The New Republic

Well, the Marihuana Tax Act of 1937 imposed a tax on marijuana, which was definitely aimed at regulating behavior. It was ruled unconstitutional in (Timothy) Leary v. US, which held that the law violated the fifth amendment because it required "taxpayers" to confess to the crime (in most states) of possessing marijuana. (I would be remiss if I did not point out that it was a better world when drugged-out Harvard professors won cases in the Supreme Court, in sad contrast to today's world where their most uptight students write the opinions.) "Sin" taxes today also try to reduce consumption of alcohol and cigarettes. I think taxing people for failing to obtain the means to pay for healthcare because they expect to be treated for free should the need arise (because we're such a damn generous country), is more defensible, and less behavior-regulating, than that.

- GeoffG

July 3, 2012 at 5:01pm

$647. I don't believe the rate for the cheapest room at the Plaza is $647. For working Americans, who don't usually stay at the Plaza, $647 is a lot of money. So here's an idea: cut taxes for working Americans by $647. I don't believe they will be making reservations at the Plaza, but it neutralizes whatever costs they may incur because of the Obamacare "tax". If that's what conservatives wish to talk about, fine. But eventually conservatives will appreciate the gift they have received, for Roberts' opinion makes clear that ACA, just in case some concerned citizens didn't get it, is all about universal coverage, and all that talk about community rating and expressions of concern for those with chronic illnesses and all the rest are window dressing. At the moment conservatives, accustomed to getting their way, are beside themselves that they didn't. Or did they? For now, let Scheiber gloat. But the freight train is coming down the tracks, and no amount of ridicule will stop it. A political party can win an election by conferring a benefit on the fortunate, but not on the unfortunate. Have a happy Independence Day.

- rayward

July 3, 2012 at 5:03pm

From my recollection of the discussion, WSJ has it wrong. It is not, in fact, against the law to not carry insurance. Legal options are: (1) carry insurance and don't pay the tax, or (2) don't carry insurance and pay the tax instead. The only thing not permitted is to not carry insurance and not pay the tax. Thus it does not follow that the optimal value of the revenue stream is $0. The tax raises revenue to cover the cost of emergency treatment for those who forgo carrying insurance. I agree with the point made elsewhere in this blog that the mandate should be permissible under the commerce clause because anyone who is assessed the penalty has to be engaged in commerce (or at least in the commerce of health care), but Roberts does not, in fact, open up a whole new way for the government to enforce behavior through the tax code. This really is just a "user fee" for people opting to use emergency services to provide their health care.

- ramcat

July 3, 2012 at 5:13pm

Yes, GeoffG, but the WSJ point is that it's constitutional to regulate behavior; not constitutional to regulate non-behavior. I don't agree. But if you do - as most conservatives seem to these days - then simply calling the mode of regulating non-behavior a tax would still be offensive. Doesn't change the fact that it remains (in your mind) unconstitutional to regulate non-behavior. In fact, it's worse, since it seems to expand the possibilities for regulating non-behavior.

- Noam Scheiber

July 3, 2012 at 5:13pm

I had an interesting conversation with a co-worker that brough up a few questions on the health care penalty and the implementation of Obamacare. My friend lives in Windsor and is not moving to the US until he has direct employment with one of the Auto Companies. If he moves over from Canada he has to pay $ 800/month for health care insurance. My question is, if an employee works for an Employment Agency do they need to spend this $ 800 per month or pay the penalty? Hmmm. Someone coming from Canada for a medical procedure, will that person be required to buy insurance or pay the penalty. If you have to have health Insurance to get Medical Services I want to make sure that the free-riders from other countries are forced to pay the penalty. In a slightly related direction. Does someone who gets the Earned Income Tax Credit and a rebate payment for their taxes, but they dont' have health insurance, is that rebate taken from them and applied to their penalty for not having insurance? The next year will be interesting to watch as this penatly is rolled out and explained to people. It's bad enough that you don't have a good job that provides health insurance, now you get penalized by the government and are writing another check.

