Source: https://www.uspoliticsonline.com/forum/political-arenas/health-care/4860-why-the-mandate-was-valid-under-taxing-power-edited-from-opinion-3-pages
Timestamp: 2019-04-24 14:37:00+00:00

Document:
Congress may also “lay and collect Taxes, Duties, Im¬posts and Excises, to pay the Debts and provide for thecommon Defence and general Welfare of the United States.” U. S. Const., Art. I, §8, cl. 1. Put simply, Con¬gress may tax and spend. This grant gives the FederalGovernment considerable influence even in areas where it cannot directly regulate. The Federal Government may enact a tax on an activity that it cannot authorize, forbid,or otherwise control. See, e.g., License Tax Cases, 5 Wall. 462, 471 (1867). And in exercising its spending power,Congress may offer funds to the States, and may condition those offers on compliance with specified conditions. See, e.g., College Savings Bank v. Florida Prepaid Postsecond¬ary Ed. Expense Bd., 527 U. S. 666, 686 (1999). These offers may well induce the States to adopt policies thatthe Federal Government itself could not impose. See, e.g., South Dakota v. Dole, 483 U. S. 203, 205–206 (1987) (con-ditioning federal highway funds on States raising their drinking age to 21).
Beginning in 2014, those who do not comply with themandate must make a “[s]hared responsibility payment” to the Federal Government. §5000A(b)(1). That payment,which the Act describes as a “penalty,” is calculated as a percentage of household income, subject to a floor based ona specified dollar amount and a ceiling based on the aver¬age annual premium the individual would have to pay for qualifying private health insurance. §5000A(c). In 2016, for example, the penalty will be 2.5 percent of an individ¬ual’s household income, but no less than $695 and no more than the average yearly premium for insurance that co¬vers 60 percent of the cost of 10 specified services (e.g., prescription drugs and hospitalization). Ibid.; 42 U. S. C. §18022. The Act provides that the penalty will be paid tothe Internal Revenue Service with an individual’s taxes, and “shall be assessed and collected in the same manner” as tax penalties, such as the penalty for claiming too large an income tax refund. 26 U. S. C. §5000A(g)(1). The Act, however, bars the IRS from using several of its nor¬mal enforcement tools, such as criminal prosecutions and levies. §5000A(g)(2). And some individuals who are sub¬ject to the mandate are nonetheless exempt from the penalty—for example, those with income below a certainthreshold and members of Indian tribes. §5000A(e).
Under the mandate, if an individual does not maintain health insurance, the only consequence is that he must make an additional payment to the IRS when he pays his taxes. See §5000A(b). That, according to the Government,means the mandate can be regarded as establishing acondition—not owning health insurance—that triggers atax—the required payment to the IRS. Under that theory, the mandate is not a legal command to buy insurance.Rather, it makes going without insurance just another thing the Government taxes, like buying gasoline or earn¬ing income.
It is of course true that the Act describes the payment asa “penalty,” not a “tax.” But while that label is fatal to the application of the Anti-Injunction Act, supra, at 12–13, it does not determine whether the payment may be viewedas an exercise of Congress’s taxing power. It is up to Con¬gress whether to apply the Anti-Injunction Act to anyparticular statute, so it makes sense to be guided by Con¬gress’s choice of label on that question. That choice does not, however, control whether an exaction is within Con¬gress’s constitutional power to tax.
None of this is to say that the payment is not intended to affect individual conduct. Although the payment willraise considerable revenue, it is plainly designed to ex¬pand health insurance coverage. But taxes that seek to influence conduct are nothing new. …. Today, federal and state taxes can compose more than half the retail price of cigarettes not just to raise more money, but to encourage people to quit smoking.
Neither the Act nor any other law attaches negative legal consequences to not buying health insur-ance, beyond requiring a payment to the IRS. The Gov¬ernment agrees with that reading, confirming that ifsomeone chooses to pay rather than obtain health insur¬ance, they have fully complied with the law.
Indeed, it is estimated that four million people each year will choose to pay the IRS rather than buy insurance. … Congress did not think it was creating four million outlaws.
A tax on going without health insurance does not fall within any recognized category of direct tax.
If it is troubling to interpret the Commerce Clause as authorizing Congress to regulate those who abstainfrom commerce, perhaps it should be similarly troubling topermit Congress to impose a tax for not doing something.
Three considerations allay this concern. First, and most importantly, it is abundantly clear the Constitution does not guarantee that individuals may avoid taxation through inactivity. Second, Congress’s ability to use its taxing power toinfluence conduct is not without limits. A few of our cases policed these limits aggressively, invalidating punitiveexactions obviously designed to regulate behavior other¬wise regarded at the time as beyond federal authority. …. “‘there comes a time in the extension of the penalizing features of the so-called tax when it losesits character as such and becomes a mere penalty with the characteristics of regulation and punishment.’” ….. We have already explained that the shared responsibil¬ity payment’s practical characteristics pass muster as atax under our narrowest interpretations of the taxing power. Third, although the breadth of Congress’s power to taxis greater than its power to regulate commerce, the taxingpower does not give Congress the same degree of controlover individual behavior. ….. Congress’s authority under the taxingpower is limited to requiring an individual to pay money into the Federal Treasury, no more.
The Affordable Care Act’s requirement that certain in¬dividuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax. Be¬cause the Constitution permits such a tax, it is not our roleto forbid it, or to pass upon its wisdom or fairness.
I notice that some administration defenders are still calling it a penalty, but it got struck down as a penalty. A penalty implies a violation, which would involve the government's power to regulate, not it's ability to tax.
