Empress Casino Joliet Corp. v. Balmoral Racing Club, Inc.

POSNER, Circuit Judge.

The plaintiffs, four riverboat casinos operating in Illinois, brought this RICO suit against five Illinois racetracks, charging that the owner of two of the tracks, in *725cahoots with Illinois’ then governor, Rod Blagojevieh, had “bought” a pair of Illinois statutes harmful to the casinos. Enacted in 2006 and 2008 by large margins, these statutes, which are to remain in effect until the end of this year, require the casinos to deposit 3 percent of their revenues in a segregated state fund- — the “Horse Racing Equity Trust Fund” — for disbursement to the racetracks within 10 days of receipt; the racetracks are directed to use the money to increase winners’ and runner-ups’ purses and improve the tracks. 111. Pub. Act 94-804, effective May 26, 2006; 111. Pub. Act 95-1008, effective Dec. 15, 2008.

The plaintiffs asked the district court to impose, as a remedy for the alleged violation of RICO, a constructive trust in their favor on the money received by the racetracks under these laws. The district judge issued a temporary restraining order that required that any money paid by the state fund be placed in an escrow account that the racetracks could not reach while the litigation was pending. Later the judge ruled that the Tax Injunction Act, 28 U.S.C. § 1341, barred equitable relief, of which the imposition of a constructive trust is a form. So he dissolved the temporary restraining order.

The casinos appealed. A panel of this court reinstated the temporary restraining order pending appeal (so the escrow remains in force and no money is being disbursed to the racetracks), and then reversed the district court (with one judge dissenting), holding that the Tax Injunction Act did not bar the casinos’ quest for equitable relief in federal court. 638 F.3d 519 (7th Cir.2011). We granted rehearing en banc to reexamine that holding. The merits of the suit were not before the panel and are not before us. Moreover, upon the grant of rehearing en banc, the panel opinion was vacated only with regard to appeal No. 09-3975; the part of the panel’s opinion and order that relates to appeal No. 10-1019, which had been consolidated with No. 09-3975, was unaffected by the grant of rehearing en banc and is unaffected by the present opinion. And the temporary restraining order pending appeal remains in force.

The Tax Injunction Act forbids federal district courts to “enjoin, suspend or restrain the assessment, levy or collection of any tax under State law,” provided that an adequate remedy is available in the state courts, 28 U.S.C. § 1341, and it is in this case. The Act thus does not limit any substantive rights to enjoin a state tax but requires only that they be enforced in a state court rather than a federal court. The requirement serves to minimize the frictions inherent in a federal system of government, and is considered so important that the duty of federal courts to cede litigation seeking to enjoin state tax statutes to the state courts (a duty of “comity” — that is, of respect for another sovereign) extends beyond the limits of the Tax Injunction Act. Fair Assessment in Real Estate Ass’n, Inc. v. McNary, 454 U.S. 100, 110, 102 S.Ct. 177, 70 L.Ed.2d 271 (1981). The Act is just a “partial codification of the federal reluctance to interfere with state taxation.” National Private Truck Council, Inc. v. Oklahoma Tax Comm’n, 515 U.S. 582, 590, 115 S.Ct. 2351, 132 L.Ed.2d 509 (1995); see also Levin v. Commerce Energy, Inc., — U.S. -, 130 S.Ct. 2323, 2331-33, 176 L.Ed.2d 1131 (2010). The Supreme Court has told us to withhold decision even in situations to which the Act does not apply, though we won’t have to take that step in this case.

Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908), had as a practical matter stripped away the states’ sovereign immunity from equitable suits. So were it not for the Tax Injunction Act *726and the related doctrine of comity, “ ‘state tax administration might be thrown into disarray, and taxpayers might escape the ordinary procedural requirements imposed by state law. During the pendency of the federal suit the collection of revenue under the challenged law might be obstructed, with consequent damage to the State’s budget, and perhaps a shift to the State of the risk of taxpayer insolvency.’ ” Rosewell v. LaSalle Nat’l Bank, 450 U.S. 503, 527, 101 S.Ct. 1221, 67 L.Ed.2d 464 (1981), quoting Perez v. Ledesma, 401 U.S. 82, 128 n. 17, 91 S.Ct. 674, 27 L.Ed.2d 701 (1971) (separate opinion); see also Hill v. Kemp, 478 F.3d 1236, 1246-47 (10th Cir.2007). The Act is “first and foremost a vehicle to limit drastically federal district court jurisdiction to interfere with so important a local concern as the collection of taxes.” Rosewell v. LaSalle Nat’l Bank, supra, 450 U.S. at 522, 101 S.Ct. 1221. The reason for this drastic limitation is that “it is upon taxation that the several States chiefly rely to obtain the means to carry on their respective governments, and it is of the utmost importance to all of them that the modes adopted to enforce the taxes levied should be interfered with as little as possible. Any delay in the proceedings of the officers, upon whom the duty is devolved of collecting the taxes, may derange the operations of government, and thereby cause serious detriment to the public.” Dows v. City of Chicago, 78 U.S. (11 Wall.) 108, 110, 20 L.Ed. 65 (1871).

