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Commerce, taxation, and ObamaCare

Some conservative analysts have been looking for a bright spot in Thursday??s tortured Supreme Court decision on ObamaCare, in which the legislation was rewritten on the fly to become legal according to arguments nobody made.  While the notorious ??individual mandate? was magically transformed into a ??tax? so it could be held Constitutional, it has been noted that the ??mandate? actually was struck down.

This led to considerable confusion in the media when the decision was first handed down, as even some fairly large news outlets, such as CNN, initially reported the mandate had been held unconstitutional.  Those media outlets suffered some unfair mockery for making this understandable mistake.  They were merely reading the decision, and hadn??t gotten to the hocus-pocus part where Chief Justice John Roberts turned it into a ??tax? yet.

As dissenting justices Alito, Thomas, Scalia, and Kennedy (yes, Kennedy!) noted, ??to say that the Individual Mandate merely imposed a tax is not to interpret the statue but to rewrite it.  Judicial tax-writing is particularly troubling.?

Adding to the illogical nature of Roberts?? opinion is that not only did the Obama Administration explicitly argue that the individual mandate was not a tax ?? putting the Court in the position of telling the defendants in this case what they really meant to say ?? but it was necessary to assert the mandate was not a tax in order to hear the case at all!

That??s because of a law called the Anti-Injunction Act, which says that a tax increase cannot face legal challenge until someone has paid the tax.  The ??individual mandate? doesn??t kick in until 2014, so no one has actually paid the penalty yet.  In order to bring this case at all, both the plaintiffs (the National Federation of Independent Business) and the defendants (the Department of Health and Human Services) had to agree, in advance, that the mandate was not a tax.

But wait ?? there??s more.  As Byron York reminds us, writing for the Washington Examiner on Thursday, the Supreme Court actually brought in an independent lawyer named Robert A. Long to make the case neither plaintiff nor defendant wanted to make, and invoke the Anti-Injunction Act.  ??The Act applies to essentially every tax penalty in the Internal Revenue Code,? Long argued.  ??There is no reason to think that Congress made a special exception for the penalty imposed by section 5000A.?

??On the contrary,? Long continued, ??there are three reasons to conclude that the Anti-Injunction Act applies here.  First, Congress directed that the section 5000A penalty shall be assessed and collected in the same manner as taxes.  Second, Congress provided that penalties are included in taxes for assessment purposes. And third, the section 5000A penalty bears the key indicia of a tax.?

(Emphasis mine.)  How can this penalty be a tax, if it is ??assessed and collected in the same manner as taxes??  That??s like saying the Social Security tax is assessed and collected in the same manner as taxes ?? an absurd non sequitur.  Law is all about the logical interpretation of language.

During subsequent discussion with the justices, Long pointed out that the Anti-Injunction Act has been interpreted, through considerable precedent, as binding upon the Court itself.  It says ??no suit shall be maintained? against a tax that has not been levied yet.  But the Roberts decision on ObamaCare did not dismiss the NFIB suit, which would have been consistent with Court precedent.  If the mandate is a tax, the suit never should have been ??maintained,? and the Court should have said ??come back in 2014 when someone has actually been forced to pay the tax.?  That would obviously have been a titanic letdown to liberals and conservatives alike, but the Supreme Court is not supposed to be worried about the hurt feelings of pundits and politicians.

Not only did the Obama Administration refuse to make the ??mandate is a tax? argument, but Solicitor General David Verrilli had to defeat that argument in order to keep the case moving forward.  Justice Kennedy actually brought up the idea of Congress using ??the tax power to raise revenue and to just have a national health service, single payer? as a contrast with ObamaCare.

Verrilli said, essentially, that ObamaCare was explicitly designed to avoid this model of taxation and spending, by ??regulating? the market instead of nationalizing it.  He was very clear that ObamaCare is all about forcing people to purchase a product, rather than taxing them for the provision of a government service.

It fell to another Justice to patiently lecture Verrilli on the nature of taxation.  ??A tax is to raise revenue.  Tax is a revenue-raising device, and the purpose of this exaction is to get people into the health care risk pool before they need medical care, and so it will be successful.  If it doesn??t raise any revenue, if it gets people to buy the insurance, that??s what this penalty is.  This penalty is designed to affect conduct.  The conduct is to buy health protection, buy health insurance before you have need for medical care.  That??s what the penalty is designed to do, not to raise revenue.?

That little sermon came from Justice Ruth Bader Ginsburg, arguably the most consistently liberal member of the Court.

It has been suggested that the silver lining here is the contraction of the Commerce Clause, which Chief Justice Roberts discussed at some length in his decision.  But the net effect of upholding ObamaCare is that the government can indeed force you to engage in commerce, and buy a product from private industry, in accordance with whatever the ruling class decides is for your own good.  The transformation of the ??penalty? for non-compliance into a ??tax? has little effect on the practical result.

