June 29th, 2012

The tax power is now the 800-pound gorilla in the room

It can do almost anything it wants to.

Rick Hills, an NYU law professor who appears to specialize in federalism (and does not appear to be a conservative), writes:

I am no friend of the Commerce Clause argument against the individual mandate’s constitutionality…But, in relying on the Taxing power, the Court has failed to offer a coherent purpose-driven reason for the result. It cannot be the case that the feds always can “encourage” people to undertake actions by taxing their inaction: Such a taxing power would render nonsense the basic idea that the enumeration presupposes something not enumerated.

So… what is the limit on the taxing power? Since Kahriger, the usual doctrine has been that the tax must generate revenue. But this test is patently unsatisfactory, because all taxes generate revenue if they are set just below the level at which they would completely prohibit a taxed activity. A tax on same-sex marriages of, say, $1,000 per marriage would presumably generate some revenue — but would it be a constitutional exercise of Congress’ enumerated powers? If so, then the idea of the enumeration is exploded, except as a formalistic obeisance to the text of Article I. Put another way, no sane framer would bother to enumerate powers if the only limit on the federal government’s taxing power is that the tax generate some revenue and that people who wish to avoid the tax can do so through either action or inaction.

So far as I can tell from an initial reading of the 5-vote majority, the Court offers no functional reason whatsoever for its analysis of the taxing power. Indeed, the Court insults our intelligence by describing the conventional analysis of taxation under its prior precedents as somehow “a functional approach” (page 35). Of course, there is nothing “functional” about its definition of the taxing power, if the only relevant factors are the power of a taxed individual to avoid action or inaction that is taxed. If the test is, as Chief Roberts describes it, paying the tax “may often be a reasonable financial decision,” then Congress will have fairly unlimited power to regulate any activity simply by imposing an exaction just short of what it would take to eliminate the activity altogether. If the only other limit is that Congress (or the IRS) cannot “penalize” persons who choose to pay the tax, by stigmatizing them as “outlaws” (page 38), then such a limit is worse than formalistic: It is not even consistent with the precedent (Doremus) upholding the Harrison Narcotics tax.

How is such a taxing power consistent with any sensible notion of enumerating powers? Why would any sane framer, whether Hamilton or Luther Martin, Federalist or Anti-Federalist, ever agree to such an arrangement? The Court does not say.

I’m not a law professor, but my sentiments exactly.

12 Responses to “The tax power is now the 800-pound gorilla in the room”

  1. Curtis Says:

    Put that in your pipe and smoke it, Chief Justice Roberts.

    I think it a case of temporary insanity. Not the “wohoo bleebidy shiz wop” insanity, but the insanity where your general reference points leave you.

    Roberts turned into super judge, duh duh duh.

    But it turned out as Carlos Mensa puts it dee dee dee.

  2. Artfldgr Says:

    As i said, he saved the image of the court, but destroyed it to do it.

    as long as they couch things under this, and so on, then nothing will rise up again to the level of scotus scrutiny….

  3. Don Carlos Says:

    I repeat part of what I said yesterday:

    “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.”

    Roberts and his coven have thrust a knife into the heart of the American Republic from which recovery will be impossible, except by the most extreme measures, which themselves are most unlikely to occur, This decision is momentous and monstrous.

    Ginsburg will resign before the election, and the Senate will confirm her ideologic replacement. 5-4 with Roberts on the losing side ain’t gonna happen. RIP

  4. J.J. formerly Jimmy J. Says:

    Some may be ready to wave the white flag. Not me.
    I just sent the following to all my e-mail correspondents:
    As you probably know, the Supreme Court upheld the constitutionality of the Affordable Care Act (ACA), known by many as Obamacare. The decision was close and the reasoning was, shall we say, tortured. What the Court did was to proclaim that the penalties for not buying mandated health insurance are actually taxes. They say buying of products cannot be mandated under the Commerce Clause or the Necessary and Proper Clause, but that citizens can be “taxed” for not buying insurance. Huh?

    But they have spoken! They have remanded the issue to the voters. If you do not want to be taxed in this way or to see thiskind of new tax invoked on the middle class, you definitely don’t like this law. Especially in the middle of what can best be described as economic malaise sliding toward recession/depression.

    There are three main arguments against the ACA. (There are many other undesirable parts in the 2700 pages, but time and space are limited.)
    1. It does nothing to slow the increase in health care prices.
    2. It increases uncertainty in the business world. Businesses, large and small, have no idea how this will affect them financially. They cannot plan ahead and this is contributing mightily to the economic malaise.
    3. It levies a new, unusual tax on everyone. You must either buy health insurance or pay a tax. What’s next? Will it be that you must either buy a home to live in or pay a tax? Can the government tax you for NOT doing something they think is good for you? Not if we, the people, do not consent………..not yet anyway.

    What is the remedy? We citizens must choose our government representatives very carefully. We must choose representatives that are opposed to this new and bizarre form of taxation. We must choose to vote for people who believe in limited government and more freedom for citizens. There is an election on November 6th. Get involved. Donate money, time, and effort to candidates of your choice. If your neighbors are opposed to the ACA, be sure they are registered to vote and that they cast their vote come Novemebr. Every vote is going to count. We are not serfs yet, but this election may determine whether we take another step on the road to serfdom.

    It isn’t over until the votes are counted in November. Be a happy warrior in the cause of repealing the ACA. I intend to be.

  5. gcotharn Says:

    If it is correct that Justice Roberts was attempting to save the image of the court, then it is ironically correct that he did grave damage to the court.