Not that enjoining a particular tax, depending on what it is, is certain to “derange the operations of government.” But a general lowering of standards under the Tax Injunction Act could result in state fiscal policy being nickeled and dimed to death by an avalanche of suits by disgruntled taxpayers. (When the suit is not by taxpayers, but by persons objecting just to how the money is being spent, as in Hibbs v. Winn, 542 U.S. 88, 124 S.Ct. 2276, 159 L.Ed.2d 172 (2004), the danger of interference with state tax administration is diminished; Hibbs holds that such suits are outside the Act’s scope.) The application of the Act should not turn on judges’ guesses about the importance of a particular tax to the legitimate operations of state government. Even the plaintiffs acknowledge that the allegedly corrupt origin of the statutes they attack does not bear on whether the exactions that those statutes impose are taxes within the meaning of the Tax Injunction Act. The Act would be thwarted if a taxpayer could get a federal court to enjoin the collection of a state tax just by presenting evidence of corruption in the process by which the taxing statute had been enacted. This principle has been recognized in analogous contexts, see, e.g., City of Columbia v. Omni Outdoor Advertising, Inc., 499 U.S. 365, 374-78, 111 S.Ct. 1344, 113 L.Ed.2d 382 (1991) (state immunity from federal antitrust suits) — notably that of absolute immunity. Pierson v. Ray, 386 U.S. 547, 553-54, 87 S.Ct. 1213, 18 L.Ed.2d 288 (1967).

We are mindful that the state is not a party to this suit. But the relief sought both is equitable and would thwart the tax as surely as an injunction against its collection. The taxpayers (the casinos) are seeking a constructive trust of the tax revenues, which if imposed would result in their recapturing the taxes they have paid. The tax would be nullified. (If the tax statutes were not shortly to expire, the casinos would be seeking an injunction as well.)

The Act’s forum-selecting character argues compellingly for a crisp rule distinguishing taxes from other exactions by states, such as fees charged for services provided (or prices charged for the sale or lease of state property), transfers of damages awarded to a state to the persons on *727whose behalf the state had sued (cf. Trailer Marine Transport Corp. v. Rivera Vazquez, 977 F.2d 1, 5 (1st Cir.1992) (“the accident-compensation statute is essentially a social welfare program and tort reform law to impose on motor vehicle owners as a class the cost of the accidents they cause and to assure compensation for accident victims ”) (emphasis added)), and fines. A crisp rule determining which court system has jurisdiction to decide a particular type of case is needful because until the proper forum for a lawsuit is determined, the case cannot proceed; and if at any time until the decision resolving the litigation becomes final by exhaustion of appellate remedies it is discovered that the court rendering the decision lacked jurisdiction, the suit must start over from scratch in the forum that has jurisdiction. A challenge to the constitutionality of the casino-tax statutes brought by the casinos in the Illinois state court system against public officials rather than the racetracks has already been decided (adversely to the casinos) by the Supreme Court of Illinois. Empress Casino Joliet Corp. v. Giannoulias, 231 Ill.2d 62, 324 Ill.Dec. 491, 896 N.E.2d 277 (2008). The casinos brought a second suit in the Illinois courts, making new allegations of corruption. While we federal judges are continuing to debate the proper venue of this case, the second state suit, too, has been decided on the merits, again adversely to the casinos. Empress Casino Joliet Corp. v. Giannoulias, 406 Ill.App.3d 1040, 347 Ill.Dec. 580, 942 N.E.2d 783 (2011), leave to appeal denied (Ill.S.Ct., No. 112003, May 25, 2011).

