Is the ACA's "Shared Responsibility Payment" a "Tax . . . Measured by Income"?

The Affordable Care Act's individual mandate penalty meets the bankcuptcy code.

If you thought the courts were done figuring out whether the financial penalty imposed under the Affordable Care Act on those who failed to obtain qualifying health insurance was a tax or a penalty, you were mistaken. Today, the U.S. Court of Appeals for the Sixth Circuit revisted that question for purposes of the federal bankruptcy code.

Chief Judge Sutton summarized the issue in In re: Juntoff as follows:

In passing the Affordable Care Act, Congress created a "Shared Responsibility Payment" for individuals who did not purchase qualifying individual health insurance plans. Congress eventually eliminated the Payment. That development did not end debates over whether the Payment is a tax or a penalty. At issue today is whether the Payment amounts to a "tax . . . measured by income" under the Bankruptcy Code's provisions for prioritizing the payment of some debts over others. We join the Third and Fourth Circuits in concluding that it is.

 

Comments

[Longtobefree]

Nope. Not a tax. Never was, never will be.
The supreme court has spoken.
End of story.
Definitely not a tax.

[defaultdotxbe]

Not a tax, but constitutional because Congress has the power to levy taxes.

[Davy C]

It really seems like if it's a tax, it's a direct tax and not an income tax. Which means it has to be apportioned. I know Roberts said otherwise. But it seems to me that when the Constitution says "Capitation, or other direct, Tax" that implies that there can be direct taxes which are *not* strict capitations. "Everyone has to pay this tax unless they do this thing" seems direct enough to me.

[defaultdotxbe]

Yeah that's why I find the court's ruling so confusing. Maybe I'm misunderstanding something (certainly not an improbable possibility) but it seems like they found its not a tax (likely to avoid restrictions on direct taxes) but also found that Congress has the power to do it under their authority to "lay and collect taxes," which, by definition, should make it a tax (and thus subject to apportionment as a direct tax)

[Ridgeway]

IIRC, the court found it to be an indirect tax (like an excise tax), and thus not subject to apportionment.