This morning's Supreme Court oral argument in the Affordable Care Act litigation concerned
the applicability of the Anti-Injunction Act—basically, if the penalty clause in the individual mandate in the ACA is deemed to be a "tax," then an 1867 law says that that courts can't assess its constitutionality until someone has been taxed. If the Court determines that the Anti-Injunction Act applies, then the Court gets to punt on the constitutionality of the individual mandate until 2015.
Having read this morning's argument transcript, I agree with the courtroom observers who believe that the Court will blow past this issue and resolve the constitutionality of the individual mandate on the merits. Justice Alito, and maybe the chief justice, do seem favorably inclined to the AIA argument, but I don't yet see five votes for it.
The AIA issue wasn't pressed by either side of the case; the Court brought in outside counsel Robert Long to argue this point. While the transcript gets wonky at times, I want to focus on the Court's discussion on whether the penalty constitutes a "tax."
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JUSTICE BREYER: -- so why does it fall within that word [tax]?
MR. LONG: Well, I mean, the first point is -- our initial submission is you don't have to determine that this is a tax in order to find that the Anti-Injunction Act applies, because Congress very specifically said that it shall be assessed and collected in the same manner as a tax, even if it's a tax penalty and not a tax. So that's one -
JUSTICE BREYER: But that doesn't mean the AIA applies. I mean -- and then they provide some exceptions, but it doesn't mean the AIA applies.
It says "in the same manner as." It is then attached to chapter 68, when that -- it that references that as "being the manner of." Well, that it's being applied -- or if it's being collected in the same manner as a tax doesn't automatically make it a tax, particularly since the reasons for the AIA are to prevent interference with revenue sources. And here, an advance attack on this does not interfere with the collection of revenues.
I mean, that's -- you have read the arguments, as have I. But I would like to know what you say succinctly in response to those arguments.
MR. LONG: So specifically on the argument that it -- it is actually a tax, even setting aside the point that it should be assessed and collected in the same manner as a tax.
The Anti-Injunction Act uses the term "tax"; it doesn't define it. Somewhat to my surprise, "tax" is not defined anywhere in the Internal Revenue Code. In about the time that Congress passed the Anti-Injunction Act, tax had a very broad definition. It's broad enough to include this exaction, which is codified in the Internal Revenue Code. It's part of the taxpayers' annual income tax return. The amount of the liability and whether you owe the liability is based in part on your income. It's assessed and collected by the IRS.
JUSTICE SCALIA: There -- there is at least some doubt about it, Mr. Long, for the reasons that Justice Breyer said, and I -- I thought that we -- we had a principle that ousters of jurisdiction are -- are narrowly construed, that, unless it's clear, courts are not deprived of jurisdiction, and I find it hard to think that this is clear. Whatever else it is, it's easy to think that it's not clear.
In other words, per Scalia, if it's a close call as to whether this is a tax, the Courts should hear the case. And as Justice Ginsburg then notes:
Mr. Long, you -- you said before -- and I think you were quite right -- that the Tax Injunction Act is modeled on the Anti-Injunction Act, and, under the Tax Injunction Act, what can't be enjoined is an assessment for the purpose of raising revenue. The Tax Injunction Act does not apply to penalties that are designed to induce compliance with the law rather than to raise revenue. And this is not a revenue-raising measure, because, if it's successful, they won't -- nobody will pay the penalty and there will be no revenue to raise.
Justice Alito did try to pin down the solicitor general as to whether there's a flip-flop, since
tomorrow they'll be arguing that part of the basis for finding the law constitutional is that it's within Congress' power to tax:
JUSTICE ALITO: General Verrilli, today you are arguing that the penalty is not a tax. Tomorrow you are going to be back and you will be arguing that the penalty is a tax.
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?
GENERAL VERRILLI: No, Justice Alito, but the Court has held in a license tax cases that something can be a constitutional exercise of the taxing power whether or not it is called a tax. And that's because the nature of the inquiry that we will conduct tomorrow is different from the nature of the inquiry that we will conduct today. Tomorrow the question is whether Congress has the authority under the taxing power to enact it and the form of words doesn't have a dispositive effect on that analysis. Today we are construing statutory text where the precise choice of words does have a dispositive effect on the analysis.