As the casino-tax litigation illustrates, “administrative simplicity is a major virtue in a jurisdictional statute____ Complex jurisdictional tests complicate a case, eating up time and money as the parties litigate, not the merits of their claims, but which court is the right court to decide those claims.” Hertz Corp. v. Friend, — U.S. -, 130 S.Ct. 1181, 1193, 175 L.Ed.2d 1029 (2010). “Functional approaches to legal questions are often, perhaps generally, preferable to mechanical rules; but the preference is reversed when it comes to jurisdiction.” Hoagland ex rel. Midwest Transit, Inc. v. Sandberg, Phoenix & von Gontard, P.C., 385 F.3d 737, 739 (7th Cir.2004). And so “the more mechanical the application of a jurisdictional rule, the better. The chief and often the only virtue of a jurisdictional rule is clarity.” In re Kilgus, 811 F.2d 1112, 1117 (7th Cir.1987) (citations omitted); see also Kuntz v. Lamar Corp., 385 F.3d 1177, 1183 (9th Cir.2004).

Although a jurisdictional rule should be simple and clear, where possible — and this is possible in regard to the Tax Injunction Act — a number of decisions under the Act, including the panel majority opinion, have flirted with open-ended, multifactor tests— open-ended because the relative weights of the factors are left to judicial discretion. Among the factors either urged by the casino plaintiffs or mentioned in the cases are whether the legislature called the exaction a “tax” or something else (the Supreme Court of Illinois calls the casino exaction a “tax,” but the plaintiffs insist that this is irrelevant — the legislature must use the word; it has not done so, instead calling the casino exaction a “condition of licensure”); whether the money generated by the exaction is deposited in a “lock box” type of trust fund (the only real kind, according to the plaintiffs, who call the Social Security Trust Funds a fraud); how quickly the money passes through the trust fund to the ultimate beneficiaries; the price elasticity of the taxed behavior; the amount of revenue collected by the exaction; whether that revenue is to be used for a traditional public purpose; whether the benefit that the fiscal program confers on the people of the state is *728direct or indirect; whether the exaction is designed to benefit one firm or a narrow group of firms (for example, racetracks) by oppressing a competitor or competitors (for example, casinos); whether enjoining its collection would prevent the state from paying its bills or even threaten it with insolvency; whether the persons or firms subjected to the exaction are numerous or few, whether the beneficiaries of the exaction are numerous or few, and what the relative size of the two groups is; whether the amount of revenue from the exaction that is transferred to the intended beneficiaries is determined by the legislature or is allowed to rise and fall with the fluctuations in that revenue; whether the plaintiff avoids naming state officials as defendants; whether the exaction was based on the state’s taxing power or on some other power, such as the police power (even though these are distinctions primarily relevant to the federal Constitution, which unlike state constitutions was designed, in order to protect state prerogatives, to be a constitution of limited, specified powers); and, as a kind of catchall, how much the exaction resembles what everyone would agree was a “tax,” or as Wittgenstein might have wanted us to ask, how close a “family resemblance” the exaction bears to an exaction acknowledged by all to be a “tax.” Is it a brother, or a third cousin?

The Supreme Court has not endorsed any multifactor test for applying the Tax Injunction Act, and such a test would be inappropriate quite apart from the need for clarity and simplicity in interpreting a forum-selection law. It is not a proper office of the federal courts to “reform” state fiscal policies by providing a federal forum for state taxpayers who object to the form or substance of laws designed to raise revenues for state purposes, whether purposes approved or disapproved by enlightened social thinkers. The wisdom of a tax on casinos to benefit racetracks is not a proper subject of inquiry by federal judges. “The federal balance is well served when the several States define and elaborate their own laws through their own courts and administrative processes and without undue interference from the Federal Judiciary. The States’ interest in the integrity of their own processes is of particular moment respecting questions of state taxation.” Arkansas v. Farm Credit Services of Central Arkansas, 520 U.S. 821, 826, 117 S.Ct. 1776, 138 L.Ed.2d 34 (1997).

