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There is much confusion regarding the ACA tax issue. Contrary to what some think, this is the same argument the President made. He said the penalty was not a tax for purposes of the Anti-injunction Act. The Majority agreed. He said it was a tax for purpose of Congress' Article I taxing authority, thus giving Congress power to enact the ACA. The majority agreed with that.

Do you remember how much criticism the Solicitor General received from some after oral argument. Many said that not only was he stumbling and ineffective but his seemingly contradictory arguments on the tax issues were lame. Well, it appears that ineffective and lame won the day.

Here is the relevant language from the Roberts opinion.

First, the Court sets up the issue,

Government’s tax power argument asks us to view the statute differently than we did in considering its com- merce power theory. In making its Commerce Clause argument, the Government defended the mandate as a regulation requiring individuals to purchase health insurance. The Government does not claim that the taxing power allows Congress to issue such a command. Instead, the Government asks us to read the mandate not as ordering individuals to buy insurance, but rather as imposing a tax on those who do not buy that product.
Then he explains must find any reasonable reading that allows a law to be sustained,
The text of a statute can sometimes have more than one possible meaning. To take a familiar example, a law that reads “no vehicles in the park” might, or might not, ban bicycles in the park. And it is 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. Justice Story said that 180 years ago: “No court ought, unless the terms of an act rendered it unavoidable, to give a construction to it which should involve a violation, however unintentional, of the constitution.” Parsons v. Bedford, 3 Pet. 433, 448–449 (1830). Justice Holmes made the same point a century later: “[T]he rule is settled that as between two possible interpretations of a statute, by one of which it would be unconstitutional and by the other valid, our plain duty is to adopt that which will save the Act.” Blodgett v. Holden, 275 U. S. 142, 148 (1927) (concurring opinion).

The most straightforward reading of the mandate is that it commands individuals to purchase insurance. After all, it states that individuals “shall” maintain health insurance. 26 U. S. C. §5000A(a). Congress thought it could enact such a command under the Commerce Clause, and the Government primarily defended the law on that basis. But, for the reasons explained above, the Commerce Clause does not give Congress that power. Under our precedent, it is therefore 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.

Then he analyses the law to discern its essence as a tax,
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 a condition—not owning health insurance—that triggers a tax—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 earning income. And if the mandate is in effect just a tax hike on certain taxpayers who do not have health insurance, it may be within Congress’s constitutional power to tax.

. . . . .

The exaction the Affordable Care Act imposes on those without health insurance looks like a tax in many re- spects. The “[s]hared responsibility payment,” as the statute entitles it, is paid into the Treasury by “tax- payer[s]” when they file their tax returns. 26 U. S. C. §5000A(b). It does not apply to individuals who do not pay federal income taxes because their household income is less than the filing threshold in the Internal Revenue Code. §5000A(e)(2). For taxpayers who do owe the pay- ment, its amount is determined by such familiar factors as taxable income, number of dependents, and joint filing status. §§5000A(b)(3), (c)(2), (c)(4). The requirement to pay is found in the Internal Revenue Code and enforced by the IRS, which—as we previously explained—must assess and collect it “in the same manner as taxes.” Supra, at 13–14. This process yields the essential feature of any tax: it produces at least some revenue for the Government. United States v. Kahriger, 345 U. S. 22, 28, n. 4 (1953). Indeed, the payment is expected to raise about $4 billion per year by 2017. Congressional Budget Office, Payments of Penalties for Being Uninsured Under the Patient Pro- tection and Affordable Care Act (Apr. 30, 2010), in Selected CBO Publications Related to Health Care Legislation, 2009–2010, p. 71 (rev. 2010).

Finally, he explains that the fact it is labeled as a "penalty" does not mean it isn't a tax for this purpose
It is of course true that the Act describes the payment as a “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 viewed as an exercise of Congress’s taxing power. It is up to Congress whether to apply the Anti-Injunction Act to any particular 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 Congress’s constitutional power to tax.
Although many thought the Solicitor General's argument was bizarre and convoluted, it won the day.

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Comment Preferences

  •  Yep, its a tax (2+ / 0-)

    Mark my words, the right will frame it as a huge tax increase on the middle class in the middle of a deep recession.

    Not sure how to counter that argument.

    •  by turning it into the Public Option. (5+ / 0-)

      The PO is a tax that pays for a service.  Rather than a penalty passed off as a tax for refusing to do biz with the most sociopathic corporations on the American landscape.

