Table of Contents
I. Introduction
“An applicable individual shall … ensure that the individual … is covered under minimum essential coverage…. If an applicable individual fails to meet the requirement … there is hereby imposed a penalty….” — The Patient Protection and Affordable Care Act
On June 28, 2012, the U.S. Supreme Court decided to uphold the individual mandate to purchase health insurance in the Patient Protection and Affordable Care Act. In doing so, the Court effectively argued that the Congress has the power to force individuals to purchase health insurance under threat of penalty, which it did by construing it simply as being a matter of Congress using its constitutional authority to lay a tax on individuals who do not purchase insurance. It arrived at the judgment that the mandate is constitutional by means of deceptive legalistic arguments devoid of logical validity. An examination of the Court’s judgment is a journey down the rabbit hole, to borrow from Lewis Carroll’s Alice’s Adventures in Wonderland, which satirized the British legal system. The Court’s judgment, while logically sound in some respects, is a case study of linguistic contortionism and fallacious syllogisms when it comes to its claim that Congress may legitimately tax non-consumption. In declaring its opinion, the Court stated that it was conferring no new powers to the Congress, and yet this is patently untrue. In fact, the Supreme Court has with this decision set a dangerous precedent by acquiescing to the Congressional claim to an extraordinary new power neither authorized by the Constitution nor even contemplated by the Founders, an authoritarian power that poses a grave threat to the principles of limited government and individual liberty.
The Court’s judgment begins by pointing out the stated purposes of the Act:
In 2010, Congress enacted the Patient Protection and Affordable Care Act in order to increase the number of Americans covered by health insurance and decrease the cost of health care.[1]
In delivering the opinion of the Court, Chief Justice Roberts reviewed the enumerated powers of the Congress in the Constitution relevant to the case before them—the Commerce Clause, the Taxing Clause, and the Necessary and Proper Clause:
This case concerns two powers that the Constitution does grant the Federal Government, but which must be read carefully to avoid creating a general federal authority akin to the police power. The Constitution authorizes Congress to “regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” Art. I, §8, cl. 3….
Congress may also “lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States.” U. S. Const., Art. I, §8, cl. 1. Put simply, Congress may tax and spend….
The reach of the Federal Government’s enumerated powers is broader still because the Constitution authorizes Congress to “make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers.” Art. I, §8, cl. 18.[2]
Chief Justice Roberts briefly explained the portions of the Act relating to the mandate:
The individual mandate requires most Americans to maintain “minimum essential” health insurance coverage. 26 U.S.C. §5000A. The mandate does not apply to some individuals, such as prisoners and undocumented aliens. §5000A(d). Many individuals will receive the required coverage through their employer, or from a government pro-gram such as Medicaid or Medicare. See §5000A(f). But for individuals who are not exempt and do not receive health insurance through a third party, the means of satisfying the requirement is to purchase insurance from a private company.
Beginning in 2014, those who do not comply with the mandate must make a “[s]hared responsibility payment” to the Federal Government. §5000A(b)(1). That payment, which the Act describes as a “penalty,” is calculated as a percentage of household income, subject to a floor based on a specified dollar amount and a ceiling based on the aver-age annual premium the individual would have to pay for qualifying private health insurance. §5000A(c)….
