Obamacare

Roberts' Rules of Meddling

Calling a regulation a tax does not make it any less intrusive.

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Last week supporters and opponents of the Patient Protection and Affordable Care Act anxiously awaited the Supreme Court's ruling on the law's individual health insurance mandate. Imagine their surprise when the Court announced, in a majority opinion by Chief Justice John Roberts, that there is no individual health insurance mandate.

Rather than a "penalty" imposed on anyone who "fails to comply" with the "requirement to maintain minimum essential coverage," which is how the law itself describes the policy, Roberts perceived a "tax" that hinges on whether one follows the government's totally nonmandatory guidelines regarding health insurance. This implausible relabeling of reality was Roberts' desperate attempt to uphold the provision formerly known as a mandate without endorsing a boundless view of Congress' power to regulate interstate commerce. Instead he endorsed a boundless view of Congress' tax power that could prove even more dangerous to liberty.

During the 2009 debate over the health care law, President Obama insisted that the "shared responsibility payment" assessed on Americans who fail to obtain government-approved medical coverage is not a tax. "I absolutely reject that notion," he told ABC's George Stephanopoulos that September. "For us to say that you've got to take a responsibility to get health insurance is absolutely not a tax increase." 

After the law was enacted and challenged in court, the Obama administration changed its tune, arguing that the mandate is a legitimate exercise of the power to "lay and collect taxes." That claim, which no court accepted until last week, contradicted the language of the statute and statements by members of Congress.

It even contradicted another argument the administration's lawyers were making in the same case. The Anti-Injunction Act bars lawsuits "for the purpose of restraining the assessment or collection of any tax." That meant that if the "shared responsibility payment" were deemed a tax, its opponents would not be able to challenge it until 2014, when it was scheduled to take effect. Preferring a quicker resolution, the Obama administration insisted that the payment, which it was simultaneously defending as a tax, was not a tax.

Roberts swallowed and regurgitated all of that illogic because, unlike the four dissenting justices, he was not prepared to overturn the health care law but, like them, could not accept the notion that forcing people to buy stuff counts as regulating interstate commerce. He warned that "allowing Congress to justify federal regulation by pointing to the effect of inaction on commerce would bring countless decisions an individual could potentially make within the scope of federal regulation and—under the Government's theory—empower Congress to make those decisions for him."

But recasting regulation as taxation only magnifies this danger. Under the government's view of the Commerce Clause, Roberts worried, Congress could order Americans to buy vegetables, citing the impact that poor diet has on health care costs. Under Roberts' view of the tax power, Congress could do much the same thing, imposing a levy on people who fail to buy vegetables. It would not even have to allege a "substantial effect" on interstate commerce. Indeed, Roberts said "the breadth of Congress's power to tax is greater than its power to regulate commerce."

By way of reassurance, Roberts added that the former approach "leaves an individual with a lawful choice to do or not do a certain act, so long as he is willing to pay a tax levied on that choice." People who decide not to pay a tax, of course, can get into plenty of legal trouble, including criminal prosecution as well as liens and forfeiture.

For political reasons, Congress barred the IRS from using those scary remedies to extract the "shared responsibility payment." The insurance mandate was controversial enough without raising the prospect of taking people's homes or throwing them in prison if they failed to obey it. Future "tax" legislation aimed at getting Americans to behave as members of Congress think they should may not be so gentle.

Jacob Sullum is a senior editor at Reason and a nationally syndicated columnist. Follow him on Twitter.

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  1. It’s okay because the Drexel Furniture decision will save us!

    You know… if future courts include it in their decisions…

    1. Hasn’t that been overturned since then?

  2. Taxes are very unpopular and can readily be removed at a later date by the same or newly elected politicians.

    So unpopular that Obama dare not use a tax increase as part of any new program. So, while I do not agree with Robert’s decision I see it as a partial positive (glass half full). Even if people were ok to go along with a broccoli law, if it raised taxes they would be against it so I don’t see it as being as dangerous as Sullum.

    1. Sullum isn’t dangerous.

    2. I believe your point would be valid if our economy were in better shape. Unfortunately we not only have a lot of people out of work, we have a lot of people underemployed. This has greatly shrunk the pool of middle class taxpayers who would ordinarily complain about the taxes in Obamacare.

      1. I believe your point would be valid if our economy were in better shape. Unfortunately we not only have a lot of people out of work, we have a lot of people underemployed. This has greatly shrunk the pool of middle class taxpayers who would ordinarily complain about pay the taxes in Obamacare.

    3. So unpopular that Obama dare not use a tax increase as part of any new program.

      They don’t have to call taxes taxes any more. They can call them anything they like now.

  3. Is Sullum on meth? He keeps such odd hours

    1. While he sleeps, his beard types furiously

  4. I really don’t see what’s new about this. People have been saying for years that Congress can just enact taxes to get people to do or not do stuff. And if the tax can in any way be conceived as an indirect one, it doesn’t have to be apportioned among the states.

