February 16, 2012

The Obama Administration clearly states that the individual mandate is not a tax.

Notes Jonathan Adler, pointing to this video:



But of course, the government is arguing in the Supreme Court that the individual mandate is a tax, authorized by Congress's taxing power. Read the brief for the United States — PDF — beginning at page 50:
The “practical operation” of the minimum coverage provision is as a tax.... It amends the Internal Revenue Code to provide that a non-exempted individual who fails to maintain a minimum level of insurance shall pay a monthly penalty for so long as he fails to do so. 26 U.S.C.A. § 5000A. The amount of the penalty is calculated as a percentage of household income for federal income tax purposes, above a flat dollar amount and subject to a cap. Id. § 5000A(c). It is reported on the individual’s federal income tax return for the taxable year, ibid., and “assessed and collected in the same manner as” other specified federal tax penalties. Id. § 5000A(b)(2), (g).

Individuals who are not required to file income tax returns for a given year are not required to pay the penalty. Id. § 5000A(e)(2). The taxpayer’s responsibility for family members depends on their status as dependents under the Internal Revenue Code. Id. § 5000A(a), (b)(3). Taxpayers filing a joint tax return are jointly liable for the penalty. Id. § 5000A(b)(3)(B). And the Secretary of the Treasury is empowered to enforce the penalty provision. Id. § 5000A(g)....

Although the taxing power may not be used to impose “punishment for an unlawful act,” United States v. LaFranca, 282 U.S. 568, 572 (1931), the minimum coverage provision does not impose punishment. It does not apply retrospectively; instead, it imposes a month-to-month penalty for a failure to maintain adequate coverage, with liability ceasing when adequate coverage is obtained. 26 U.S.C.A. § 5000A(a)-(c). The tax cannot exceed the cost of qualifying insurance, id. § 5000A(c), does not apply to persons below a certain income level who do not need to file a federal income tax return, id. § 5000A(e)(2), and contains a “hardship” exemption, id. § 5000A(e)(5). It has no scienter requirement, and bars criminal prosecution for failure to pay. Id. § 5000A(g)(2)(A).
That sounds pretty sincere. And yet President Obama's acting budget director Jeffrey Zients acted completely confused when House Budget Committee Rep. Scott Garrett, R-N.J., asked him if the penalty for failure to buy insurance was a tax.

Well, I suppose it depends on what the meaning of the word "tax" is. It's one thing for the purpose of political argument: Democrats in Congress didn't want to call it a tax when they were jamming it through, and Obama doesn't want to call it a tax now as he's promoting a budget with no new taxes for those making less than $250,000 a year. But for the purposes of legal argument, you might want to characterize it as a tax. The serious question is whether the Supreme Court will accept that characterization for the purpose of upholding the law, even though for political purposes the word was not — and is not — used.

And the answer to that question depends on whether the Justices think that analysis of the political dynamics matters in the interpretation of the scope of Congress's enumerated powers. Whatever the vigor of the Court's role here — and obviously much is left to Congress's political will — it is crucial for the people — exercising their political pressure on the Congress that works its political will — to see what is happening. Even in the thrall of judicial restraint, the Court should reject an argument based on fooling the people about what Congress is doing. The people are especially vigilant about new taxes, so denying that something is a tax is an important maneuver in the political arena. If that move is made to ward off public outrage, it should not be easy to turn around win the favor of judges by calling it what you did not dare tell the people it was.

70 comments:

Matthew said...

Like pornography, I think the Supreme Court knows a tax when it sees it.

... It was that or find a way to make a Sir Humphrey "Yes, but also no," joke. I took the easy way out.

Carnifex said...

The O administration spews garbage, and the liberal media thinks it's pearls. It doesn't even matter if they issue contradicting statements in the same press release. In all honesty, the media would prefer that so as to assuage what little moral rectitude they have, so that if needs be, the media can point to either statement and say "See! The Dear Leader was right, and all republicans are icky, nasty poo poo"

I have more respect for Hugo Chavez than I do for Barrack Obama. At least Chavez is honest in his Marxism.

I have NO respect for the media.

The Drill SGT said...

Althouse, isn't there another supporting argument for you?

The Legislative intent of the sponsors was that it was not a "tax". Doesnt the court look at that in its fact finding?

Dan in Philly said...

"When I use a word it means exactly what I want it to mean, nothing more" Barack Obama... errr... the Mock Turtle.

MayBee said...

If the Court sees it as a tax, it will be the biggest boon ever to the government.

Suddenly they will have a way to pay for services they deem necessary without having to go through the whole ugly appropriations and budgeting process. The Federal deficit will disappear in a jiffy, all without raising anybody's taxes!

Alex said...

I don't see it as a tax except on those few people who choose not to have health insurance right now. 90% of us are already covered. The mandate does not affect me or anyone I know.

Ann Althouse said...

"The Legislative intent of the sponsors was that it was not a "tax". Doesnt the court look at that in its fact finding?"

That's the question under discussion, so you need to answer it. That is what I am trying to do.

Alex said...

The main issue with Obama Care is not the mandate, but eliminating pre-existing conditions. That is a death blow to the entire medical insurance industry.

Terry said...

It's not a punishment, it's a penalty!

Matthew said...

It's not a penalty, it is a negative inducement!

Alex said...

Patient Protection and Affordable Care Act

Guaranteed issue and partial community rating will require insurers to offer the same premium to all applicants of the same age and geographical location without regard to most pre-existing conditions (excluding tobacco use).[17]

Terry said...