The only material distinction is between exactions designed to generate revenue — taxes, whatever the state calls them (for what is a “tax” for purposes of the Tax Injunction Act is a question of federal rather than state law, RTC Commercial Assets Trust 1995-NP3-1 v. Phoenix Bond & Indemnity Co., 169 F.3d 448, 457 (7th Cir.1999); Wright v. Riveland, 219 F.3d 905, 911 (9th Cir.2000); American Landfill, Inc. v. Stark/Tuscarawas/Wayne Joint Solid Waste Management District, 166 F.3d 835, 837 (6th Cir.1999)) — and exactions designed either to punish (fines, in a broad sense) rather than to generate revenue (the hope being that the punishment will deter, though deterrence is never perfect and therefore fines generate some state revenues), or to compensate for a service that the state provides to the persons or firms on whom or on which the exaction falls (or, what is similar, to compensate the state for costs imposed on it by those persons or firms, other than costs of providing a service to them): in other words, a fee. “If the fee is a reasonable estimate of the cost imposed by the person required to pay the fee, then it is a user fee and is within the municipality’s regulatory power. If it is calculated not just to recover a cost imposed on the municipality or its residents but to generate revenues that the municipality can use *729to offset unrelated costs or confer unrelated benefits, it is a tax, whatever its nominal designation.” Diginet, Inc. v. Western Union ATS, Inc., 958 F.2d 1388, 1399 (7th Cir.1992).

For examples of exactions held to be fees, see Hager v. City of West Peoria, 84 F.3d 865, 870-71 (7th Cir.1996) (fees for permits for use of certain streets by heavy trucks); Government Suppliers Consolidating Services, Inc. v. Bayh, 975 F.2d 1267, 1271 n. 2 (7th Cir.1992) (registration fees for waste collection vehicles), and Trailer Marine Transport Corp. v. Rivera Vazquez, supra, 977 F.2d at 4-6 (annual fee imposed on owners of motor vehicles to fund compulsory accident compensation). For examples of nominal “fees” held to be taxes for purposes of the Act, see Hill v. Kemp, supra, 478 F.3d at 1243-46 (revenue from sale of specialty license plates greatly exceeded cost of the plates and the excess was earmarked for purposes, such as promotion of adoptions, tied to the legend on the plate); Folio v. City of Clarksburg, 134 F.3d 1211, 1217 (4th Cir.1998) (city fee for fire protection); Wright v. McClain, 835 F.2d 143, 144-5 (6th Cir.1987) (parolee’s payments to a victim compensation fund); cf. Diginet, Inc. v. Western Union ATS, Inc., supra, 958 F.2d at 1399 (“franchise fee” imposed on use of a fiber optic network to generate revenues that are “use[d] to offset unrelated costs or confer unrelated benefits”). In listing these cases, however, we do not mean to endorse their specific holdings, based as they often are on questionable multifactor tests.

The line between a tax and a fee, and a tax and a fine, is sometimes fuzzy, and in a borderline case factors that distinguish between rather similar-looking exactions may be useful tools for determining on which side of the line the case falls. For example, a tax might be so totally punitive in purpose and effect that, since nomenclature is unimportant, it should be classified as a fine rather than a tax. “The mere use of the word ‘tax’ in an act primarily designed to define and suppress crime is not enough to show that within the true intendment of the term a tax was laid. When by its very nature the imposition is a penalty, it must be so regarded.” Lipke v. Lederer, 259 U.S. 557, 561-62, 42 S.Ct. 549, 66 L.Ed. 1061 (1922) (citation omitted); see also Retail Industry Leaders Ass’n v. Fielder, 475 F.3d 180, 189 (4th Cir.2007); Denton v. City of Carrollton, 235 F.2d 481, 485 (5th Cir.1956); RTC Commercial Assets Trust 1995-NP3-1 v. Phoenix Bond & Indemnity Co., supra, 169 F.3d at 457-58. And so in Department of Revenue v. Kurth Ranch, 511 U.S. 767, 782, 114 S.Ct. 1937, 128 L.Ed.2d 767 (1994), the Supreme Court held that a state marijuana “tax” was actually a fine, noting among other things that it was exacted only after the taxpayer had been arrested for the conduct that had given rise to the tax obligation and that because the taxed activity was completely forbidden “any legitimate revenue-raising purpose that might support such a tax could be equally well served by increasing the fine imposed upon conviction.”

Or imagine a fee that has aspects of a tax because the revenue it generates is greater than is needed to fund the service for which the fee is the charge, and the surplus goes into the state’s general funds. In Schneider Transport, Inc. v. Cattanach, 657 F.2d 128, 132 (7th Cir.1981) — a case indistinguishable from the present case— we held that what was called a fee was actually a tax; we said: “although not denominated as such, the [vehicle] registration fees are imposed for revenue-raising purposes, a characteristic of any tax. The fees are deposited in a segregated fund, the state transportation fund, for *730transportation purposes, including highway construction. The revenues from the fund ‘are deposited into funds other than the general fund and are available for the purposes for which such funds are created’ ” (citations omitted). The First Circuit reached the opposite conclusion in San Juan Cellular Telephone Co. v. Public Service Comm’n, 967 F.2d 683 (1st Cir.1992); it held that a fee imposed on phone companies to defray the expenses of regulating them was not a tax even though the fee generated more revenue than needed to meet those expenses and the surplus was used for other state purposes rather than returned to the companies.