- CRS9TNR

July 3, 2012 at 5:38pm

Noam, I think the WSJ is (predictably) full of it. The tax code is full of provisions that incentivize and penalize behavior. The mandate, in essence, is but one more of those, altering your tax liability depending on what you do or don't do. It's actually a straightforward argument. I think the reason that it was the second argument instead of the first is that the label "tax" wasn't used by the bill's proponents or in the bill itself. But, as Roberts pointed out, mere labels don't matter, nor should they. The bill wouldn't be any less constitutional if it had been called the "Unconstitutional Health Care Act or 2010."

- JakeH

July 3, 2012 at 7:01pm

CRS9TNR, the subsidies are pretty generous. I mean, c'mon, who the hell doesn't want insurance?

- blackton

July 3, 2012 at 7:11pm

I think you can coherently buy the taxing power argument without buying the commerce power argument. I admit that I haven't gotten around to reading the whole opinion yet -- just the summary -- so I don't know exactly what Roberts said, but the argument could go like this: We start with the text of the document. The commerce clause gives Congress the power to regulate interstate commerce, i.e., (one might say) economic activity that substantially affects interstate commerce. Not buying health insurance, say the conservatives, is not activity at all, much less economic activity that substantially affects interstate commerce. Hence Kennedy's opening salvo during oral argument, "Can the government create commerce in order to regulate it?" the implicit answer being, "No." That argument is wrong for many reasons, but even if we buy it, the issue isn't quite the same when it comes to the taxing power, where the question becomes not whether the government may "regulate" inactivity -- non-commerce, as it were -- but rather whether the government may "tax" inactivity. Yes! Every tax credit taxes inactivity if you don't take advantage of it. Consider the fact that Congress could have just as well written the bill so that it raised everyone's taxes and made the mandate a credit, and it would have had *precisely* the same effect on individuals. Does the law fall outside the taxing power because Congress did not write the bill in that fashion -- use those words? Why should it? Surely what's important when it comes to the constitutionality of the bill is its actual operation, and not merely the labels chosen or the precise mechanism. Indeed, people often talk about tax "penalties" when they're saying that the code disfavors some behavior and favors other behavior. The only arguments against this reasoning that I can discern are that (i) we want honest salesmanship (Kennedy alluded to this), and (ii) this is, in essence, a tax on breathing. But it's not for the Court to involve itself in how a bill is sold or packaged -- that's pure politics with which the Court has nothing to do, and it runs counter to the spirit of the First Amendment which encourages a free-wheeling debate. Some may think, "Well, if the bill had increased everyone's taxes as you suggest, it would have been a tougher sell and wouldn't have passed." Maybe, maybe not, it's not for the Court to consider that question. The bill does what it does -- that, and only that, is what the Court is charged with passing on, no matter how ts proponents talk about it or how the bill frames it -- whether as a credit, penalty, tax, whatever. If the mandate had been a misdemeanor fine, that would be a different story. There's also the suggestion that if it were *huge*, it would, in essence, be coercion akin to a straight-up law requiring every citizen to do X. But neither is the case here. It's more like a tax credit -- a provision of the code that changes your liability depending on what you do -- or do not -- do. On the "tax on breathing" point, this penalty only applies to income taxes, and so it's no more a tax on breathing than the income tax itself. If you pay income taxes, your liability will be the same if you buy insurance, increased if you don't. It's really that simple, isn't it? Can't one see it that way, and consistently reject the commerce power argument?

- JakeH

July 4, 2012 at 3:33pm

Conservatives love the idea of tax incentives and tax credits aimed at regulating behavior. In fact, they always say they prefer that approach to mandates or regulations. Yet, somehow taxes aimed at regulating behavior means the government is arrogating police powers to control the population? Sorry, I think the WSJ argument is a big stinking load of you-know-what.

