Opinion: Daily Journal

Learning the Constitutional Ropes

RALEIGH — If we’re not careful, we’re likely to go a whole week without a governmental body misinterpreting the constitution.

On Wednesday, I wrote about legislation moving through the North Carolina House that would ensure property owners just compensation if their signs or other property, erected legally, were subsequently removed by a local ordinance. On Thursday, lawmakers overwhelmingly passed the bill on its third reading; it will now head over to the N.C. Senate.

Today, I’m writing about an excellent decision by a U.S. appeals court upholding a lower court ruling that struck down a North Carolina law designed to favor in-state wineries over their out-of-state competitors.

The 4th U.S. Circuit Court of Appeals ruled this week that it is unconstitutional for the state to allow in-state wineries to sell and ship products directly to North Carolina residents while barring direct shipments from vintners in other states. That’s what the General Assembly did a while back — obviously violating the constitution’s interstate commerce clause, which prohibits states from essentially attempting to manage interstate trade through regulations, tariffs, or preferential tax treatment.

What’s particularly egregious about the legislature’s miscue here is that it previously lost a huge case — the intangibles tax lawsuit in the 1990s — on the same issue. North Carolina had attempted to tax the stock of in-state companies at a lower rate than it taxed out-of-state stocks. The courts said, basically, “What, are you kidding?” The state was ordered to refund hundreds of millions of dollars in taxes collected under this illegal scheme.

Now we have lawmakers trying to pull something similar to protect North Carolina’s emerging wine industry. An Associated Press report quotes several winery owners mourning the court’s decision because its immediate import is to forbid all direct shipping of wines to state residents, whatever the source. Of course, it would be far more reasonable to simply junk the delivery rule for all wines, something I presume legislators will do shortly. The point is, the politicians have to be consistent on this — consistently wise or consistenly stupid.

By the way, despite the obvious temptation to do so, our legislature couldn’t retain the ban just for wines exported from certain weasely foreign countries. We, the People, will have to make that buying decision for ourselves. I’m not much of a drinker, but I’m told Australia produces some marvelous products.

Hood is president of the John Locke Foundation and publisher of Carolina Journal.