Fees for products (people buy electricity from public utilities) and bona fide user fees (a toll for crossing a bridge, for example) are not “taxes” in either lay or legal lingo. Similarly, bona fide user fees for wharfs and tugboats aren’t taxes for the purpose of the Constitution’s import-export duties clause, or the rule against discriminatory taxes on interstate commerce. But “sin taxes” are real taxes and so are taxes that go into limited-purpose funds, such as the FICA tax and the gasoline tax. We mustn’t write transfer payments and behavior-shaping taxes out of the Tax Injunction Act just because it is easier with such taxes to identify winners and losers. The Act would have a very limited reach if we did that.

The recent decision in Kathrein v. City of Evanston, 636 F.3d 906, 912-13 (7th Cir.2011), classified a city “demolition tax” as not being a tax for purposes of the Tax Injunction Act, but instead as being a regulatory device (like the Prohibition-era tax on alcohol that we mentioned) because its sole purpose, the panel concluded, was to keep poor people in their homes. The tax would deter demolitions and the modest fund generated by it (a trivial $90,000 each year) would be used to subsidize those poor people and thus amplify the effect of the tax in enabling them to keep their homes out of reach of the wrecker’s ball. We do not agree with that decision. Taxes that seek both to deter and to collect revenue when deterrence fails (liquor taxes are an example) are commonplace, and these sin taxes often are an important component of state fiscal policy because there are so many unrepentant sinners.

The exaction imposed on the casinos is not a fine or a fee, and is therefore (if there is to be a simple and clear jurisdictional rule) a tax; the panel majority was explicit that it was not a fee and no one suggests that it’s a fine. It is instead an example of a state’s taking money from one group of firms and giving it to another group, in much the same way that federal income tax takes money from persons and firms mostly in the nonagricultural sector of the economy and Congress gives some of the tax revenues to the tiny but influential agricultural sector in the form of farm subsidies: in other words, tax and spend, and the taxpayers and the recipients of the tax revenues needn’t be the same.

The fact that the casino exaction isn’t called a tax, is placed in a trust fund, passes speedily from taxpayer to recipient, is justified by reference to the police power of the state rather than the state’s taxing power, etc., has nothing to do with any concern behind the Tax Injunction Act. “Taxation” is unpopular these days, so taxing authorities avoid the term. Legislatures are unpredictable, so trust funds are created to hold revenues generated by specific taxes, in order to avoid annual appropriations battles. The politics of state taxation have naught to do with the policy of the Tax Injunction Act. If in the guise of “interpreting” the Act the courts insist on greater candor or directness in state taxing legislation as the price for avoiding federal-court suits to enjoin state *731tax collections, we shall make it difficult, given the politics of tax-and-spending legislation, for states to raise revenues — we shall be doing just what the Supreme Court in Rosewell said it was the object of the Act to prevent doing: throwing state tax administration into disarray.

Gambling taxes, including casino taxes, are not unique to Illinois. See Ind.Code §§ 4-33-12-1, -6(b)(6); N.J. Stat. §§ 5:12-203(a), -205; cf. Md.Code, State Gov’t, §§ 9-lA-27(a)(5), -29. They are real taxes, not fees. Their aim is to raise revenue, not to cover costs. That the revenue is earmarked for a particular purpose is hardly unusual; think of the social security tax. Congress does, it is true, define the exact benefits to which each social security recipient is entitled. But the aggregate benefits vary with the number of recipients, rather than being specified. The benefits conferred by another earmarked federal tax, the federal tax on gasoline, likewise fluctuate; the amount of revenue generated by the tax varies from year to year because it’s a tax on gallonage and so depends on the amount of driving and on the gas consumption of the vehicles driven. See, e.g., U.S. Energy Information Administration, “Annual Energy Outlook 2011,” p. 10 (2011), www.eia.gov/forecasts/aeo/pdfi 0383(2011).pdf (visited July 1, 2011).