I thought this exchange between the Justices and General Verrilli was pretty enlightening as to how the Court views the ACA, and if you were worried about Justice Breyer, don't:
JUSTICE BREYER: So is your point that the tax -- so, what we want to do is get money from these people. Most of them get the money by buying the insurance and that will help pay. But if they don't, they are going to pay this penalty, and that will help, too. And the fact that we put the latter in brings it within the taxing power. And as far as this Act is concerned about the injunction, they called it a penalty and not a tax for a reason. They wanted it to fall outside that, it's in a different chapter, et cetera. Is that what the heart of what you are saying?
GENERAL VERRILLI: That's the essence they called it a penalty. They didn't give any other textural instruction in the Affordable Care Act or in the Internal Revenue Code or that that penalty should be treated as a tax for the Anti-Injunction Act purpose.
CHIEF JUSTICE ROBERTS: You agree with Mr. Long, and, in fact, you just agreed with Justice Breyer that one of the purposes of the provision is to raise revenue.
GENERAL VERRILLI: It will -- well, it will raise revenue. It has been predicted by the CBO that it will raise revenue, Your Honor. But even though that's the case, and I think that would be true of any -- of any penalty, that it will raise some revenue, but even though that's the case, there still needs to be textural instruction in the statute that this penalty should be treated as a tax for Anti-Injunction Act purposes, and that's what is lacking here.
JUSTICE ALITO: After this takes effect, there may be a lot of people who are assessed the penalty and disagree either with whether they should be assessed the penalty at all, or with the calculation of the amount of their penalty. So under your interpretation of the Act, all of them can now go to court? None of them are barred by the Anti-Injunction Act?
GENERAL VERRILLI: Those are two different things, Justice Alito. I think for reasons that Justice Kennedy, I think, suggested in one of his questions to Mr. Long, all of the other doctrines that are an exhaustion of remedies and related doctrines would still be there. The United States would rely on them in those circumstances. And -- and so, I don't think the answer is that they can all go to court, no.
Gregory Katsas, arguing for the ACA opponents, has a tougher job in arguing that while the mandate is a bad penalty, it's not a tax. Let's see how he does:
CHIEF JUSTICE ROBERTS: The whole point -the whole point of the suit is to prevent the collection of penalties.
MR. KATSAS: Of taxes, Mr. Chief Justice.
CHIEF JUSTICE ROBERTS: Well prevent of the collection of taxes. But the idea that the mandate is something separate from whether you want to call it a penalty or tax just doesn't seem to make much sense.
MR. KATSAS: It's entirely separate, and let me explain to you why.
CHIEF JUSTICE ROBERTS: It's a command. A mandate is a command. If there is nothing behind the command. It's sort of well what happens if you don't file the mandate? And the answer is nothing. It seems very artificial to separate the punishment from the crime.
MR. KATSAS: I'm not sure the answer is nothing, but even assuming it were nothing, it seems to me there is a difference between what the law requires and what enforcement consequences happen to you. This statute was very deliberately written to separate mandate from penalty in several different ways.
They are put in separate sections. The mandate is described as a "legal requirement" no fewer than 20 times, three times in the operative text and 17 times in the findings. It's imposed through use of a mandatory verb "shall." The requirement is very well defined in the statute, so it can't be sloughed off as a general exhortation, and it's backed up by a penalty.
Congress then separated out mandate exceptions from penalty exceptions. It defined one category of people not subject to the mandate. One would think those are the category of people as to whom Congress is saying: You need not follow this law. It then defined a separate category of people not subject to the penalty, but subject to the mandate. I don't know what that could mean other than -
CHIEF JUSTICE ROBERTS: Why would you have a requirement that is completely toothless? You know, buy insurance or else. Or else what? Or else nothing.
MR. KATSAS: Because Congress reasonably could think that at least some people will follow the law precisely because it is the law. And let me give you an example of one category of person that might be -- the very poor, who are exempt from the penalty but subject to the mandate. Mr. Long says this must be a mandate exemption because it would be wholly harsh and unreasonable for Congress to expect people who are very poor to comply with the requirement to obtain health insurance when they have no means of doing so.
That gets things exactly backwards. The very poor are the people Congress would be most concerned about with respect to the mandate to the extent one of the justifications for the mandate is to prevent emergency room cost shifting when people receive uncompensated care. So they would have had very good reason to make the very poor subject to the mandate, and then they didn't do it in a draconian way; they gave the very poor a means of complying with the insurance mandate, and that is through the Medicaid system.
Look: this thing gets really wonky, and tomorrow will be much more straightforward. Read
Armando's and
the ABA Journal's preview of this if you dare to get into the weeds, but, bottom line: I think we'll reach a merits decision, and not punt. They can't get to five votes on punting without Scalia, and he's pretty clearly skeptical of the AIA case.