    Roberts was right, of course. This is a tax. If it were a penalty, you would have due process rights against it; you could plead “not guilty”. Just because its enactors denied it was a tax should make no difference; everyone either saw thru that or should’ve. As to the anti-injunction business, those who were challenging it got the benefit of its not being a tax and hence getting it adjudicated early, so there’s nothing to be gained by trying to gainsay that now. They could still take it to court when it’s due if other things about the manner of its enactment or its collection are alleged to be improper, so this way the opponents are getting 2 bites of the apple.

    1. If it is a tax, then the Supreme Court violated the law by judging on it. The Supreme Court cannot rule on a tax until it has actually been collected.

  5. After the law was enacted and challenged in court, the Obama administration changed its tune, arguing that the mandate is a legitimate exercise of the power to “lay and collect taxes.” That claim, which no court accepted until last week, contradicted the language of the statute and statements by members of Congress.

  6. Taxes are very unpopular and but can readily be removed raised or added at a later date by the same or newly elected politicians.

    1. “The income tax? C’mon! It’s ONLY 1%!”

  7. A big problem as I see it is now that this decision has come down, it will be a long while before it could possibly be overturned. If Justice “King Solomon” Roberts really had to hem and haw to get this decision, no way he reverses it in 2 years when private individuals may try to challenge the mandate. We would have to wait for a new court and new chief justice.

    1. It will never be overturned. I pay thousands more every year in taxes than people who have one, two, even three kids. I pay thousands more every year for not being in school. I pay a lot of taxes for not having done anything. It’s all part of keeping the countries coffers filled. Neither political party will remove any of this, because it goes directly into their pockets, both literally and figuratively.

  8. Anybody that sees this decision as anything other than an disastrous abomination is a fucking idiot.

  9. People who decide not to pay a tax, of course, can get into plenty of legal trouble, including criminal prosecution as well as liens and forfeiture.

    For political reasons, Congress barred the IRS from using those scary remedies to extract the “shared responsibility payment.”

    But how do you separate that tax out from the rest of your income taxes? Not paying that tax just leads to a condition of “failure to pay income taxes.” Wouldn’t that trigger all the scary IRS tactics?

  10. The Supreme Kangaro oCourt is a joke!
    http://www.Way-Anon.tk

  11. Feck this worthless punk. He should be arrested for treason.

  12. Because yuck fou! That’s why

  13. “shared responsibility payment”
    I hadn’t heard this term yet. It embodies the absurdity quite well.

  14. What is interesting is that the tax for not buying insurance is actually a regressive tax – in the sense that it charges lower income earners a higher percentage of their income than higher income earners. (with the exception of those whose income is so low that they are exempt).

    The penalty, I mean tax, is the higher of either:

    – 1% of the person’s taxable income
    – Flat fee of $95

    By 2016, these amounts gradually increase to:

    – 2.5% of the person’s taxable income
    – Flat fee of $695

    I believe there is also a maximum amount for the penalty/tax which will be tied to the cost of insurance in the “exchanges”.

    In cases where they take a percentage of the person’s income, this is akin to what the government has already long been doing with income and payroll taxes. But the flat fee for lower income earners seems more like a head tax.

    1. On paper it is, but as has been said, depending on your income level, you can receive vouchers. No one knows what these are, so it’s a bit premature to say lower income people will be paying more.

      1. Pippers

        The vouchers are for low income people who purchase health insurance, aren’t they? My post was referring to the penalty/tax levied on those who don’t.

  15. It seems to me that the 2.5% part is constitutional, if construed as a tax, but the flat fee part might not be.

    Article 1, section 9 of the Constitution states: “No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken”.

    The 16th amendment exempted income taxes from this clause. But an income tax is a percentage of a specified base of income. A head tax is different: it isn’t a percentage of a person’s income, and could be applied even to people with no income.

    I don’t think the government has the authority to impose a head tax, at least not without complying with article 1 section 9. If they had this power it could open the door to a variety of abuses. They could, for example, impose a $1,000 tax on all citizens ? and then prosecute homeless people with no income for tax evasion.*

    So what are the limits on the power to tax? Tariffs and excise taxes are required to be “uniform throughout the United States” under the Tax and Spend Clause, and there is article 1 section 9 cited above. These limitations on tax power don’t seem fully adequate to me, but they are better than nothing. Beyond those clauses from Article 1 of the Constitution, are there any other limits?

    * – The PPACA doesn’t do this: people with no income are exempt from any taxes/penalties for being uninsured. The point is with unlimited head tax power, a future government could theoretically do it.

  16. Well, regarding the tax versus penalty thing, I see it as 6 of one or half a dozen of the other.

    The problem is the mandatory nature of it. And the real problem is that the mandatory nature is piled on mandatory and mandatory mandates that does everything to support the status quo of ever rising pricing and ever diminishing effectiveness.
    If the law was you have to take responsiblity for your own healthcare, that would be fine. But it says you have to buy insurance, from licensed (restrained choice) that offer “polices” that are laid out in detail as to what is covered (birth control pills, sex change operations, ad infinitum). So, as usual with government, no real thought to keeping prices low (Oh LOTS of lip serivce) and inducing real competition is made and allowing real choice for say low cost catastrophic coverage. For example, many states prevent home births with midwives or prevent prescription from being written by nurses.
    In my view the law freezes the way we do things in place, which demonstratibly is high cost and low effectivness.

