On Monday, U.S. Solicitor General Donald Verrilli told the Supreme Court the “shared responsibility payment” required of Americans who fail to obtain government-approved medical coverage is not a tax. On Tuesday, he said it is.
In the first instance, Verrilli was urging the Court to address the constitutionality of the individual health insurance mandate in spite of an 1867 law that ordinarily bars legal challenges to taxes that have not been collected yet. On the following day, he was arguing that, even if the mandate cannot be justified as a regulation of interstate commerce, it is a legitimate exercise of Congress’s tax power.
Justice Samuel Alito seemed skeptical on Monday, asking Verrilli, “Has the Court ever held that something that is a tax for purposes of the taxing power under the Constitution is not a tax under the Anti-injunction Act?” Whether or not the Court is prepared to accept that confusing claim, the tax argument suggests how little is at stake in this case when it comes to enforcing substantive limits on the federal government’s powers.
If the Supreme Court agrees with the U.S. Court of Appeals for the 11th Circuit that the insurance mandate cannot be justified as a regulation of interstate commerce, it may be “a huge symbolic victory for limited government,” as Georgetown law professor Randy Barnett says. But it will still leave in place an absurdly broad reading of the Commerce Clause, generous enough to allow virtually everything Congress has tried to do under this pretext since the New Deal. And if the Court overturns the mandate, enacting a revised version that passes muster would be legally straightforward (though politically difficult), thanks to the enormous power that Congress wields under its tax authority.
The 11th Circuit concluded that “the individual mandate as written cannot be supported by the tax power.” It emphasized that the Patient Protection and Affordable Care Act, which imposes the mandate, repeatedly calls the money owed by uninsured taxpayers a “penalty,” while calling various other levies “taxes.” It noted that legislators had originally called the payment a “tax” but deliberately changed the terminology, indicating that “Congress intended to impose a penalty for the failure to maintain health insurance.”
How could this problem have been avoided? The U.S. Court of Appeals for the 6th Circuit, which also rejected the tax power justification for the mandate, suggested Congress “might have raised taxes on everyone in an amount equivalent to the current penalty, then offered credits to those with minimum essential insurance.” Alternatively, “it might have imposed a lower tax rate on people with health insurance than those without it.”
Judge Brett Kavanaugh, who dissented from a decision by the U.S. Court of Appeals for the D.C. Circuit that upheld the mandate on Commerce Clause grounds, argued that “just a minor tweak to the current statutory language would definitively establish the law’s constitutionality under the Taxing Power.” All it would take, Kavanaugh said, is a clarification that Congress is merely using the tax code to “incentivize certain kinds of lawful behavior,” as it routinely does, rather than imposing an outright requirement.
In other words, Congress could accomplish exactly the same thing by wording it a little bit differently. The response to that possibility from the states challenging the insurance mandate — that making income tax liability hinge on the purchase of health insurance amounts to “an unconstitutional direct tax” — seems pretty weak, given the myriad ways in which the tax code is used to encourage politically preferred actions, such as adopting children, going to college, buying a house, giving to charity, driving an electric car and even obtaining health insurance (through one’s employer).
We might wish taxes were used simply to pay for the government’s legitimate functions, but that is not how things are. In 1819, Chief Justice John Marshall observed that “the power to tax involves the power to destroy.” As currently interpreted, it also involves the power to manipulate us into submission.
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