"... the shared re¬sponsibility payment may for constitutional purposes be considered a tax, not a penalty..." The part I put in bold limits that ruling for constitutional purposes, not for the everyday life of the population. As I remarked, not every citizen is a jurist, and for them "tax" and "penalty" can mean greatly different things than for the Court. If they perceive it as a penalty, they're fully justified to call it a penalty, even if legally it's a tax. Because, in the end, it's what describes the most accurately what they will experience.
I only have French examples for this but put me in front of a hill. By strict (French) definition, a hill becomes a mountain when it's higher than 600 meters. When I call a mountain a hill, I don't calculate its height, I compare it with the mountains I know and if it doesn't look like a mountain, it's not a mountain to me. Same with rivers, same with cities, same with facts and same with taxes and fees.
And to be fair, this tax is intended as a penalty.
It's not that the president and democrats shouldn't call it a tax - it would be virtuous and not very clever of them to do so - but if they want to call it a penalty, I think linguistically they're justified.
A penalty implies a violation. And in order for not buying insurance to be a violation, it requires the government to be able to regulate. Since the government is not allowed to regulate this, they cannot penalize it.
The law is still the same. What it does is still the same. What it will mean, in practice, for people in 2014, is still the same. Before the ruling, people had to buy health insurance or pay a penalty. After the ruling, people who don't buy health insurance pay a tax. Seriously.
What's more, when people hear of a tax they don't immediately think of the conditions attached to this tax - without any incentive to look further, and especially faced with catchphrases like "the highest tax raise on the middle-class since...", it's expected that they conclude there is no such condition, and they will have to pay that tax like income tax, whatever else they do. The "word" penalty force them to take conditions into account, so using that word might actually be even more accurate than "tax", even if technically it is one.
Basically, if you say "there is a new tax" you immediately expect to have to pay it. If you say "there is a new penalty" you immediately expect not to have to pay it. That's the only actual stake in calling it a "tax" or a "penalty" here, for non-constitutional purposes. When a "war" is called an "intervention", that's no different.
Reagan's COBRA act to force hospital emergency rooms to accept illegals forces me to pay taxes top cover the expense.
Or is cheap labor worth the distribution of such a tax?
They don't penalize it, they grant a tax credit for having insurance.
The court looks at whether congress has the power to do something under the constitution, it doesn't play gotcha with the wording.
I realize it's only philosophical, but it means something to me that the mandate is now morally neutral. I am not actually required to buy health insurance. I am not in violation of any law if I don't. As you imply goober, it is now akin to choosing to buy or not buy alcohol. Either choice is legally the same.
If I'm paying a penalty or a fine, that implies that I broke the law. But since the mandate is only legal under Congress' tax power, that means I have broken no law, since Congress never had the authority to pass any such law. They only have the authority to encourage me to buy insurance by having me pay less taxes if I do.
Last edited by adaher; 06-30-2012, 09:38 PM.
Does Congress have the power to raise your taxes? Does Congress have the power to give you a tax credit if you have health insurance?
So Congress has the power to do exactly what the ACA does.
So the point is, the Supreme Court (well, at least 5 of them) isn't going to play a gotcha game over wording.
Could Congress do exactly what the ACA says, if it was worded differently? If so, then it has the power to do what the ACA calls for.
Congress still can call it a penalty, in Massachusetts, we've had basically the same law for a number of years, and I think we have less than 5% uninsured.
And less than 2% of children uninsured. Compare that with Texas where 25% of the population is uninsured. Three people paying for what 4 people get, 1 out of 4 people is a free riding bum.
And the penalty in Massachusetts is like a third of what the ACA imposes.
Last edited by goober; 07-01-2012, 08:25 PM.
It's semantics. If you speed, you get a $100 ticket. Let's say you get caught once a year on average. It's a violation. How about a law, if you prove you didn't speed for a year, you get a $100 credit. Oh, and with the new law are tax increases increasing average taxes by $100 per person.
It's mostly shifting the burden of proof. You need to be caught speeding to pay the fine. To get a credit, you have to prove you qualify to the IRS.
The problem with getting for-profit insurance is that it is for-profit. You will likely spend more than if you had not bought it. Same with car insurance.
You can call it what you want, but what you can't call it is a violation of the law to forego health insurance. Which is important to some people. Congress' ability to regulate commerce means they can punish wrongdoing. Their tax power includes no such power except to punish nonpayment of tax. But if I pay the penalty, I'm in full compliance. Legally, I am in exactly the same position in regards to the ACA as someone who does have insurance. This was not Congress' intent, but that is what the law is now.
Speeding is a violation and you can't just pay the fine and call it a day. If you get caught speeding too much, other sanctions ensue. That's why you can't call the mandate a fine, because there are no further sanctions possible by the government. Fines are generally initial punishments, I can think of no violations that involve ONLY fines no matter how much you commit the violation. Things escalate the more you violate the law. But the ability to do that with the mandate has been shut down by SCOTUS.
The way the law is written stays on the books.
They call it a penalty, if people are going to go without insurance and pay a tax, who would have had insurance to avoid paying a fine, then more power to them.
A certain % will go bankrupt from medical expense.
Because going uninsured only works if you have nothing, if you have assets, you'll pay, eventually.
You'll need to supply the IRS with proof of insurance to avoid the penalty.
We have it already in Massachusetts, it's a form of 1099 you get from your insurance company, that says you were insured and for how much of the year.
If you don't have it, you pay the fine.

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