefore inappropriate. Id. Only Justice O'Connor in her dissenting opinion determined the Halper method of analysis should be applied. Id. at 1955 (O'Connor, J., dissenting). 1 44. United States v. Halper, 490 U.S. 435 ( 1 989). 145. Mat 452. 146. /J. at 437 (citing 18 U.S.C. §287(1988)). 147. /J. at 437-40. 148. /J. at 438-39. 149. /c/. at 448-49. 150. /<:/. at449. I i 1 996] ASSAULT ON STATE DRUG TAXES 7 1 used Halper as a justification for its double jeopardy madness. By attempting to explain the Halper decision as the "rare case,"'"^' the Court dodged many of its earlier decisions regarding civil and criminal proceedings.'" The Court also acknowledged that the holding applied to cases "such as the one before us, where a fixed-penalty provision subjects a prolific but small-gauge offender to a sanction overwhelmingly disproportionate to the damages he has caused."'" The opinion added that when the civil penalty sought in the subsequent proceeding bears no rational relation to the goal of compensating the Government for its loss but rather appears to qualify as "punishmenf ' in the plain meaning of the word, then the defendant is entitled to an accounting of the Government's damages and costs to determine if the penalty sought in fact constitutes a second punishment. ''''* The Court muddied the double jeopardy waters even further, and acknowledged it was doing so,'"*^ by leaving to the trial courts the arduous task of determining when civil penalties have crossed the imaginary line into punishment. '"^^ Armed with the Halper decision, the majority in Kiirth Ranch, although acknowledging that Halper did not consider whether a tax may similarly be characterized as punitive,"''^ attacked Montana's drug tax by analogy. The Court conceded that while "fines, penalties, and forfeitures are readily characterized as sanctions, taxes are typically different because they are usually motivated by revenue-raising rather than punitive purposes."'''^ The majority also noted that the Court has previously "cautioned against invalidating a tax simply because its enforcement might be oppressive or because the legislature's motive was somehow suspect."''''^ Immediately thereafter, the Court attacked the weight of precedent \5\. Id. 1 52. Id. at 441-46. The Court makes strained efforts to distinguish earlier holdings in several cases including United States v. Ward, 448 U.S. 242 (1980); Rex Trailer Co. v. United States, 350 U.S. 148 (1956); United States exrel. Marcus v. Hess, 317 U.S. 537 (1943); Helvering v. Mitchell, 303 U.S. 391 (1938). 153. //fl//7er, 490 U.S. at 441-46. 1 54. Id. at 449-50. 155. Id. Specifically the Court stated that "[w]e acknowledge that this inquiry will not be an exact pursuit. In our decided cases we have noted that the precise amount of the Government's damages and costs may prove to be difficult, if not impossible, to ascertain." See, e.g.. Rex Trailer Co., 350 U.S. at 153 (The process of determining the government's compensation and costs "involves an element of rough justice."). 156. Halper, 490 U.S. at 450 ("We must leave to the trial court the discretion to determine on the basis of such an accounting the size of the civil sanction the Government may receive without crossing the line between remedy and punishment."). 157. Department of Revenue of Mont. v. Kurth Ranch, 114S. Ct. 1937, 1945 (1994). 158. Id. at 1946 (emphasis added). 1 59. Id. at 1 946 (cifing A. Magnano Co. v. Hamilton, 292 U.S. 40, 44 ( 1 934)). 7 1 2 INDIANA LAW REVIEW [Vol. 29:695 with the Child Labor Tax Case}^^^ The Court explained that the Child Labor Tax Case supports the proposition that at some point a tax loses its character as such and becomes a penalty.'^' However, the Child Labor Tax Case dealt with the federal government's attempt to regulate the employment of child labor through a tax, a matter reserved to the states under the Tenth Amendment; '^^ and thus the federal action was an invalid exercise of the taxing power conferred by the Constitution.'^'' Notwithstanding the majority's own acknowledgments, it attacked the state drug tax despite appeals to precedent by the minority opinions. Chief Justice Rehnquist, in his dissenting opinion, tried to dull the double jeopardy blade; however, his efforts seemed only to make the majority swing that much harder. The Chief Justice agreed with the majority that Halper begged the question of whether the Montana Drug Tax constitutes a second punishment—for double jeopardy purposes—for conduct already punished criminally.'^'* However, this is where his agreement with the majority ends. He noted that "the Court then goes astray and the end result of its decision is a hodgepodge of criteria—many of which have been squarely rejected by our previous decisions—to be used in deciding whether a tax statute qualifies as 'punishment.'"'^^ Rehnquist argued that the manner in which taxes have been viewed in prior cases is an area too compelling to be overlooked. '^^ In examining the Halper decision, he noted that "compensation for the Government's loss is the avowed purpose of a civil penalty statute. "'^^ In contrasting this purpose with that of tax statutes, he noted that "here we are confronted with a tax statute, and the purpose of a tax statute is not to recover the costs incurred by the Government for bringing someone to book for some violation of law, but is instead to either raise revenue, deter conduct, or both."'^'^ He emphasized that "[t]ax statutes need not be based on any benefit accorded to the taxpayer or on any damage or cost incurred by the Government as a result of the taxpayer's activities. "'^^ The Supreme Court had previously turned aside Constitutional attacks on taxes that could be enacted to deter or even suppress the taxed activity. '^^' In 160. 259U.S. 20, 38(1922). 161. Kurth Ranch, 1 14 S. Ct. at 1946. 1 62. U.S. Const, amend. X. 163. 259 U.S. at 36-44. 164. Kurth Ranch, 1 14 S. Ct. at 1950 (Rehnquist, C.J., dissenting). 165. /