Gun Violence Prevention Excise Taxes and the Second Amendment
Written by Todd Milligan, Georgetown University Law Center LL.M. Taxation Candidate 2021
The pervasive nature of gun violence throughout the U.S. demonstrates the compelling need for gun policy reform. In 2020, gun-related deaths rose by nearly ten percent compared to the year before, as mass shootings, homicides, suicides and other gun-related crimes continue to plague many communities. Meanwhile, state and local governments have struggled to enact meaningful gun legislation that does not infringe on the Second Amendment. In what is known as the Heller framework, the Supreme Court placed guardrails on States’ ability to regulate guns under the Second Amendment. In Heller, the Court held that the Second Amendment grants law-abiding citizens the right to own guns in the home for self-defense. In Heller II, the Court held that a law may only have a de minimis impact on one’s Second Amendment rights.
Gun violence prevention excise taxes have recently emerged as a novel tool for state and local legislators looking to quell gun violence. Gun violence prevention excise taxes are imposed on the purchase of firearms and ammunition. The proceeds are then used to fund projects to reduce gun violence or enhance public safety. Gun violence prevention excise taxes may provide other potential benefits, including encouraging gun owners to report lost or stolen handguns and reducing straw purchases. Moreover, the gun industry has seen record profits in recent years, with many purchases being made by first time gun buyers. In light of historic demand for guns and ammunition, many states and localities have focused on the gun industry and are looking to raise revenues by pushing gun or ammunition excise tax legislation.
Critics of these tax schemes argue the tax will lead to job loss, business migration and declines in revenue. For example, Tacoma, Washington, imposes an excise tax of $25 on firearms and between two and five cents on ammunition. After passage of the tax, one of Tacoma’s biggest firearm retailers fled Tacoma for the neighboring city of Lakewood which does not have a gun violence excise tax. Using Tacoma as a case study, it is easy to see how an excise tax could effectively, and unintentionally, reduce a jurisdiction’s tax base and gross receipts. To avoid the tax, businesses and consumers may migrate to other jurisdictions that do not impose such excise taxes. Thus, the tax may do more harm than good and inadvertently fail to achieve its policy objectives. Ultimately, jurisdictions will likely have to conduct a cost-benefit analysis, weighing the societal costs of gun violence against the potentially negative economic outcomes.
The cases that have addressed gun violence taxes on Second Amendment grounds are scant. To date, the only two such cases are Guns Save Life v. Ali and Murphy v. Guerrero. In Guns Save Life, the plaintiff challenged Cook County’s gun violence prevention excise tax as unconstitutional under the Second Amendment. Likening Cook County’s tax to a sales tax, the court highlighted that a sales tax has never been struck down on Second Amendment grounds; and— like a sales tax— Cook County’s excise tax was a reasonable condition on the commercial sale of firearms. The court also reasoned that Cook County’s excise tax could not be deemed prohibitive or exclusionary. Ultimately, Cook County’s excise tax was upheld.
In Murphy, a federal court considered the Northern Mariana Islands’ gun violence prevention excise tax. Plaintiffs argued that the tax violated the Second Amendment. In that case, the tax was struck down. The court held that the $1,000 tax was an unconstitutional restriction on the right to bear arms. The court noted that the excise tax was roughly 670% of the purchase price, far from a de minimis intrusion on the Second Amendment right to bear arms.
In order to pass constitutional muster, an optimal gun violence prevention excise tax should take effect upon a gun owner’s third gun purchase. In Heller, the Supreme Court found that the Second Amendment provides the “undoubted constitutional right to keep arms (plural) in [the] home for self-defense.” The term “plural” is plainly defined as more than one. This gun violence prevention tax scheme strictly satisfies the textual demands of the Second Amendment as espoused in Heller, as a gun owner’s first two guns are free from tax. Only after the purchase of a third gun would the tax take effect, increasing incrementally with each gun purchase thereafter. This would ensure that the tax rate is always closely tied to the number of guns purchased, so the tax would never be considered prohibitive or exclusionary. Additionally, jurisdictions could tailor the excise tax to their liking. E.g., the excise tax rate could be subject to a cap, it could apply separately to different types of firearms, or the tax could exempt law enforcement personnel or other agencies. For these reasons, the tax would only be deemed a de minimis impact on Second Amendment rights.
Considering the limited gun control policy choices available to states and localities, more and more jurisdictions are considering gun violence prevention excise tax schemes. However, to ensure that these tax schemes do not overstep constitutional boundaries, states and localities may want to consult Guns Save Life and Murphy as guideposts for successful implementation of their own gun-violence prevention excise tax schemes.