The only arguable benefit would be the obligation for politicians to be honest about the nature of the taxes they plan to levy, as Barack Obama was not.   But that??s not really true either, because the Roberts decision accepted an argument that even the liberal justices on the Court thought was, literally, laughable: the creation of an entirely new government power, the ??tax penalty.?  It??s a penalty when it needs to slip past the Anti-Injunction Act, and popular opinion, but it transforms into a tax when challenged at the Supreme Court.

No rhetorical opposition to the Commerce Clause in the commentary to a Supreme Court decision can be ??worth? the creation of this limitless, protean ??tax penalty? power.  Justice Ginsburg??s practical definition of taxation has been stretched beyond all reason ?? ??taxation? is now a catch-all term for any compulsive seizure of money the government wishes to make, against any disobedient citizen.  There was already too much of this going on in our tax code, with its labyrinth of special deductions and tax credits.  Now the tax weapon can be used to proactively force citizens to do business with government-sanctioned private entities.

Furthermore, the Supreme Court now has a new legislative power that was not granted to it by the Constitution: it can re-write legislation from the bench, rather than judging the actual language of the acts placed before it, and the arguments made in their defense.  Imagine another Big Government enthusiast or two on the bench, and tell me what value a little tut-tutting over the limits of the Commerce Clause will have against that.  The Constitution is now officially what liberals have always seen it as: an obstacle to be overcome in the quest for power.

Limited, transparent government is honest with its citizens about the cost of its proposed activities, and lives within the funding means they have chosen to allocate through taxation.  The Roberts decision gives Big Government powerful new tools to conceal the true cost of its plans, and compel obedience to its agenda, rather than impartially enforcing the law.

Taxation was not meant to serve as a weapon against dissent.  And “commerce” is supposed to encompass free-market transactions between individuals, protected by (hopefully wise and limited) government regulations… not a vehicle for imposing government’s will, while relieving politicians of all responsibility for the outcome.

Written By

John Hayward began his blogging career as a guest writer at Hot Air under the pen name "Doctor Zero," producing a collection of essays entitled Doctor Zero: Year One. He is a great admirer of free-market thinkers such as Arthur Laffer, Milton Friedman, and Thomas Sowell. He writes both political and cultural commentary, including book and movie reviews. An avid fan of horror and fantasy fiction, he has produced an e-book collection of short horror stories entitled Persistent Dread. John is a former staff writer for Human Events. He is a regular guest on the Rusty Humphries radio show, and has appeared on numerous other local and national radio programs, including G. Gordon Liddy, BattleLine, and Dennis Miller.

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Commerce, taxation, and ObamaCare

Some conservative analysts have been looking for a bright spot in Thursday’s tortured Supreme Court decision on ObamaCare, in which the legislation was rewritten on the fly to become legal according to arguments nobody made.  While the notorious “individual mandate” was magically transformed into a “tax” so it could be held Constitutional, it has been noted that the “mandate” actually was struck down.

This led to considerable confusion in the media when the decision was first handed down, as even some fairly large news outlets, such as CNN, initially reported the mandate had been held unconstitutional.  Those media outlets suffered some unfair mockery for making this understandable mistake.  They were merely reading the decision, and hadn’t gotten to the hocus-pocus part where Chief Justice John Roberts turned it into a “tax” yet.

As dissenting justices Alito, Thomas, Scalia, and Kennedy (yes, Kennedy!) noted, “to say that the Individual Mandate merely imposed a tax is not to interpret the statue but to rewrite it.  Judicial tax-writing is particularly troubling.”

Adding to the illogical nature of Roberts’ opinion is that not only did the Obama Administration explicitly argue that the individual mandate was not a tax – putting the Court in the position of telling the defendants in this case what they really meant to say – but it was necessary to assert the mandate was not a tax in order to hear the case at all!

That’s because of a law called the Anti-Injunction Act, which says that a tax increase cannot face legal challenge until someone has paid the tax.  The “individual mandate” doesn’t kick in until 2014, so no one has actually paid the penalty yet.  In order to bring this case at all, both the plaintiffs (the National Federation of Independent Business) and the defendants (the Department of Health and Human Services) had to agree, in advance, that the mandate was not a tax.

But wait – there’s more.  As Byron York reminds us, writing for the Washington Examiner on Thursday, the Supreme Court actually brought in an independent lawyer named Robert A. Long to make the case neither plaintiff nor defendant wanted to make, and invoke the Anti-Injunction Act.  “The Act applies to essentially every tax penalty in the Internal Revenue Code,” Long argued.  “There is no reason to think that Congress made a special exception for the penalty imposed by section 5000A.”