The Act provides that the penalty will be paid to the Internal Revenue Service with an individual’s taxes, and “shall be assessed and collected in the same manner” as tax penalties, such as the penalty for claiming too large an income tax refund. 26 U. S. C. §5000A(g)(1). The Act, however, bars the IRS from using several of its normal enforcement tools, such as criminal prosecutions and levies. §5000A(g)(2). And some individuals who are subject to the mandate are nonetheless exempt from the penalty—for example, those with income below a certain threshold and members of Indian tribes. §5000A(e).[3]
II. Congress Intended the Mandate as a “Penalty” Not a “Tax”
“‘When I use a word,’ Humpty Dumpty said in rather a scornful tone, ‘it means just what I choose it to mean—neither more nor less.’” — Humpty Dumpty in Lewis Carroll’s Through the Looking-Glass[4]
The Court next addressed the question of whether it was barred from hearing the suit under the Anti-Injunction Act on the grounds that the penalty for non-compliance with the mandate is treated under the Internal Revenue Code as a tax. The Court dismissed this argument, ruling that the Anti-Injunction Act did not apply in this case, as Chief Justice Roberts explained:
Before turning to the merits, we need to be sure we have the authority to do so. The Anti-Injunction Act provides that “no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed.” 26 U.S.C. §7421(a). This statute protects the Government’s ability to collect a consistent stream of revenue, by barring litigation to enjoin or otherwise obstruct the collection of taxes. Because of the Anti-Injunction Act, taxes can ordinarily be challenged only after they are paid, by suing for a refund. See Enochs v. Williams Packing & Nav. Co., 370 U. S. 1, 7–8 (1962)….
The Anti-Injunction Act applies to suits “for the purpose of restraining the assessment or collection of any tax.” §7421(a) (emphasis added). Congress, however, chose to describe the “[s]hared responsibility payment” imposed on those who forgo health insurance not as a “tax,” but as a “penalty.” §§5000A(b), (g)(2). There is no immediate reason to think that a statute applying to “any tax” would apply to a “penalty.”
Congress’s decision to label this exaction a “penalty” rather than a “tax” is significant because the Affordable Care Act describes many other exactions it creates as “taxes.” See Thomas More, 651 F. 3d, at 551. Where Congress uses certain language in one part of a statute and different language in another, it is generally presumed that Congress acts intentionally. See Russello v. United States, 464 U. S. 16, 23 (1983).[5]
In sum, the Court made it clear that Congress’s decision to describe the “shared responsibility payment” as a “penalty” rather than as a “tax” was purposeful. It was their clear intent to penalize individuals for not buying insurance. In fact, President Barack Obama, when selling the Act’s reforms to the public, went so far as to insist that it wasn’t a tax. He falsely claimed that it would not raise taxes, which he was able to do by defining the mandate as “absolutely not a tax increase”.[6]
The Court pointed out that the government itself “argues that §5000A(g)(1) does not direct courts to apply the Anti-Injunction Act”. The Court concluded:
The Affordable Care Act does not require that the penalty for failing to comply with the individual mandate be treated as a tax for purposes of the Anti-Injunction Act. The Anti-Injunction Act therefore does not apply to this suit, and we may proceed to the merits.[7]
The Court nevertheless also stated:
It is true that Congress cannot change whether an exaction is a tax or a penalty for constitutional purposes simply by describing it as one or the other.[8]
As we shall see, this caveat was necessary for the Court to conclude on one hand that is was able to hear the case because Congress intended the “shared responsibility payment” as a “penalty” while on the other that the mandate is not unconstitutional because it is “not a penalty”.
🔓Continue reading with a FREE or premium membership.
Log in below or choose your membership.
Very thorough article. Thank you.
There is one glossed over defect not brought up in this article concerning the Tax and Spend clause. The Tax and Spend clause is misrepresented at large, and in this article here, as an enumerated power. It is instead an ancilary plenary power that gives affect to the enumerated powers. The enumerated powers would be nothing without the power of the purse. It is frivilous for any law other than an bill to raise revenue to cite the Tax and Spend clause as a grant of power for justification for that law because that power is non-specific of any purpose and is only a preface to the actual enumerated powers of the federal government. The Tax and Spend power is then sub-joined to all other objects of power with a stipulation that the taxing and spending must affect the common defense and the general welfare of the states. This means that the objects of taxing and spending must be for the whole country, and not just one segment of it, and only under the enumerated powers that have been nationalized by the federal constitution. Simply put, if a law is not germane to an enumerated power, then it cannot be a federal power; tax and spending power notwithstanding as states also have a tax and spending power to objects not under the purview of the federal seat.
See also: https://www.aipnews.com/talk/forums/thread-view.asp?tid=15844&posts=5
Thanks for that view, Ralph.