Supreme Court Justices: Health Care ‘Individual Mandate’ Is Not A Tax

In the first day of arguments over Obama’s health care law (the Affordable Care Act), the most vocal Supreme Court justices indicated (although not a final ruling) that they believe the individual mandate is a ‘penalty’ and not a ‘tax’. This is contrary to the argument I made in the article, The Individual Mandate: Why Precedent Matters. In that article I made the case for why I believe the individual mandate is essentially a tax on income since it will be collected by the Internal Revenue Service (IRS). If the Supreme Court rules the individual mandate is not a tax then it will invalidate much of my argument that income tax collection is precedent and support for the individual mandate’s constitutionality.

It might be surprising to find out that both sides actually agree on this issue. Lawyers for Obama as well as lawyers for 26 Republicans-led states actually agree that the individual mandate is not a tax. The purpose of this first argument is to decide whether the Supreme Court can rule on the individual mandate’s constitutionality. If the individual mandate is ruled a tax then the Supreme Court could not go ahead because of the ‘Tax Anti-Injunction Act‘ which says taxes can only be challenged once they are collected. If the justices did rule the individual mandate is a tax, my understanding is that any additional arguments over the constitutionality of the individual mandate would then have to wait until 2014 when the mandate goes into effect. If the justices rule the mandate is not a tax, then arguments over it’s constitutionality can go ahead.

Talking Points Memo – Justices Skeptical That Health Care Mandate Is A ‘Tax’

“Congress has nowhere used the word tax. What it says is penalty,” said Justice Stephen Breyer. “It’s collected in the same manner as a tax. But that doesn’t automatically make it a tax.” The law, he added, “doesn’t use the word tax once, except as a collection device.”

Obama-appointed Justices Sonia Sotomayor and Elena Kagan questioned the limits and exceptions under the Anti-Injunction Act. They pressed the counsel tasked with defending the AIA argument, Robert Long, to cite where the Affordable Care Act statute suggests that Congress intended for the mandate to be a tax.

Justice Ruth Bader Ginsburg seemed clearer in her view. “This is not a revenue-raising measure,” she said, “because if it is successful, nobody will pay the penalty, and there will be no revenue to raise.”

It is right about now when I can’t help but think of the ‘public option’. Had the Obama administration and Democrats fought harder for the public option we wouldn’t be speculating on the fate of the health care law. See, it was the individual mandate that replaced the public option. The Obama administration would argue that the health care bill would never have passed if it had a public option. I believe they didn’t fight for the public option in the first place, and that is no way to win support.


photo by Mark Fischer

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