June 28th, 2012

This is how you get from a mandate to a tax, according to SCOTUS

I’ve been wondering what sort of reasoning the Court used to justify calling the mandate a tax, despite the fact that it the people who designed it and passed it explicitly claimed it was not a tax.

Here’s the text of the ruling. From the majority opinion:

“[T]he rule is settled that as between two possible interpretations of a statute, by one of which it would be unconstitutional and by the other valid, our plain duty is to adopt that which will save the Act.” Blodgett v. Holden, 275 U. S. 142, 148 (1927) (concurring opinion).

The most straightforward reading of the mandate is that it commands individuals to purchase insurance. After all, it states that individuals “shall” maintain health insurance. 26 U. S. C. §5000A(a). Congress thought it could enact such a command under the Commerce Clause, and the Government primarily defended the law on that basis. But, for the reasons explained above, the Commerce Clause does not give Congress that power. Under our precedent, it is therefore necessary to ask whether the Government’s alternative reading of the statute—that it only imposes a tax on those without insurance—is a reasonable one.

Under the mandate, if an individual does not maintain health insurance, the only consequence is that he must make an additional payment to the IRS when he pays his taxes. That, according to the Government, means the mandate can be regarded as establishing a condition—not owning health insurance—that triggers a tax—the required payment to the IRS. Under that theory, the mandate is not a legal command to buy insurance. Rather, it makes going without insurance just another thing the Government taxes, like buying gasoline or earning income. And if the mandate is in effect just a tax hike on certain taxpayers who do not have health insurance, it may be within Congress’s constitutional power to tax.

The question is not whether that is the most natural interpretation of the mandate, but only whether it is a “fairly possible” one. Crowell v. Benson, 285 U. S. 22, 62 (1932) . As we have explained, “every reasonable construction must be resorted to, in order to save a statute from unconstitutionality.”…

The exaction the Affordable Care Act imposes on those without health insurance looks like a tax in many respects. The “[s]hared responsibility payment,” as the statute entitles it, is paid into the Treasury by “taxpayer[s]” when they file their tax returns. 26 U. S. C. §5000A(b). It does not apply to individuals who do not pay federal income taxes because their household income is less than the filing threshold in the Internal Revenue Code. §5000A(e)(2). For taxpayers who do owe the payment, its amount is determined by such familiar factors as taxable income, number of dependents, and joint filing status. §§5000A(b)(3), (c)(2), (c)(4). The requirement to pay is found in the Internal Revenue Code and enforced by the IRS, which—as we previously explained—must assess and collect it “in the same manner as taxes.” Supra, at 13–14. This process yields the essential feature of any tax: it produces at least some revenue for the Government…

That §5000A seeks to shape decisions about whether to buy health insurance does not mean that it cannot be a valid exercise of the taxing power.

In distinguishing penalties from taxes, this Court has explained that “if the concept of penalty means anything, it means punishment for an unlawful act or omission.”…While the individual mandate clearly aims to induce the purchase of health insurance, it need not be read to declare that failing to do so is unlawful. Neither the Act nor any other law attaches negative legal consequences to not buying health insurance, beyond requiring a payment to the IRS.

39 Responses to “This is how you get from a mandate to a tax, according to SCOTUS”

  1. jeff Says:

    Not to repeat what has already been said, but justifying the mandate by calling it a tax is legislating from the bench; something the right asserts that leftist judges always do. If Roberts made all of the arguments he makes in his opinion, but concluded that “while we could otherwise justify the Act if the funding mandate was a tax, because it was described and passed on the basis that it was, in fact, not a tax, then it cannot stand as is.”

    Instead, Roberts went ahead and unilaterally redefined the entire foundation and intention of the legislation. This is judicial activism at its worst. Now the legal precedent that stands is that the Supreme Court can parachute into the legislators’ heads and re-jigger legislation that is Constitutionally questionable to make it Constitutional. In a single decision he has blended the legislature with the judiciary in one of the most contentious issues in modern times. I’m less upset about the outcome and more upset, once again, at the process.