- JEFF FREY

July 4, 2012 at 5:42pm

Blackie - When I was 25 years old, I was working for an Agency and the cost of Employer Health Insurance was about $ 200/month. At age 25 I really didn't need health insurance and went 10 years without it. It was my experience that most health single people did this. If you run the numbers, paying $200/month for a 20% Co-Pay and $ 5,000 deductible runs you about $5,000 if you use any health care at all. In you early single days when you are stuggling to make a house and car payment this is a lot of money. And really the Doctors are mostly quacks out there that are more interested in your payment than your health. Yes if you have a condition that they know what it is, and have a standard treatment for, the US is still the best place in the world. But from 20-50 a relatively healthy person does not benefit from a trip to the doctor. It will be fun to watch the 'Free-Riders' get caught up in this legislation. With most large employers out-sourcing big portions of their work forces these days the employment agencies will really get hit. Imagine their HR Departments telling the employees you can get a policy and avoid the penalty for $ 500/month, and the Government will be taling about a $ 200 rebate check in August. I don't know. I thought this law would be overturned. Now I think you'll see some scrambling as this is implemented. People looking for coeverage, IRS looking for agents and Insurance Numbers and States looking for someone to pay for processing all the paperwork. I don't think we got healthcare, I think we got a lot of paperwork and government employees asking dumb questions about our personal lives.

- CRS9TNR

July 4, 2012 at 5:57pm

I think there may be another relevant distinction between a penalty and a tax. A penalty is aimed solely at discouraging particular behavior. A tax raises revenue and, in some cases, also discourages behavior. People who wait to buy insurance until they are sick place a heavy financial burden on the rest of us, particularly if pre-existing conditions cannot be considered. A tax could be justified as a way of offsetting some of that burden.

- brthompson

July 4, 2012 at 7:18pm

With regard to the marijuana tax being deemed unconstitutional under the 5th Amendment, note that it was not deemed unconstitutional under some constraint deemed to be inherent in the taxing power, or under some zeitgeist about the legitimate reach of government power, but under a separate provision of the Constitution that expressly circumscribes the exercise of Congress' enumerated powers. Likewise with regard to the ACA "mandate." The commerce clause is not self-limiting, other than its implication that whatever is regulated must have some connection to interstate commerce. If the argument is that the mandate is an illegitimate infringement on individual liberty, it seems to me that the opponents should have looked to the due process clause of the 5th Amendment and the doctrine of "substantive due process" to argue that, even if the commerce clause, as interpreted over the past 100 years, vests Congress with nearly unfettered power, that power is circumscribed by the Bill of Rights, in this case the due process clause of the 5th Amendment. I'm not saying that argument would be successful at the end of the day, but it would at least be coherent in my view. As it is, Roberts circumscribed the commerce clause by appealing to what he perceives to be the zeitgeist about the legitimate reach of government power. But to argue that the mandate is an unprecedented and unacceptable intrusion on individual liberty for purposes of commerce-clause analysis on the one hand, but that it is perfectly acceptable under Congress' taxing power, does indeed seem to be incoherent. Dhurtado

- NR143296

July 5, 2012 at 9:49am

CR- Someone else may already have responded to this, but the ACA does not require one to have health insurance in order to purchase medical services. I you have the resources and it is more economical for you to self-insure and pay the relatively modest tax/penalty, you are free to do that. Dhurtado

- NR143296

July 5, 2012 at 10:08am

"I think you can coherently buy the taxing power argument without buying the commerce power argument." I completely agree with that statement Jake. But I think you are missing the WSJ and Noam's point. Roberts' *reasons* for holding that the mandate could not be uhpeld under the commerce clause make it arguably incoherent for him to hold that it nevertheless may be upheld under the taxing power. Roberts' main argument is that of Kennedy, namely, that the mandate is an illegitimate use of government power over indidivual behavior. It is thus incoherent to argue that the government may nevertheless wield that illegitimate power under its taxing authority. Dhurtado

