Is Robbing Peter To Pay Paul A Taking?

The Cato Institute has filed an amicus brief supporting the petitioner in Empress Casino Joliet Corp. v. Giannoulias, No. 08-945 (cert. petition filed Jan. 21, 2009). In that case, the Illinois Supreme Court held (896 N.E.2d 277 (Ill. 2008) that a regulation which imposes a 3% "surcharge" on Illinois casinos with gross receipts over $200 million per year, and then gives the money to horse racing tracks is not a taking of property. Several casinos challenged the law asserting, among other arguments, that the redistribution of their money to tracks was a taking.  The Illinois Supreme Court held that the regulation was a tax, and not subject to takings analysis. The cert petition asks:

In this case, the Illinois Supreme Court held that a state law transferring the revenues of four Illinois casinos to five Illinois horse-racing tracks is categorically not susceptible to challenge under the Takings Clause of the Fifth Amendment because, in that court’s view, "regulatory actions requiring the payment of money are not takings." The question presented is:

Whether the State's taking of money from private parties is wholly outside the scope of the Takings Clause.

Cato's amicus brief puts it more succinctly:

If the government robs Peter to pay Paul, does it violate the Takings  Clause?

The brief doesn't stop there:

The Illinois statute at issue takes money from the private owners of certain riverboat casinos—only disfavored Chicagoland casinos—and gives it to the
private owners of horseracing tracks, without even a brief stopover in the State’s treasury.

One Illinois legislator aptly referred to the statute as "rob[bing] Peter to pay Paul." See Mar. 29, 2006 Transcript of House Debate on H.B. 1917 (statement of Rep. Beiser). In French and Spanish, the idiom is more tangible: "undress one saint to dress another." http://en.wikipedia.org/wiki/Robbing_Peter_to_pay_Paul. The Chinese have a similar expression: "dismantle the east wall to patch up the west wall." Ibid. And so does this Court: "the sovereign may not take the property of A for the sole purpose of transferring it to another private party B." Kelo v. City of New London, Conn., 545 U.S. 469, 477 (2005).

Under the Fifth Amendment, it matters not if it is Peter's money, the first saint's clothes, the east wall owner's stones, or A's property. None of these
things can be taken by the government unless for public use, and then only if just compensation is paid. That rule does not change simply because the property transferred is money, contrary to the Illinois Supreme Court's holding in this case. See Pet. 18-26.

Brief at 2.