  2. Mrs Whatsit Says:

    “Rather, it makes going without insurance just another thing the Government taxes, like buying gasoline or earning income.” Fascinating that the question whether we really can be taxed for “going without” something rather than “buying” or “earning” something was simply . . . well, skipped.

    And what a weird tax to impose! It will be paid not just by those who choose not to buy health insurance, but also by those who can’t afford it (and while the well-paid SCt may not think that a payment between $695 and $2085 — presumably not subject to tax credits, deductions or other protections — is significant, those of us who’ve lived closer to the bone might beg to disagree). Meanwhile, those well-off enough to have good insurance, through a job or their own resources, go tax-free. Even if the tax is scaled to income, it’s bizarrely regressive to tax the have-nots for their inability to subsidize the haves.

    I agree with you, Neo, that the real victory here is that the Commerce Clause was not expanded beyond all reason (by only one vote! So close, too close.) It may be that the sheer weirdness of this tax that wasn’t a tax when it was enacted, but magically became a tax thereafter, will become a second victory by driving energy to repeal the ACA. Nobody likes being taxed at any time, and especially not when the tax was imposed by trickery, deceit and such general incompetence.

  3. I R A Darth Aggie Says:

    Yeah, but this hands Romney a great sledgehammer on which to beat Teh Won.

    All he has to do is replay Teh Won saying “I won’t raise taxes on people earning less than $200K/year” while pointing directly at this tax, the heart of Teh Won’s first term.

  4. Artfldgr Says:

    Excuse me, i have to whistle as i pass this graveyard

  5. kolnai Says:

    What a steaming pile of rot that is. Kennedy et al. destroyed it in their dissent. Destroyed it (admittedly not hard to do).

    Roberts rested his case against calling coercing activity from inactivity “commerce” on the fact that it erases limited government. Then he says that it is totally fine to coerce activity from inactivity if only you call it a “tax.”

    Why? Because, as Kennedy et al. pointed out, Roberts has decided to read a TEENSY-WEENSY coercive penalty as a “tax,” by the new constitutional interpretive principle of TEENSY-WEENSINESS.

    “Never – NEVER” – say the dissenters – has the Court read a tax in this way.

    So remember kiddies, the new phrase for dictatorial power is not “regulating commerce” but a “teensy-weensy tax.”

  6. Bob from Virginia Says:

    $1,500,000 in donations to the Romney campaign since the announcement.

  7. Artfldgr Says:

    Did Roberts Give in to Obama’s Bullying?

    http://www.breitbart.com/Big-Government/2012/06/28/Did-Roberts-Give-in-to-Obama-Bullying

  8. Artfldgr Says:

    Gene Sharp: A dictator’s worst nightmare
    http://www.cnn.com/2012/06/23/world/gene-sharp-revolutionary/

    His practical manual on how to overthrow dictatorships, “From Dictatorship to Democracy,” has spread like a virus since he wrote it 20 years ago and has been translated by activists into more than 30 languages.

    He has also listed “198 Methods of Nonviolent Action” — powerful, sometimes surprising, ways to tear power from the hands of regimes. Examples of their use by demonstrators and revolutionaries pop up over and over again.

    In Ukraine, during the 2004 Orange Revolution that propelled opposition leader Viktor Yushchenko to electoral triumph, hundreds of thousands of demonstrators turned Kiev’s Independence Square into a sea of orange flags — the color of Yuschenko’s campaign.

    I have tried…
    but no one saw the power in what i offered
    singing? a singing revolution?
    well…

    ya’ll might want to pay attention to people who have dealt with worse when you realize your collective experience on such things is: Nil

    sharp payed attention

    Nos. 20, 37 and 47 on Sharp’s list: Prayer and worship. Singing. Assembling to protest.

    His ideas of revolution are based on an elegantly simple premise: No regime, not even the most brutally authoritarian, can survive without the support of its people. So, Sharp proposes, take it away.

