How can lawmakers reduce the skyrocketing rate of gun deaths in the United States? How can they stymie the spread of viral fake news stories designed to undermine our elections? Certain constitutionally protected activities—like owning a gun or speaking online—can generate social harms. Yet when lawmakers enact regulations to reduce those harms, they are regularly struck down as unconstitutional. Indeed, the very laws designed to most aggressively reduce social harms—like total criminal bans—are the least likely to be upheld. As a result, regulators appear stuck with an unpleasant choice—regulate constitutionally or effectively, but not both.
This Article proposes a novel solution: Pigouvian taxation. A Pigouvian tax is an economic tool whereby people are required to bear the social costs of their own activity, rather than forcing others to do so. Pigouvian taxes can thread the needle that traditional regulations have not, reducing serious social costs while respecting constitutional protections of individual rights. This is because many constitutional tests—for example, strict scrutiny’s “narrow tailoring” requirement—implicitly reflect the very kind of economic thinking on which Pigouvian taxes rely. In short, constitutional doctrines protecting individual activity do not require society to implicitly subsidize such activity by absorbing any and all costs it generates. Legitimate social costs may be regulated. But regulations must maintain a careful proportionality between the constitutional burdens they impose and the social harms they seek to eliminate. Pigouvian taxes, unlike traditional command-and-control rules, are inherently well-suited to such tailoring. Thus, in areas where traditional rules have been difficult or impossible to adequately tailor—like guns and speech—Pigouvian taxation presents an important new regulatory tool.