A tax, possibly of corrupt origin, levied on one set of gambling enterprises to subsidize another may seem a fiscal travesty. But what has that to do with the Tax Injunction Act? And, though we don’t think this matters, we note that horse racing is a major activity in Illinois and one with economic significance for the state. It employs more than 30,000 people and generates more than $700 million in annual betting and some $15 million in state and local government revenues. 111. Pub. Act 94-804, § l(3)-(4); Illinois Racing Board, “2010 Annual Report” 2, 6 (Mar. 2011), www2.illinois.gov/irb/Documents/AnnualReports/2010_Annual_Report.pdf (visited July 1, 2011); Commission on Government Forecasting and Accountability, “Wagering in Illinois — 2010 Update” 53-60 (2011), www.ilga.gov/commission/cgfa2006/ Upload 2010wageringJn_il.pdf (visited July 1, 2011). And that’s just the beginning, because horse racing boosts the equine population of Illinois, which benefits breeders, horse farms, feed companies, and other businesses ancillary to horse racing. Bill Wright, “Where Illinois’ Economy Gets Its Horsepower,” Chicago Tribune, Mar. 10, 2002, p. 6.

There is also Illinoisians’ sentimental affection for horses which we noted in Cavel Int’l, Inc. v. Madigan, 500 F.3d 551 (7th Cir.2007), where we upheld against a commerce clause challenge the decision by the Illinois legislature — inspired by movie actress Bo Derek, id. at 559, a notable horse lover — shutting down the last slaughterhouse in the United States (which happened to be in Illinois) that was permitted to slaughter horses for human consumption. States routinely subsidize favored activities — not by taxing the persons or firms engaged in the activities, which would make the “tax” a fee and negate the subsidy, but by taxing someone else. Are animals not appropriate objects of state subsidy? Cannot Citation, Man ‘o War, Seabiscuit, and Secretariat be distinguished, as objects of public solicitude, from roulette wheels and one-armed bandits?

Casinos are recent additions to the legal gambling scene in Illinois; the first casino in the state opened in 1991. Jerry Shnay, “Alton Riverboat Already Hitting Jackpot,” Chicago Tribune, Sept. 25, 1991, at 4. They compete with the racetracks and thus attract gamblers away from them. So at least it is widely believed, see Illinois Harness Horsemen’s Ass’n, Press Release, *732“Top State Horsemen Flee to Greener Pastures in Eastern States” (Nov. 30, 2005), and William Nack, “A House Divided,” Sports Illustrated, July 10, 1995, at 52, 56, though Douglas M. Walker and John D. Jackson, in their article “Do U.S. Gambling Industries Cannibalize Each Other?,” 36 Public Finance Rev. 308, 322-24 (2008), present contrary evidence — evidence that casino and other non-racetrack gambling increases the demand for racetrack gambling by increasing the demand for gambling in general. What is not debatable is that, whether because of the advent of casinos or because of other factors, racetrack attendance and revenues in Illinois have plummeted in recent years, along with the state’s horse population and commercial activities that are correlated with the number of horses. Illinois Racing Board, supra, at 9; Commission on Government Forecasting and Accountability, supra, at 59-60; Will Buss, “Hoffman: Bill Will Help Fairmount,” Belleville News-Democrat, Mar. 27, 2008, p. Al. The first of these sources shows horse-racing bets falling from $1.2 billion in 1996 to $.7 billion in 2010, though some of the drop is doubtless due to the economic crisis that began in 2008; the 2007 total was $900 million.

Sixty percent of the subsidy created by revenues from the casino tax is earmarked for the purses for winners and runners-up in the horse races, on the theory that bigger purses attract the owners of the better horses and the better the horses in a race the larger the attendance and therefore the more money is bet and so the greater the track’s revenues are because they’re a percentage of the amount of money that is bet. The other 40 percent is earmarked for physical improvements of the racetracks. The subsidy is rationally designed to promote the horse racing industry in Illinois, which seems no less proper an objective than promoting a state’s film industry by offering tax credits or other financial incentives to filmmakers, a common form of state subsidy. Horse racing and movies are two forms of entertainment. Are the taxes that provide the revenue to subsidize such activities not taxes at all, but instead — what?

