Sunday, July 18, 2010

During the debate over health care reform, the Obama Administration steadfastly denied that a statutory penalty for failing to purchase a government-approved health insurance policy would constitute a “tax.” The President himself categorically rejected the argument that the mandate is a tax in an ABC interview. Now, however, the Administration is relying upon the federal taxing power to defend the constitutionality of the health care law.

Volokh Conspiracy, Administration Now Says Individual Mandate Is a “Tax,” by Jonathan H. Adler (Case Western):

New York Times, Changing Stance, Administration Now Defends Insurance Mandate as a Tax, by Robert Pear:

When Congress required most Americans to obtain health insurance or pay a penalty, Democrats denied that they were creating a new tax. But in court, the Obama administration and its allies now defend the requirement as an exercise of the government’s “power to lay and collect taxes.” And that power, they say, is even more sweeping than the federal power to regulate interstate commerce. Administration officials say the tax argument is a linchpin of their legal case in defense of the health care overhaul and its individual mandate, now being challenged in court by more than 20 states and several private organizations. . . . In a brief defending the law, the Justice Department says the requirement for people to carry insurance or pay the penalty is “a valid exercise” of Congress’s power to impose taxes. Congress can use its taxing power “even for purposes that would exceed its powers under other provisions” of the Constitution, the department said. For more than a century, it added, the Supreme Court has held that Congress can tax activities that it could not reach by using its power to regulate commerce. ... While Congress was working on the health care legislation, Mr. Obama refused to accept the argument that a mandate to buy insurance, enforced by financial penalties, was equivalent to a tax. “For us to say that you’ve got to take a responsibility to get health insurance is absolutely not a tax increase,” the president said last September, in a spirited exchange with George Stephanopoulos on the ABC News program “This Week.” When Mr. Stephanopoulos said the penalty appeared to fit the dictionary definition of a tax, Mr. Obama replied, “I absolutely reject that notion.” Congress anticipated a constitutional challenge to the individual mandate. Accordingly, the law includes 10 detailed findings meant to show that the mandate regulates commercial activity important to the nation’s economy. Nowhere does Congress cite its taxing power as a source of authority. ... Jack M. Balkin, a professor at Yale Law School who supports the new law, said, “The tax argument is the strongest argument for upholding” the individual-coverage requirement. Mr. Obama “has not been honest with the American people about the nature of this bill,” Mr. Balkin said last month at a meeting of the American Constitution Society, a progressive legal organization. “This bill is a tax. Because it’s a tax, it’s completely constitutional.” Mr. Balkin and other law professors pressed that argument in a friend-of-the-court brief filed in one of the pending cases.

Volokh Conspiracy, So Much For the Commerce Clause Challenge to Individual Mandate Being “Frivolous”, by Randy Barnett (Georgetown):

I have so far seen no case that says (4) when a measure is expressly justified in the statute itself as a regulation of commerce (as the NYT accurately reports), the courts will look look behind that characterization during litigation to ask if it could have been justified as a tax, or (5) when Congress fails to include a penalty among all the “revenue producing” measures in a bill, the Court will nevertheless impute a revenue purpose to the measure. Now, of course, the Supreme Court can always adopt these two additional doctrines. It could decide that any measure passed and justified expressly as a regulation of commerce is constitutional if it could have been enacted as a tax. But if it upholds this act, it would also have to say that Congress can assert any power it wills over individuals so long as it delegates enforcement of the penalty to the IRS. Put another way since every “fine” collects money, the Tax Power gives Congress unlimited power to fine any activity or, as here, inactivity it wishes! (Do you doubt this will be a major line of questioning in oral argument?) But it gets still worse. For calling this a tax does not change the nature of the “requirement” or mandate that is enforced by the “penalty.” ALL previous cases of taxes upheld (when they may have exceeded the commerce power) involved “taxes” on conduct or activity. None involved taxes on the refusal to engage in conduct. In short, none of these tax cases involved using the Tax Power to impose a mandate. So, like the invocation of the Commerce Clause, this invocation of the Tax Power is factually and judicially unprecedented. It is yet another unprecedented claim of Congressional power. Only this one is even more sweeping and dangerous than the Commerce Clause theory.

Jonathan Turley (George Washington), Health Care: Turns Out To Be A Tax After All:

If you recall, one of the most steadfast public positions of the Democrats and the Obama White House during the health care debate was that the legislation did not constitute a tax. President Barach Obama expressly denied that the legislation was a tax in pushing for its approval. Now, however, his administration is seeking to defend the law on the basis that it is . . . you guessed it . . . a tax. The Obama Administration has been repeatedly criticized for saying things to the public and then saying different things in court. ... The Administration is defending the new law as part of the government’s “power to lay and collect taxes.” It is the strongest possible basis for defending the law (and was used to justify the social security law), but it happens to contradict what both Democratic leaders, including President Obama, told the public.

ABA Journal, Surprising Pundits, DOJ Brief Defends Health Care Law Under Tax Power

https://taxprof.typepad.com/taxprof_blog/2010/07/after-denying-.html