    Nonviolent action, he says, can eat away at a regime’s pillars of power like termites in a tree. Eventually, the whole thing collapses.

    in Norway, Sharp also began to see the flaw in his work: He didn’t understand political power.

    maybe he can breach those that dont get it?

    “That’s a great advantage — to know what you don’t know,” he says now. “‘You have a chance of learning — if you want to and you’re not arrogant.”

    right now. most are too busy trying to make up something to fill in and sound great, and NOT admit they don’t know and find answers… ‘

  9. Artfldgr Says:

    What gives a government — even a repressive regime — the power to rule? The answer, he realized, was people’s belief in its power. Even dictatorships require the cooperation and obedience of the people they rule to stay in charge.

    So, he reasoned, if you can identify the sources of a government’s power — people working in civil service, police and judges, even the army — then you know what a dictatorship depends on for its existence.

  10. Parker Says:

    Should BHO be reelected & dems maintain control of the senate; the repub house is going to have to hang tough and dig in its heels. Otherwise, we have a ‘tax’ for not buying healthy vegetables, a ‘tax’ for not buying a Volt, a ‘tax’ for exhaling CO2, a ‘tax’ for buying too much wine, a ‘tax’ for buying a burger with the works, and so forth.

    The more I learn about this atrocious decision, the more enraged I become. I rarely donate to presidential candidates simply because except for Reagan I’ve never had a candidate I could enthusiastically support, but I’m going to donate to Romney and the RNC. Even some of us libertarians can see this is not a choice between a lesser of 2 evils, its a choice between a great evil and fumbling mortals.

  11. Stacy Says:

    The mandate was presented to SCOTUS as a tax. Only politically was it deemed not a tax.

  12. kolnai Says:

    Stacy -

    Be that as it may, it is not a tax.

    It was not a tax in the legislative history. It was not a tax as written in the law itself. It did not even appear in the section concerning revenues (which is what the Court has held numerous times is what a tax is for, as opposed to a penalty). And, finally, it functions exactly like a penalty.

    None of the lower courts bought the tax argument, for all of those reasons. An additional consideration was the disturbing fact that to re-write the law to accord with the tax argument would ratify legislative fraud as proper congressional behavior in a regime supposedly dependent first and foremost on public deliberation with at least a pretense to honesty.

    Goodbye to all that. Fraud is now Constitutionally incentivized. As is judicial activism in the sense of micromanaging and re-writing laws.

    The most transparent administration in history has managed to get legislative fraud constitutionalized. I’m not sure what your point is, but if you mean to say that this is how the Court, the Constitution, and Congress should operate – noble lies for the rubes, semantics for the elites – then one can see why even Anthony Kennedy found it necessary to vigorously dissent.

  13. neo-neocon Says:

    Stacy: but if you read Roberts’ opinion, you’ll find he does some rather astounding mental gymnastics. In order for the Court to have standing to hear the suit—because if it were a tax, it could not be heard until the “tax” kicks in, which I believe wouldn’t be till 2014—the Court had to consider it not a tax, which they did. They determined that for that purpose they would go by what Congress called it. However, for the purpose of deciding on its constitutionality, they would switch hats and call it a tax and therefore constitutional.

    Sort of like light is sometimes a particle and sometimes a wave. Except this isn’t physics.

  14. T Says:

    I am concerned by the appearance of this decision; it looks as though Justice Roberts succumbed to political pressure. I am especially concerned in light of David Bernsteins essay (at Volokh Conspiracy) that It appears that Scalia’s dissent was actually the original majority opinion.

    Having said that, I must also wonder if Justice Roberts has, with this decision, injected a political “Stuxnet” virus into America’s inexorable leftward evolution since FDR.

    Like a queen’s sacrifice in chess, there are certain elements to consider. The mandate was unanimously overruled as a legal mandate under the commerce clause. This is a big conservative win. It has been overshadowed in the media by the retention of the law, but the mandate was ruled UNconstitutional. Something tells me that this will come back to haunt progressives.

