NFIB v. Sebelius and the Transformation of the Taxing Power

IV. CHIEF JUSTICE ROBERTS AND THE TAXING POWER Chief Justice Roberts was prepared to overlook the drafting features of the statute that had persuaded the lower courts that the shared responsibility payment could not be treated as a tax. It was "well established that if a statute has two possible meanings, one of which violates the Constitution, courts should adopt the meaning that does not do so." (257) Thus, "'every reasonable construction must be resorted to, in order to save a statute from unconstitutionality.'" (258) The Chief Justice concluded that "[t]he most straightforward reading of the mandate is that it commands individuals to purchase insurance." (259) Nevertheless, it was "necessary to ask whether the Government's alternative reading of the statute--that it only imposes a tax on those without insurance--is a reasonable one." (260) The question was not whether the Government's reading was "the most natural interpretation of the mandate, but only whether it is a 'fairly possible' one." (261) "Granting the Act the full measure of deference owed to federal statutes," Chief Justice Roberts concluded, the mandate could be interpreted as imposing a tax. (262) This resolution of the statutory construction issue accordingly led the Chief Justice to the question of whether the individual mandate presented a constitutional exercise of Congress's taxing power. Unlike some of the lower courts, both Chief Justice Roberts and the dissenting Justices treated the Child Labor Tax Case as a precedent with continuing authority. Rather than overruling the Child Labor Tax Case, Chief Justice Roberts sought in several respects to distinguish the Child Labor Tax from the shared responsibility payment imposed by the ACA. This section examines each of those distinctions. A. The Burden of the Exaction First, Chief Justice Roberts argued that the Child Labor Tax "imposed an exceedingly heavy burden--10 percent of a company's net income--on those who employed children, no matter how small their infraction." (263) By contrast, under the ACA, "for most Americans the amount due will be far less than the price of insurance, and, by statute, it can never be more. It may often be a reasonable financial decision to make the payment rather than purchase insurance, unlike the 'prohibitory' financial punishment" imposed by the Child Labor Tax. (264) Chief Justice Roberts recognized that the "shared responsibility payment," like the Child Labor Tax, was "plainly designed" to affect behavior. (265) "But taxes that seek to influence conduct are nothing new," he observed, and as Sonzinsky pointed out, "[e]very tax is in some measure regulatory. To some extent it interposes an economic impediment to the activity taxed as compared with others not taxed." (266) The fact that the ACA "seeks to shape decisions about whether to buy health insurance [therefore did] not mean that it [could not] be a valid exercise of the taxing power." (267) Thus, Chief Justice Roberts seemed to suggest, the fact that the Child Labor Tax sought to influence conduct was not its fatal flaw. Instead, its problem was that the levy it imposed in order to do so was "prohibitory." Chief Justice Taft did describe the Child Labor Tax as "prohibitory," but that seems to have been putting it too strongly. (268) There can be little doubt that the tax reduced the employment of child labor, (269) but it clearly did not prevent such labor. Recall that the Child Labor Tax imposed the excise on firms employing children under the age of sixteen in mines and quarries, and on firms employing children under eighteen in manufacturing enterprises. (270) The 1920 Census, taken the year after the tax went into effect, showed 7,191 children under the age of sixteen employed in the "Extraction of minerals" and 9,473 children under fourteen employed in "Manufacturing and mechanical industries." (271) The 1910 Census had shown 18,090 children under sixteen employed in the "Extraction of minerals," meaning that there were 10,899 fewer children so employed in 1920. …