- NR143296

July 5, 2012 at 10:28am

But Dhurtado, Kennedy's opinion (and Roberts's) is not an unspecified, free-form defense of liberty. Rather, it's an interpretation of the commerce clause. I think it's a wrong interpretation of that text, but there you are. After all, there are provisions of the Constitution that govern individual rights, and they're not to be found in Article I, and nobody argues that those provisions -- the due process clause of the 14th Amendment, for example -- would prohibit the mandate. (That would make Massachusetts' mandate unconstitutional.) The case was about *federalism* in particular -- whether the mandate can plausibly fit within one of the boxes the Constitution provides for the exercise of federal power. It's not incoherent to find that one of those boxes might provide more power to the government than another box in any given case, even if that means that the federal government may do via X what it may not do via Y. It only has to fit one of the boxes, and Roberts's opinion made clear that the law should only be struck down if it clearly doesn't fit into *any* of those boxes. Look, the idea here is that Congress from now on can just do whatever it wants via the taxing power instead of the commerce power, but that's no so. That applies to *this* case, but it wouldn't apply to others. For example, the commerce power could justify a misdemeanor fine-type mandate or a harsh punishment. The taxing power cannot get you there. The WSJ says, oh my God, now government can encourage people to do X or not do Y via the tax code. But it already does that! The tax code encourages and discourages all sorts of behavior. This isn't new; it's just one more incentive/penalty (two sides of the same coin) in the tax code meant to nudge people in the desired direction. So, whether you buy the broader liberty concerns or whether you're presuaded by the cramped reading of the text of the commerce clause, it does not seem to me that the mandate can plausibly be seen as a broad new expansion of the taxing power.

- JakeH

July 5, 2012 at 12:46pm

Jake- You said in an earlier post that you had not yet read the Roberts opinion. Perhaps you have since read it, but, in any event, I have read it, and I think that it is indeed, essentially, an “unspecified, free-form defense of liberty.” It does not root its “interpretation” in the text of the commerce clause, other than to argue that “regulate commerce” cannot mean to “create commerce.” It does not root its interpretation in precedent, other than to argue that no prior case has expressly recognized the power to compel individuals to enter into private commercial transactions. Roberts does not meaningfully distinguish the Wickard case, in which the farmer and similarly situated individuals were effectively being compelled to purchase wheat in the commercial market rather than grow wheat for their own consumption. Roberts merely argues that the farmer was engaged in the “activity” of growing wheat, but completely elides the fact that the farmer was not engaged in *commercial* activity and was effectively being forced to enter a commercial market. If the argument is that private, non-commercial activity can subject an individual to the regulatory power of the federal government, but that failure to act cannot subject an individual to the regulatory power of the federal government, the textual and precedential support for that argument is exceedingly weak. Instead, Roberts’ primary argument is that the power to mandate participation in a private, commercial transaction exceeds the bounds of legitimate government power. He argues that such power implies the power to compel any individual conduct that the government wishes to compel. He, of course, raises the specter of compulsory consumption of broccoli. There is nothing in the commerce clause itself that would prevent the government from compelling the purchase of broccoli, but Roberts is appealing to an intuition, or a zeitgeist, if you will, that such a compulsion would be beyond to scope of legitimate government power. You may disagree with my reading of Roberts’ opinion, but to the extent it relies on a perceived zeitgeist about the limits of federal power, rather than on traditional hermeneutic methodology, I think it is incoherent to then argue that the tax clauses authorize the government to exceed its legitimate powers. As you say, the function and effect of the mandate is precisely the same regardless of whether it is rooted in the commerce clause or th taxing power. Dhurtado

- NR143296

July 5, 2012 at 1:52pm

NR143296 - Thanks for the info. The Penalty is a little stiff, $695 or 2.5% of houshold income, up to about $2,000. I don't think that's too modest, but ok. My point is, why should a Canadian be able to buy healthcare in the US without paying the penalty. They are Healthcare consumers at this point like us. They should pay the penalty just on basic fairness. I think we agree here. If they want Fee-For-Service, they pay the Penalty of $ 695-2,000, which is a modest amount for access to US healthcare.

- CRS9TNR

July 5, 2012 at 5:55pm

CR- The fee is modest in comparision to what the premiums would be for even minimal insurance coverage. But I don't understand your point about Canadian purchasers of healthcare in America. The penalty relates not to the purchase of healthcare, but to failure to purchase health insurance, thus potentially shifting the cost of one's own care to taxpayers. If a Canadian comes to the US to purchase healthcare, but otherwise lives in Canada, the risk of future cost-shifting to American taxpayers is minimal. Moreover, unless the Canadian person pays US income taxes, there would be no mechanism for collecting the penalty from the Canadian user. Dhurtado

- NR143296

July 6, 2012 at 1:01am