      "Minus two votes for the Democrat" equals "plus one vote for the Republican." Arithmetic doesn't care about your feelings.

      by G2geek on Thu Jun 28, 2012 at 08:47:05 AM PDT

      [ Parent ]

    •  Toothless. (1+ / 0-)
      Recommended by:
      Gary Norton

      Far too many Americans are without health insurance (and care).

      Far too many (more, even, than the above) are "insured" with coverage that they know... or strongly suspect... is inadequate. In a real crisis, it'll leave them screwed.

      Then there's a large number who know people in the first two classes. Family members. Friends. Associates. Members of their churches, etc.

      The tax? They're not seeing it. Those who have insurance aren't feeling it--because the tax doesn't fall on them. Tell them they're being taxed. (Ok, the GOP will, but it's a complete lie and easy to debunk.) Decently insured, or crap, they're covered.

      In short, most of the middle class isn't being taxed for this. And for those that don't have insurance (and haven't been able to get it), Obamacare is a godsend--even if it's not as good as it ought to be.

      "Be just and good." John Adams to Thomas Jefferson

      by ogre on Thu Jun 28, 2012 at 10:34:48 AM PDT

      [ Parent ]

  •  We all new (1+ / 0-)
    Recommended by:
    Gary Norton

    it a was a tax, well a fee or whatever, but they just did not wanted to call it that because if you say tax aloud three times Grover Norquist  appears in a pluff of unholy smoke and takes you to another dimension.

    If they had called it a tax it will not even have gotten a hearing by SCOTUS.

  •  Interesting, so did the court affirm health care (1+ / 0-)
    Recommended by:
    Gary Norton

    ...generally (not just for seniors & poor) as a government service funded by taxes?

    Eliminate the Bush tax cuts Eliminate Afghan and Iraq wars Do these things first before considering any cuts

    by kck on Thu Jun 28, 2012 at 08:44:48 AM PDT

  •  This was Verilli's last-ditch line of defense (4+ / 0-)

    and the continuing pronouncements of the Administration back to 2009 stating that the mandate was not a tax made it very likely that a fifth vote for upholding PPACA would not be available.  Roberts had to overlook a lot to get to where he did and it was, at best, a very risky bet.

    He's absolutely right about constitutional avoidance (which I think renders the whole discussion of the Commerce Clause as dicta) and he came to the right decision -- and a lot of Justices and judges would have failed to do that (as did four of his colleagues.)  Yes, I'm glad that Verrilli made the argument; I don't actually blame him.  I blame Obama and Congressional Democrats for forcing him to have to make a convoluted argument to comport with how they represented PPACA before the cases were even filed.

    Verrilli did a poor job, because his client put him in a terrible position.  It was luck, as much as anything, that prevented a disaster.

    Pro-Occupy Democratic Candidate for California State Senate, District 29 & Occupy OC Civic Liaison.

    "I love this goddamn country, and we're going to take it back." -- Saul Alinsky

    by Seneca Doane on Thu Jun 28, 2012 at 08:54:53 AM PDT

    •  Yes and no. Public statements didn't drive (3+ / 0-)
      Recommended by:
      Deep Texan, ybruti, Eric Nelson

      the legal arguments. When these cases first started the Government argued it was a tax for anti-injunction Act purpose, but soon stopped making that argument. I think they decided they wanted the case decided on the merits.

      But they always maintained the argument that it was Constitutional under the Congress' taxing authority. Yes, that's a tough argument, but Verilli knew his audience better than many.

      Further, affiant sayeth not.

      by Gary Norton on Thu Jun 28, 2012 at 09:01:40 AM PDT

      [ Parent ]

  •  I didn't see this coming (2+ / 0-)
    Recommended by:
    pico, Gary Norton

    I did not think that there were five votes for approving the ACA on the basis of the Commerce Clause and I had that right. Given how badly the "it's a tax" view did in oral argument, even from Justice Ginsburg who stated with such clarity the difference between a mandate and a tax, I never saw the ACA being approved based on the taxing power of Congress. In addition Congress went out of its way to state, with emphasis in the legislation, that it was not a tax.  The basis of the decision is surprising, I didn't see this one coming.

    "let's talk about that"

    by VClib on Thu Jun 28, 2012 at 08:57:22 AM PDT

  •  it threaded several needles (3+ / 0-)
    Recommended by:
    Deep Texan, Gary Norton, Eric Nelson

    but the guidelines were in the law in other decisions.

    Magic language often wins in court.  Penalty, after the fact tax imposition, not subject to injunctive relief, but doesn't remove it from being a tax. All established precedent.

    Maybe Obama was a con law professor for a reason.

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