Fairness in Judicial Taxation Act of 1996

Summary: Fairness in Judicial Taxation Act of 1996 - Amends the Federal judicial code to set limits on the authority of Federal courts to enter an order or approve a settlement that requires any State or political subdivision to impose, increase, levy, or assess any tax. 
Sets forth provisions regarding:  (1) judicial review; (2) a right of certain aggrieved, persons, corporations, or unincorporated associations to intervene in proceedings concerning imposition of a tax; (3) termination of any tax so imposed, increased, levied, or assessed automatically after one year or at any time if the court determines that the deprivation of rights has been cured to the extent practicable; (4)  preemption; and (5) State and local governmental rights.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Fairness in Judicial Taxation Act of 
1996''.

SEC. 2. FINDINGS.

    The Congress finds that--
            (1) a variety of effective and appropriate judicial 
        remedies are available under existing law for the full redress 
        of legal or constitutional violations;
            (2) the imposition, increase, levying, or assessment of 
        taxes by courts is not necessary or appropriate for the full 
        and effective exercise of remedies imposed by Federal courts 
        with appropriate jurisdiction;
            (3) the imposition, increase, levying, or assessment of 
        taxes by judicial order is--
                    (A) not an appropriate exercise of the judicial 
                power under the Constitution; and
                    (B) incompatible with--
                            (i) the traditional principles of the laws 
                        and Government of the United States; and
                            (ii) the basic American principle that 
                        taxation without representation is tyrannical 
                        (because Federal courts are composed of 
                        unelected officials who are not answerable to 
                        the popular will);
            (4) when a Federal court issues an order that requires or 
        results in the imposition, increase, levying, or assessment of 
        any tax, the court--
                    (A) exceeds the proper boundaries of the limited 
                jurisdiction and authority of Federal courts under the 
                Constitution; and
                    (B) impermissibly intrudes on the legislative 
                functions of the democratic system of government of the 
                United States;
            (5) no court should enter an order or approve any 
        settlement--
                    (A) remedying a legal or constitutional violation 
                by imposing, creating, increasing, levying, or 
                assessing any tax; or
                    (B) that has the effect of imposing, creating, 
                increasing, levying, or assessing any tax;
            (6) a settlement agreement or order entered by a Federal 
        court should be fashioned within the framework of the budgetary 
        restraints of any affected State or political subdivision 
        thereof; and
            (7) the Congress has the authority under sections 1 and 2 
        of Article III of the United States Constitution to limit and 
        regulate the jurisdiction of the inferior Federal courts, and 
        such authority includes the power to limit the remedial 
        authority of such courts.

SEC. 3. LIMITATION ON FEDERAL COURT REMEDIES.

    (a) In General.--Chapter 85 of title 28, United States Code, is 
amended by adding at the end the following new section:
``Sec. 1369. Limitation on Federal court remedies
    ``(a)(1) No district court may enter any order or approve any 
settlement that requires any State, or political subdivision of a 
State, to impose, increase, levy, or assess any tax for the purpose of 
enforcing any Federal or State common law, statutory, or constitutional 
right or law, unless the court finds by clear and convincing evidence, 
that--
            ``(A)(i) there are no other means available to remedy the 
        deprivation of rights or laws; and
            ``(ii) the proposed imposition, increase, levying, or 
        assessment is narrowly tailored to remedy the specific 
        deprivation at issue;
            ``(B) the tax will not contribute to or exacerbate the 
        deprivation intended to be remedied;
            ``(C) the proposed tax will not result in a loss of revenue 
        for the political subdivision in which it is assessed, levied, 
        or collected;
            ``(D) the proposed tax will not result in the loss or 
        depreciation of property values of the taxpayer so affected;
            ``(E) the proposed tax will not conflict with the 
        applicable laws with respect to the maximum rate of taxation as 
        determined by the appropriate State or political subdivision 
        thereof; and
            ``(F) plans submitted to the court by State and local 
        authorities will not effectively redress the deprivations at 
        issue.
    ``(2) A finding under paragraph (1) shall--
            ``(A) be subject to immediate interlocutory de novo review; 
        and
            ``(B) be reviewed by the court making the finding at least 
        annually with respect to the issues related to the finding, 
        whether or not a related order or settlement agreement 
        continues to apply.
    ``(3)(A) Notwithstanding any law or rule of procedure, any 
aggrieved corporation, or unincorporated association or other person 
residing or present in the political subdivision in which a tax is 
imposed in accordance with paragraph (1) or other entity located within 
that political subdivision shall have the right to intervene in any 
proceeding concerning the imposition of the tax.
    ``(B) A person or entity that intervenes pursuant to subparagraph 
(A) shall have the right to--
            ``(i) present evidence and appear before the court to 
        present oral and written testimony; and
            ``(ii) appeal any finding required to be made by this 
        section, or any other related action taken to impose, increase, 
        levy, or assess the tax that is the subject of the 
        intervention.
    ``(b) Notwithstanding any law or rule of procedure, any order of a 
district court requiring the imposition, increase, levy, or assessment 
of a tax imposed pursuant to subsection (a)(1) shall automatically 
terminate or expire on the date that is 1 year after the later of--
            ``(1) the date of the imposition of the tax;
            ``(2) the date of the enactment of the Fairness in Judicial 
        Taxation Act of 1996; or
            ``(3) an earlier date, if the court determines that the 
        deprivation of rights that is addressed by the order has been 
        cured to the extent practicable.
    ``(c) This section may not be construed to preempt any law of a 
State or political subdivision thereof that imposes limitations on, or 
otherwise restricts the imposition of a tax, levy, or assessment that 
is imposed in response to a court order referred to in subsection (b).
    ``(d)(1) Except as provided in paragraph (2), nothing in this 
section may be construed to allow a Federal court to, for the purpose 
of funding the administration of an order referred to in subsection 
(b), use funds acquired by a State or political subdivision thereof 
from a tax imposed by the State or political subdivision thereof.
    ``(2) Paragraph (1) does not apply to any tax, levy, or assessment 
that, before the date of enactment of the Fairness in Judicial Taxation 
Act of 1996, has, in accordance with applicable State or local law, 
been used to fund the actions of a State or political subdivision 
thereof in meeting the requirements of an order referred to in 
subsection (b).
    ``(e) The court shall provide written notification to a State or 
political subdivision thereof subject to an order referred to in 
subsection (b) with respect to any finding required to be made by the 
court under subsection (a) before the beginning of the fiscal year of 
that State or political subdivision.
    ``(f) There shall be a presumption that the imposition, increase, 
levying, or assessment of taxes is not a narrowly tailored means of 
remedying deprivations of Federal or State rights.
    ``(h) For purposes of this section--
            ``(1) the District of Columbia shall be considered to be a 
        State; and
            ``(2) any Act of Congress applicable exclusively to the 
        District of Columbia shall be considered to be a statute of the 
        District of Columbia.''.
    (b) Conforming Amendment.--The chapter analysis for chapter 85 of 
title 28, United States Code, is amended by adding after the item 
relating to section 1368 the following new item:

``1369. Limitation on Federal court remedies.''.
    (c) Statutory Construction.--Nothing contained in this Act and the 
amendments made by this Act shall be construed to, beyond the scope of 
applicable law, make legal, validate, or approve the use of a judicial 
tax, levy, or assessment by a district court.