In a laissez-faire or Social Darwinist society, as dreamed by Herbert Spencer (the target of Holmes’s crack that “the 14th Amendment does not enact Mr. Herbert Spencer’s Social Statics,” Lochner v. New York, 198 U.S. 45, 75, 25 S.Ct. 539, 49 L.Ed. 937 (1905)), the government would keep its hands off the competition between the casinos and the racetracks. The disappearance of racetracks, jockeys, horses, bridles, blacksmiths, racetrack touts, and DVDs of National Velvet — replaced by croupiers, glassy-eyed retirees at one-armed bandits, roulette wheels, and blackjack tables, all on riverboat casinos— would be commended as progress. But American government is not committed to the laissez-faire vision of society. We find no hints of Social Darwinism in the Tax Injunction Act. Congress and state legislatures frequently use their taxing, spending, and regulatory powers to redistribute wealth from one group in society to another. This is a familiar exercise of taxing power and whether unconstitutional in particular instances (in the Illinois courts the casinos unsuccessfully attacked the casino tax as an uncompensated taking), it is still taxation, which is our only concern in this appeal. Federal payroll taxes are earmarked for such expenditure programs as Medicare, social security, and unemployment benefits; the federal gasoline tax is used to subsidize highway construction; other earmarked taxes are common. See Susannah Camic, “Earmarking: The Potential Benefits,” 4 Pitt. Tax Rev. 55, 60-61 (2006). Rarely are taxpayers closely matched with the recipients of the spend*733ing that the taxes support. If you die before reaching the age of 62, you get no social security benefits even if you’ve been paying social security tax for 40 years.

Illinois’ casino tax is not an isolated example of taxing one industry for the benefit of another. The federal Audio Home Recording Act of 1992 taxes digital media to subsidize prerecorded media, 17 U.S.C. § 1001 et seq. (though the tax has, as many taxes do, a punitive purpose as well — to discourage illegal copying of recordings). The Illinois Coal Technology Development Assistance Fund taxes gas and electrical utilities to pay for the development of coal technologies, 30 ILCS 730/3. And Ohio taxes wine from all over the world to pay for research on grapes in Ohio. Ohio Rev.Code Ann. §§ 924.51 et seq., 4301.43(B).

When the plaintiffs call the casino tax a “fee,” they do so because they want a word to describe what the casino exaction is: if it is not a tax or a fee (or a fine), what is it? The panel majority, emphasizing the adverse effect of the tax on the casinos, called it “a regulatory penalty or fee.” Fees for services are not taxes, but no services are rendered to the casinos in exchange for their having to give up 3 percent of their revenues. All the money goes to the racetracks. The plaintiffs try to blur the distinction by quoting from a previous opinion of this court that “courts faced with distinguishing a ‘tax’ from a ‘fee’ ‘have tended ... to emphasize the revenue’s ultimate use, asking whether it provides a general benefit to the public, of a sort often financed by a general tax, or whether it provides more narrow benefits to regulated companies or defrays the agency’s cost of regulation.’” Hager v. City of West Peoria, supra, 84 F.3d at 870, quoting San Juan Cellular Telephone Co. v. Public Service Comm’n, supra, 967 F.2d at 685. The reference to “narrow benefits” may seem to describe this case, since only racetracks received the proceeds of the casino tax. But this is to ignore the words in the Hager opinion that follow “provides more narrow benefits”: “to regulated companies or defrays the agency’s cost of regulation.” The revenues from the tax on the casinos does not go to pay for some service that the State of Illinois renders to casinos, or, what amounts to the same thing, to some service that is required by the existence of casinos, in the same way that expenses incurred to regulate telephone companies were necessitated by those companies and hence were part of the regulatory costs (San Juan Cellular). The casino tax goes to subsidize racetracks, and so it falls within the rule that exactions of money earmarked for designated purposes rather than collected just to swell the state’s coffers are taxes within the meaning of the Tax Injunction Act even if imposed for a reason of which judges disapprove.

The plaintiffs point us to Bidart Brothers v. California Apple Comm’n, 73 F.3d 925 (9th Cir.1996), but that case involved an assessment of fees on apple producers to support advertising and other activities designed to boost apple consumption. The fees were to pay for services to the payors of the fees. Taxes often are levied on people or firms that will derive no benefit at all from them, as in the present case.

The practical reason for the difference in treatment under the Tax Injunction Act between fees and taxes is that enjoining the collection of a fee is less likely to disrupt state programs than enjoining a tax. Fees are for services and if the collection of the fees is enjoined, the state can curtail the services. Cf. Ben Oehrleins & Sons & Daughter, Inc. v. Hennepin County, 115 F.3d 1372, 1383 (8th Cir.1997); San Juan Cellular Telephone Co. v. Public Service Comm’n, supra, 967 F.2d at 686-87. *734But if the use of tax moneys to subsidize racetracks is prohibited, the subsidy program will be thwarted — unless the rule is to be that an earmarked tax, held to be enjoinable, can be replaced by a tax having a broader base and a suit against- the replacement in federal court would be blocked by the Tax Injunction Act. This would inject the federal courts deeply into the design of federal-injunction-proof state taxes. It is another reason not to distort language by calling the casino tax a fee.