    Furthermore, I recognized this afternoon that this puts Obama in the position of being a buffoon or a liar. He defended the mandate as not a tax, but it has unequivocally been ruled such by SCOTUS (former constitutional law prof knows not whereof he speaks; buffoon). Now as he chooses to continue moving forward with ACA he must adopt it as a tax increase on Americans making less than $250k (liar; see also James Taranto).

    Now, Obamacare sits as the single largest tax increase on the middle class in American history and joins a long line of broken Obama promises starting with his promises to accept public funding and close Gitmo.

    Given the fact that 59% of Americans wanted to see Obamacare repealed in its entirety, I ask this question that I have posed before:

    47% of voters rejected Obama before he had any record. Has Obama convinced at least 4% of those voting for him to change their mind?

  15. kolnai Says:

    Right, neo, forgot about that one. Good metaphor too.

    And I will add that the only possible kind of tax it can be is a direct tax, and this must be apportioned to the states in proportion with population. Thus, as Ilya Somin pointed out, even if it is a tax it is not a constitutionally cognizable one, for it is not an impost, tariff, duty, excise, or income tax, and it is not apportioned by population like a direct tax.

    So if it is a tax it is not a tax. Quantum constitutionalism at its finest (no disrespect to quantum physics intended).

    Roberts just brushed off the question with a “lick-and-a-promise,” as the dissenters put it.

  16. rickl Says:

    Artfldgr Says:
    June 28th, 2012 at 3:38 pm

    Excuse me, i have to whistle as i pass this graveyard

    I’d like to join you, except I never could whistle.

  17. AHLondon Says:

    I agree that Roberts should have joined the dissenters, so don’t take the following as an endorsement of his opinion, but things aren’t as bad as they seem. Back during the Obamacare debates, the Administration refused to call the mandate a tax because then it wouldn’t have passed. Americans, as a general rule, hate taxes. Framing an issue as a tax is often a political loser. Roberts basically told Congress, it doesn’t matter what you say, we are going to call a tax a tax, a spade a spade. This is not welcome news for progressives. They have lost momentum under the Commerce Clause and now have to admit that they tax people to get the behavior they want.

  18. Shouting Thomas Says:

    Obama won.

    I’m not very good at predictions, but I think Obama will win re-election.

    And, now, the healthcare issue is so obtuse and twisted that it really cannot be understood by the public… thus rendering it of no consequence.

    Romney will fail in any attempt to make sense out of all this manuevering.

  19. Artfldgr Says:

    No, it isnt physics. Maybe metaphysics

    but i say its more Saturday night life

    Dems: Its not a floor wax, its a desert topping!!!
    REpublicans, its not a desert topping, its a Floor wax!!!

    in come the supreme court:
    Hey, hey, hey, calm down, you two. New Shimmer is both a floor wax and a dessert topping! Here, I’ll spray some on your mop.. [ sprays Shimmer onto mop ] ..and some on your butterscotch pudding. [ sprays Shimmer onto pudding ]

    Dems and Republicans smile

    in the back ground you can hear the dems say:
    New Shimmer, for the greatest shine you ever tasted!

    [speed speaker telling you all the ways it will make you sick while it cures you]

  20. E.M.H. Says:

    AHLondon’s right. Once the dust settled, I believe that the socialist advocates are going to look at the decision and realize that they may have gotten the program, but at a high cost that may result in its elimination.

    Put the ACA under the Commerce Clause, and bye-bye any notion of limited government. Put it where it is and as bad as it is, it’s ultimately undoable. It’s just up to the electorate to get fiscally sane and right minded people into office.

    Just because it’s more work doesn’t mean all is lost. Now that they’re forced to call it a tax, they can’t handwave past the fact that it’s one of the worst gut-shots to the American economy, ever. If socialists want to take the victory, they have to take the court decision telling them not to disguise it as something else. They have no choice. And that can be used as ammunition to the smart conservative campaigner.

    No, it’s not a win. There’s no way it can be called a win. Obama’s cadre got its program. But the court limited the win, set boundaries on it, and forced the socialists to stop lying about what the ACA is. Conservatives just have to settle down, realize that, and use it properly. The real work comes now, for the upcoming elections.