    1. I want them to give me a vajayjay and one boob while I take my birth control pills

  17. I’ve always thought that, constitutionally, the tax justification was weaker than the commerce justification. The Constitution doesn’t give Congress universal taxing authority, but it enumerates specific types of taxes that Congress can levy: duties and imposts (commonly called tariffs), and excises (taxes on specific goods) (Article I, Section 8) and, since the passage of the 16th amendment, income taxes. Any other tax would come under the “direct tax” category, which must be levied in proportion to population (Article I, Section 9).

    As Jacob Sullum notes, the expansive view of the taxing authority gives the government essentially unlimited power. If the government can tax people who don’t have “adequate” health insurance, it can also tax people who have swimming pools, or people who have houses that are too large or too small, or people who rent rather than buy housing, or people go to restaurants, or nearly anything else.

    I suppose even the Roberts view would not allow taxing people who read magazines, based on First Amendment considerations, but I suppose it could tax people who own televisions, or computers.

  18. Logically the tax argument makes sense

    “You may levy an income tax”

    That’s really all the 16th says.
    This means of course that you can levy a tax and exempt certain things (which is really the act of not-taxing). It also does mean that you can levy income taxes based on behavior, because that isn’t specifically barred in the language. It’s a tiny stretch, but it isn’t barred in the language, so I buy it. So it would seem constitutional according to the 16th

    However, isn’t it the same as a penalty? It really isn’t any different from a civil penalty. This matters, because the government can’t get away with something by simply calling it something else. Anybody know any precedents on that general concept?

    Now, if we accept that it is a civil penalty, so what? At first it wouldn’t seem to matter much, since the federal government has plenty of civil violations and respective penalties on the books. However, this understanding of it brings back tghe commerce clause point. All the penalties on the books, for the most part, involve interstate commerce.

    But then, the it’s-a-penalty idea confuses me, too. If we do assume that, then why isnt every exemption in the tax code also a penalty? Because exempting something, that is, NOT taxing it (as part of your income), is the same thing as taxing everyone else for engaging in the opposite behavior. So… is there a way to understand it as a one-way thing? Am I imagining this last logic problem?

    Anybody know any relative precedents?

    1. no, you know what? There is a difference. An exemption is an exemption. You are allowed to not be taxed whatever it is you spent money that is an exemption. That’s not the same thing as taxing everyone else for not buying whatever thing (or spending money on whatever, like a donation), because everyone else is already taxed in the first place, their whole income too. With the exemption only the money you spent on whatever is exempted.

      So the health insurance penalty is definitely not like an exemption. And you ask me it is very much like a civil penalty.

      Like I said, I know of no precedent explicitly saying the government can’t get away with something by calling it something else, but it should be an obvious point of law. You couldn’t ban certain kinds of speech by calling whatever laws did that “Offensiveness guidelines” or something.

      Then again, I don’t know enough of the details of the nature of civil penalties to say that this supposed “tax” is indeed effectively the same. I’m just saying it definitely sounds pretty similar.

      Anybody got more knowledge than I?

    2. *more knowlegde than I, on this matter, that they could share?

  19. Since the ACA (un-ACA) will certainly now be repealed…
    My health care plan:
    Lower the Schedule A threshold for medical deductions from 7.5% of AGI down to 1%. With this change of one single number millions of people would have the ability to afford medical insurance while avoiding any need for tens of thousands of new regulations and bureaucrats at a multi-trillion dollar cost. But simplicity is not good enough for a power mad government determined to destroy an industry and the liberty of the population for no significant benefit.

  20. Roberts’ rationale on the matter was goodthink.

    I expect some of you will need to be sent to Hope Camps.

    By the way, since tax bills no longer need to originate in the House like the Constitution says, states no longer need to abide by Supreme Court decisions since the Supremacy Clause, like the 10th Amendment, both exists and doesn’t exist, depending on how many living cats are in the area.

  21. Suppose the majority party were to decide that the country would benefit from a better understanding of the non-white American experience. One way to obtain those needed insights would be for all Americans to read a book about that experience. From that premise the majority might write a law mandating that all Americans purchase “Dreams of My Father.” To insure compliance, this majority could require a penalty–let’s stipulate the penalty to be $695–for anyone not purchasing said book. (Add, just for the sake of argument, that its author would sign the legislation.)

    Would Chief Justice Roberts find this a legitimate exercise of the authority to tax and spend?

  22. If it’s a tax, then the Constitutional limitations on the taxing power apply. Direct taxes must be apportioned, Indirect taxes must be uniform.
    Since the individual mandate “tax” is obviously Direct, it is illegal unless apportioned, which means it will never be applied.

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