It’s true that the plaintiffs are not seeking to enjoin the casino tax in the narrow sense of “enjoin.” The money is being collected from the casinos for intended payment to the racetracks; it is being held in escrow pending the outcome of this appeal; it will be paid to them if they prevail — but only if they prevail. A constructive trust, however, is an equitable remedy, just like an injunction. Bontkowski v. Smith, 305 F.3d 757, 761 (7th Cir.2002); Beatty v. Guggenheim Exploration Co., 225 N.Y. 380, 122 N.E. 378, 380 (1919) (Cardozo, J.); 1 Dan B. Dobbs, Law of Remedies § 4.3(2), pp. 589-90 (2d ed.1993). If allowed in cases in which an injunction would be unlawful, a constructive trust in favor of the taxpayers would defeat the purpose of the Tax Injunction Act as effectively as an injunction would. As we explained earlier, a constructive trust gives the tax money back to the taxpayers; the money goes in a circle. And so the Second Circuit has invalidated in the name of the Tax Anti-Injunction Act, 26 U.S.C. § 7421(a) — the counterpart, in federal taxation, to the Tax Injunction Act — the imposition of a constructive trust on moneys that would otherwise have been used to satisfy federal tax liabilities. SEC v. Credit Bancorp, Ltd., 297 F.3d 127, 137-38 (2d Cir.2002).

Other forms of equitable relief have been held to be forbidden by the Tax Injunction Act when, even though no equitable relief was sought against the state itself, the relief sought would have indirectly but substantially impeded state tax collection. In Sipe v. Amerada Hess Corp., 689 F.2d 396, 403-04 (3d Cir.1982), for example, the plaintiffs sought to enjoin their employers from deducting unemployment taxes from their paychecks. And in RTC Commercial Assets Trust 1995-NP3-1 v. Phoenix Bond & Indemnity Co., supra, 169 F.3d at 454-56, the plaintiff sought a declaration that a tax certificate that the private defendant had purchased at a tax sale was invalid. See also Blangeres v. Burlington Northern, Inc., 872 F.2d 327, 328 (9th Cir.1989) (per curiam); cf. California v. Grace Brethren Church, 457 U.S. 393, 407-11, 102 S.Ct. 2498, 73 L.Ed.2d 93 (1982); Wright v. Pappas, 256 F.3d 635 (7th Cir.2001).

There is one last point to consider. The Tax Injunction Act bars federal equitable relief only if the plaintiffs have available to them a state remedy that is “plain, speedy and efficient.” 28 U.S.C. § 1341; see, e.g., Rosewell v. LaSalle Nat'l Bank, supra, 450 U.S. at 512-15, 101 S.Ct. 1221. There is such a remedy in this case; the casinos can ask an Illinois state court to impose a constructive trust on the tax receipts. See Village of Itasca v. Village of Lisle, 352 Ill.App.3d 847, 288 Ill.Dec. 35, 817 N.E.2d 160, 170 (2004); Selmaville Community Consolidated School Dist. No. 10 v. Salem Elementary School Dist. No. Ill. 96 Ill.App.3d 1062, 52 Ill.Dec. 224, 421 N.E.2d 1087, 1091 (1981). Whether they can seek a refund of the taxes they paid is less clear, because it is unclear whether the refund statute cited by the parties— the State Officers and Employees Money Disposition Act, 30 ILCS 230/2a, the statutory basis for the casinos’ claims in Empress Casino Joliet Corp. v. Giannoulias, supra, 324 Ill.Dec. 491, 896 N.E .2d at *735283 — authorizes the recovery of tax money that has already been disbursed. But if the unlawfulness can be traced to the racetracks, the casinos can seek damages from them. The Tax Injunction Act does not bar federal monetary relief. What the federal courts must not do is freeze the state’s tax moneys by imposition of a constructive trust.

The judgment of the district court is affirmed, but the temporary restraining order against releasing money from the escrow is extended for 30 days from the date of this decision to enable the plaintiffs to ask our Circuit Justice to continue the order pending the casinos’ petitioning the Supreme Court for certiorari.

Affirmed.