    An interesting aspect:
    if Justice Roberts truly did not believe it appropriate for the SCOTUS to be invalidating such significant and historic legislation during a hot election season … then it is also true that Justice Roberts proved that a big lie is easier to sell than a little lie. Justice Roberts is saying that it is okay for the SCOTUS to invalidate a minor legislative mistake, yet it is NOT OKAY for SCOTUS to invalidate a large legislative mistake. Which I analogize to a big lie succeeding … where a small lie would have failed; to a big legislative incompetence succeeding .. where a small legislative incompetence would have failed.

  6. Don Carlos Says:

    JJ:
    Exactly how does ACA repeal undo the extraordinary Supreme precedent of Roberts and the coven? We now face an avalanche of Bloombergisms: If you don’t do as I demand, I will tax yo’ ass.
    The ACA Ruling must be overturned, and that will require a new Chief Justice and new litigation. Not anytime soon.
    Bush I gave us Souter, Bush II, Roberts. Thank you both.

  7. Curtis Says:

    Well, the power to tax has been used and abused and it now seems ingrained in the American psyche that excessive taxation is repugnant. So much so, that Obamacare had to be packaged as a mandate/penalty and not a tax package.

    The people, man, the people.

  8. SteveBrooklineMA Says:

    I consider myself a libertarian, but I can’t get worked up about Roberts’ decision. He is right. The “mandate” is nothing more than a minor tax, indeed an adjustment to the federal income tax. Suppose the Feds increased income taxes by $750 and gave a $750 tax credit to those who have approved insurance plans. In effect, this is exactly the same as taxing people without insurance for $750. Surely the Feds have the power to increase income taxes and give tax credits. They do it all the time. That’s all this is.

    I am surprised that a law professor at a prestigious school like NYU would put forth that analysis without actually addressing Roberts’ points that make a distinction between a tax and a penalty. “First, for most Americans the amount due will be far less than the price of insurance, and, by statute, it can never be more. It may often be a reasonable financial decision to make the payment rather than purchase insurance, unlike the ‘prohibitory’ financial punishment in Drexel Furniture”. If the tax were in the ballpark of the cost of insurance, then there would be a Constitutional problem, as the government would be overstepping its power by disguising a harsh, prohibitive penalty as a tax. That’s not the case here.

    http://althouse.blogspot.com/2012/06/how-chief-justice-roberts-reenvisioned.html

  9. J.J. formerly Jimmy J. Says:

    Don Carlos asked, “Exactly how does ACA repeal undo the extraordinary Supreme precedent of Roberts and the coven? We now face an avalanche of Bloombergisms: If you don’t do as I demand, I will tax yo’ ass.”

    That seems to say that you believe the politicians can do as they wish. That they are not responsible to the citizens. I disagree. I believe that most Americans, armed with decent information, will favor electing representatives that are in favor of smaller governmment and lower taxes. If we don’t fight this in any way possible, the obamination of the ACA will be our legacy to our children and grandchildren. No one ever said it was going to be a rose garden or easy sledding. The issue is one of constant vigilance to prevent this kind of taxing activity by people who are supposed to represent us. The will of the people and all that. As Ben Franklin said, “A republic, if you can keep it.” What we have to do is keep it or as close to it as we can. We’ll never have a small, completely non-intrusive government, but that should not prevent us from working our behinds off to head the ship of state in that direction. Throwing up our hands and saying, “All is lost, all is lost!” ensures that all will be lost. At least that’s the way I see it.

  10. neo-neocon Says:

    SteveBrooklineMA: no, it’s not the same at all, as I believed I’ve explained several times in the comments section of this thread. I suggest you read it, especially if you are a libertarian.

    The point is not that the people involved pay a certain amount; it’s the different way the charge is arrived at, and the action/inaction it’s connected to.

  11. Are we ready for a NEW Mandate now? « Says:

    [...] NeoNeocon has a good snippet from a post from someone who is not necessarily conservative. So far as I can tell from an initial reading of the 5-vote majority, the Court offers no functional reason whatsoever for its analysis of the taxing power. Indeed, the Court insults our intelligence by describing the conventional analysis of taxation under its prior precedents as somehow “a functional approach” (page 35). Of course, there is nothing “functional” about its definition of the taxing power, if the only relevant factors are the power of a taxed individual to avoid action or inaction that is taxed. If the test is, as Chief Roberts describes it, paying the tax “may often be a reasonable financial decision,” then Congress will have fairly unlimited power to regulate any activity simply by imposing an exaction just short of what it would take to eliminate the activity altogether. If the only other limit is that Congress (or the IRS) cannot “penalize” persons who choose to pay the tax, by stigmatizing them as “outlaws” (page 38), then such a limit is worse than formalistic: It is not even consistent with the precedent (Doremus) upholding the Harrison Narcotics tax. [...]

  12. Don Carlos Says:

    From today’s WSJ front page, in part:

    “Employers, insurers, hospitals, drug makers and others are angling for an advantage as the government writes the regulations and sets the policies that will bring the law to life.

    Hospital owners want the government to reduce the $155 billion in health-care payment cuts they agreed to during negotiations over the law. Makers of medical devices hope to roll back a 2.3% tax on their sales contained in the measure. Insurance companies want more leeway to charge older people higher rates than younger ones. Drug makers are aiming at a provision that could squeeze how much Medicare pays for medicine.
    ‘Let’s face it, this law is going to be amended and adjusted for years and years to come,’ said Rick Pollack, executive vice president of the American Hospital Association, a lobbying group.”

    Good luck with that, J.J.: the politicians (90%
    lawyers, 90% re-elected incumbents) that you place your electoral trust in will get to tweak and tune medicine, about which they know nothing. Nothing.

    Bloombergism run amok is in our future. As is IPAB, obviously.

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Previously a lifelong Democrat, born in New York and living in New England, surrounded by liberals on all sides, I've found myself slowly but surely leaving the fold and becoming that dread thing: a neocon.
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