“On the contrary,” Long continued, “there are three reasons to conclude that the Anti-Injunction Act applies here.  First, Congress directed that the section 5000A penalty shall be assessed and collected in the same manner as taxes.  Second, Congress provided that penalties are included in taxes for assessment purposes. And third, the section 5000A penalty bears the key indicia of a tax.”

(Emphasis mine.)  How can this penalty be a tax, if it is “assessed and collected in the same manner as taxes?”  That’s like saying the Social Security tax is assessed and collected in the same manner as taxes – an absurd non sequitur.  Law is all about the logical interpretation of language.

During subsequent discussion with the justices, Long pointed out that the Anti-Injunction Act has been interpreted, through considerable precedent, as binding upon the Court itself.  It says “no suit shall be maintained” against a tax that has not been levied yet.  But the Roberts decision on ObamaCare did not dismiss the NFIB suit, which would have been consistent with Court precedent.  If the mandate is a tax, the suit never should have been “maintained,” and the Court should have said “come back in 2014 when someone has actually been forced to pay the tax.”  That would obviously have been a titanic letdown to liberals and conservatives alike, but the Supreme Court is not supposed to be worried about the hurt feelings of pundits and politicians.

Not only did the Obama Administration refuse to make the “mandate is a tax” argument, but Solicitor General David Verrilli had to defeat that argument in order to keep the case moving forward.  Justice Kennedy actually brought up the idea of Congress using “the tax power to raise revenue and to just have a national health service, single payer” as a contrast with ObamaCare.

Verrilli said, essentially, that ObamaCare was explicitly designed to avoid this model of taxation and spending, by “regulating” the market instead of nationalizing it.  He was very clear that ObamaCare is all about forcing people to purchase a product, rather than taxing them for the provision of a government service.

It fell to another Justice to patiently lecture Verrilli on the nature of taxation.  “A tax is to raise revenue.  Tax is a revenue-raising device, and the purpose of this exaction is to get people into the health care risk pool before they need medical care, and so it will be successful.  If it doesn’t raise any revenue, if it gets people to buy the insurance, that’s what this penalty is.  This penalty is designed to affect conduct.  The conduct is to buy health protection, buy health insurance before you have need for medical care.  That’s what the penalty is designed to do, not to raise revenue.”

That little sermon came from Justice Ruth Bader Ginsburg, arguably the most consistently liberal member of the Court.

It has been suggested that the silver lining here is the contraction of the Commerce Clause, which Chief Justice Roberts discussed at some length in his decision.  But the net effect of upholding ObamaCare is that the government can indeed force you to engage in commerce, and buy a product from private industry, in accordance with whatever the ruling class decides is for your own good.  The transformation of the “penalty” for non-compliance into a “tax” has little effect on the practical result.

The only arguable benefit would be the obligation for politicians to be honest about the nature of the taxes they plan to levy, as Barack Obama was not.   But that’s not really true either, because the Roberts decision accepted an argument that even the liberal justices on the Court thought was, literally, laughable: the creation of an entirely new government power, the “tax penalty.”  It’s a penalty when it needs to slip past the Anti-Injunction Act, and popular opinion, but it transforms into a tax when challenged at the Supreme Court.

No rhetorical opposition to the Commerce Clause in the commentary to a Supreme Court decision can be “worth” the creation of this limitless, protean “tax penalty” power.  Justice Ginsburg’s practical definition of taxation has been stretched beyond all reason – “taxation” is now a catch-all term for any compulsive seizure of money the government wishes to make, against any disobedient citizen.  There was already too much of this going on in our tax code, with its labyrinth of special deductions and tax credits.  Now the tax weapon can be used to proactively force citizens to do business with government-sanctioned private entities.

Furthermore, the Supreme Court now has a new legislative power that was not granted to it by the Constitution: it can re-write legislation from the bench, rather than judging the actual language of the acts placed before it, and the arguments made in their defense.  Imagine another Big Government enthusiast or two on the bench, and tell me what value a little tut-tutting over the limits of the Commerce Clause will have against that.  The Constitution is now officially what liberals have always seen it as: an obstacle to be overcome in the quest for power.

Limited, transparent government is honest with its citizens about the cost of its proposed activities, and lives within the funding means they have chosen to allocate through taxation.  The Roberts decision gives Big Government powerful new tools to conceal the true cost of its plans, and compel obedience to its agenda, rather than impartially enforcing the law.

Taxation was not meant to serve as a weapon against dissent.  And “commerce” is supposed to encompass free-market transactions between individuals, protected by (hopefully wise and limited) government regulations… not a vehicle for imposing government’s will, while relieving politicians of all responsibility for the outcome.

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