  21. kolnai Says:

    AHLondon -

    I hear you, but the problem is that there is no requirement that a mandate be presented as a tax. How could there be? The Court just ruled that a mandate presented entirely as a penalty is really a tax.

    Hence my remarks about constitutionalizing and incentivizing legislative fraud.

    Basically, the purveyors can call it whatever they want, sell it however they want, so long as it assesses money from people who don’t do what they’re commanded to do. They’ll even let them slide on the Anti-Injunction Act so they can affirm such “taxes.”

    The Court has essentially just created a new kind of tax, a quantum tax (to stick with neo’s metaphor): the “Non-tax Tax.” When being debated and written and sold and observed by the public, it is a non-tax; when observed by the Court it retains a brief non-tax appearance for purposes of the Anti-Injunction Act, which is the “slit” opening up to the Court, and then, at last, it transforms into a tax.

    Aristotle said law was intellect purged of passion. He called the converse tyranny. We’re closer now to the latter. Whatever the present power-wielders desire to see and project, so it shall be.

  22. neo-neocon Says:

    Shouting Thomas: Yes, the Democrats have been counting on the fact that it’s so convoluted that people won’t understand it. And it is complicated and hard to understand.

    But people already don’t like Obamacare. Now they know the courts won’t save them. I don’t see how this makes Obamacare more popular. It deprives people of the hope that they can sit out the election and everything will be okay because the courts will fix it. Now they know if they want it repealed they have to vote for Republicans.

  23. Don Carlos Says:

    The truly terrible thing about the SCOTUS decision today is that it sets a terrible precedent. It does not in the long term matter whether Obamacare is repealed; the precedent stands, and will determine future Court decisions to uphold other mandates, aka taxes, that the Ruling Class may from time to time compose and impose. We will face an onslaught of mandates aka taxes, each of which must be legislatively repealed, otherwise will stand.

    It is madness to require a Constitutional Republic to swing from pillar to post, from dark to light. That one man accomplished this is remarkably remarkable.

  24. Parker Says:

    It can’t be a tax, the penalty for not engaging in the buying and selling of medical insurance originated in the Senate. All revenue provisions must, under the Constitution, originate in the House. If its a tax it does not pass the Constitutional sniff test. Smart pants Roberts has been allowed to glide over that sticking point. This needs to go back into the courts and dumped like a pile of steaming who know what back into SCOTUS’s lap.

  25. neo-neocon Says:

    Don Carlos: by “one man,” do you mean Obama, or John Roberts?

  26. Occam's Beard Says:

    I’d like to join you, except I never could whistle.

    Whistling is easy – you just put your lips together and blow.

    Kinda like this decision in that respect.

  27. J.J. formerly Jimmy J. Says:

    Legal manuevering takes too long. There’s an election coming and that is where the people can offer their opinion of this new tax. That is where all the effort must be focused. If you want to see Obamacare repealed, get out and do something about it. Donate, volunteer, debate, join a TEA Party group, etc. If your neighbors are against Obamacare, make sure they are registered to vote and make sure they vote. Now is not the time to be parsing Justice Roberts’ mental state or what this means down the road. Now is the time to get to work.

  28. rickl Says:

    I don’t believe that we can vote ourselves out of this.

    That particular box is now closed, and it’s time to open the next one.

  29. rickl Says:

    I had another comment, but I thought better of it. For now.

    Let me put it another way.

    We are now being ruled, not governed, by tyrants. What do rational, civilized, free people do when confronted by tyrants?

  30. texexec Says:

    “J.J. formerly Jimmy J. Says:
    June 28th, 2012 at 10:27 pm
    Legal manuevering takes too long. There’s an election coming and that is where the people can offer their opinion of this new tax. That is where all the effort must be focused. If you want to see Obamacare repealed, get out and do something about it. Donate, volunteer, debate, join a TEA Party group, etc. If your neighbors are against Obamacare, make sure they are registered to vote and make sure they vote. Now is not the time to be parsing Justice Roberts’ mental state or what this means down the road. Now is the time to get to work.”

    AMEN!! And I would point out that we should work hard to elect Republicans to the House and Senate as well as elect Romney.

    But DO support Romney, big time. People who read and comment here in this blog are smart and well enough informed to sometimes split their votes but most people don’t…they vote a straight party ticket with the party determined by whom they vote for for the presidency. If you work to get Romney elected you will also help get Republican senators and representatives elected also.

  31. texexec Says:

    Many commenters are saying that this ruling sets a bad precedent for using taxing power (which the federal government DOES have) to force people to do or not do things.

    Dammit, I’ve been harping for AGES that we should abolish income taxes and replace them with some kind of consumption tax. Then, if someone uses or consumes something, he or she pays a tax on it. The government would have a much harder time of using the tax code to make things happen that have nothing to do with paying the government’s expenses.

    And EVERYONE would pay taxes…based on what they consume of other peoples work and creativity and the planet’s resources.

    How about a constitutional amendment along these lines?

  32. parker Says:

    “I don’t believe that we can vote ourselves out of this. That particular box is now closed, and it’s time to open the next one.”

    My oh my you are a feisty firecracker rickl! I have many of the “next” boxes and the ability to create many more; but it is not time to lock and load, yet. And should I perceive that time is near I will not be posting comments on neoneocon. My lap top will be sleeping with catfish at the bottom of the Big Muddy and me & mine will be somewhere else where the drones do not except us. ;-) Be of good cheer. As Yogi once said, “It ain’t over until its over.”

    The lesson I learned from 30+ years in jiujitsu can be distilled into a simple slogan: The harder they come, the harder they fall. I thoroughly enjoy big, young guys attacking me with all their strength, speed, and determination.

    http://tinyurl.com/dn3d7x

  33. AHLondon Says:

    Kolnai, “no requirement that a mandate be presented as a tax. How could there be?” And that is why Roberts was too clever by half and should have ruled with the dissenters. I don’t agree with Roberts opinion, I just think it is not all doom and gloom. If the left tries to tell us something like this is not a tax again, we can call them on it. Why won’t we be overrun with new taxes? Because reps and senators want to keep their jobs. Progressives will be forced to concede, at least in the PR wars, that they are taxing us to control our behavior. This will be a hard sell. Ask the British. Texexec, exactly except no amendment required. Congress has the power to tax. Basically, as long as the tax is uniform, its a go. Passing said tax, well, that’s another matter.

  34. AHLondon Says:

    Hmmm. Parker you are right, it did originate in the Senate. Again Roberts was too clever. I wonder if we can go after the procedural problem now that it is declared a tax?

  35. AHLondon Says:

    Thinking through procedural issue, probably not. Once bill certified to Pres as duly passed by Congress, courts won’t supplant their judgment for the judgment of the certifier.

  36. Rob Says:

    It must be secretly gratifying to Romney that his healthcare plan was upheld by the SCOTUS, even though Obama stole it from him and he now has to disavow it.

  37. Don Carlos Says:

    Neo:
    “One man” means Roberts.
    Obama simply signs the bills, much like a dog signs fire hydrants. The design of the, ahem, Affordable Care Act was the product of thousands of hours of Progressive work, housed in a drawer until the time was right.

    Parker sounds as if he won’t lock and load until he is seized by the throat, when it will be too late.

  38. Don Carlos Says:

    Conn Carrol in today’s Washington Examiner endorses my view:

    http://washingtonexaminer.com/morning-examiner-chief-justice-john-souter/article/2500969

  39. neo-neocon Says:

    Rob: your ignorance of the law is profound. The case SCOTUS just decided is completely irrelevant to Romneycare. It only discusses the issue of what the FEDERAL GOVERNMENT can do under its enumerated powers, not what a STATE can do under its police powers. States have a great deal more leeway than the fed, and there is very little doubt that Romneycare is legal. Whether it’s good is another story. But yesterday’s case is irrelevant to either question.

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