So are the illegal aliens who are either working for cash (no W2 or 1099) or are using a stolen SSN responsible for paying this non-tax tax?

Alex said...

Obama Care discriminates against working class people who dis-proportionally are smokers.

Matthew said...

"Obama Care discriminates against working class people who dis-proportionally are smokers."

Why is the government trying to impose their morality on smokers?

MadisonMan said...

Deer in headlights.

Alex said...

Matthew - don't look at the man behind the curtain. Working class people vote for Democrats at their own peril. Want a job or handout?

jbarker4682 said...

@Alex... What about people like myself who use FSA's / HSA's and pay for everything out-of-pocket?

Medical insurance is a rip-off. Even if I never use a single service, I still have to pay upwards of $6,000 a year to cover my family, and that's just for the premium. Tack on a $4,000 deductible and 80/20 coverage, and I'd have to use at least $10,000 a year in medical services before I'd come-out even.

So basically, Obama-care is about forcing people like me to participate in a broken system to subsidize OTHER people who are getting $100k+ treatments. Its just more forced wealth distribution.

Alex said...

jbarker - how do you know you won't need a $100K surgery next week? Life is so unpredictable. Why should a person be financially ruined because of something like that?

The Drill SGT said...

That's the question under discussion, so you need to answer it. That is what I am trying to do.

The intent was established on the floor during debate and in the body of the law. The word Tax was not used by supporters to describe the penalty imposed for not meeting the individual mandate.


That bell can't be unrung by fancy lawyering after the fac t, at least in the area of "intent"

I hate this double VW

Tank said...

I am proud [and amazed] to have Garrett as my rep.

Most people could care less what you call this tax/penalty/negative inducement thingy. They just want to know when they are getting more free stuff.

Next up - eliminate the "payroll" tax completely, so that:

1. Social Security is free.

2. Rich people pay more.

Original Mike said...

"Even in the thrall of judicial restraint, the Court should reject an argument based on fooling the people about what Congress is doing."

Then they need do no more than read the title of the Act.

Tank said...

I wonder if there is any controlling legal authority.

Bender said...
This comment has been removed by the author.
edutcher said...

Right out of the Newspeak dictionary.

It's all doubleplusgood.

Eric Blair told us so.

Tank said...

Next up - eliminate the "payroll" tax completely, so that:

1. Social Security is free.

2. Rich people pay more.


Can't wait for the next trustees' report.

If there ever is another.

PS For crying out loud!

WV in Greek?

Bender said...

Once again the Obama Administration is playing fast and loose with language, treating it as a malleable thing that allows for conflating two entirely separate and distinct things.

Regardless of whether the PENALTY is a tax, the government must first justify the mandate to buy insurance.

And since the mandate requires payment of money to INSURANCE COMPANIES, not the government, the mandate itself is not and cannot be a tax.

Moreover, since, by its very terms, the failure to pay money to insurance companies has monetary PENAL consequences, the PENALTY is in the nature of a continuing fine, a fine which is imposed without any procedural due process whatsoever.

Although the amount is based on income, the penalty cannot be a form of income tax because the trigger of the tax is not the receipt of income, but the failure to buy insurance. If a tax at all, it can only be a direct tax, which is invalid because it is not laid in proportion to the census.

Toby said...

I understand political CYA, but there's one aspect of this I find particularly troubling: the executive branch is making contradictory arguments to the other two branches of government. I don't think you can spin away an act of bad faith that undermines the principles of checks and balances and co-equal branches of government.

Henry said...

What we all know is that if the Obama administration wins this case by insisting the individual mandate is a tax, the kids on the left will use that fact to insist that Federal policy isn't progressive.

We know this. The fact that the individual mandate BUYS you something will be ignored. FICA supposedly buys you something too, yet it is consistently used by the left as an example of a regressive tax.

If you suggest that because FICA is regressive it should be eliminated and the programs it supports should be means-tested, you will suddenly find out that FICA is an investment or an insurance and not a tax at all.

Thus government perverts language.

There is nothing new under the sun.

chickenlittle said...

No Alex, barker is covered for that under high deductable insurance.

High deductable insurance is incompatable with Obamacare and will be phased out. Enjoy it's benefits while you can.

Nathan Alexander said...

Liberals always play with language like this.

Just think back to all sorts of issues where the "Equal Protection" clause was cited, but used in context to mean "equal outcome".

Or how the liberals call you a hypocrite for wanting to get SS and Medicare payments, even though you are not given a choice to pay into those programs in the first place.

There is little honesty and no integrity on the part of modern liberals in the US.

Original Mike said...

"Although the taxing power may not be used to impose “punishment for an unlawful act,” ... the minimum coverage provision does not impose punishment. It does not apply retrospectively; instead, it imposes a month-to-month penalty..."

Huh? By its very nature, a "penalty" IS "punishment".

P.S. - BTW, if this goes through, it took me 5 tries to get past word verification on this post

Original Mike said...

"The fact that the individual mandate BUYS you something will be ignored. FICA supposedly buys you something too, yet it is consistently used by the left as an example of a regressive tax.

If you suggest that because FICA is regressive it should be eliminated and the programs it supports should be means-tested, you will suddenly find out that FICA is an investment or an insurance and not a tax at all."


Yeah, that one annoys the hell out of me. They're fucking dishonest; through and through.

Henry said...

@Original Mike (and others):

Directly to the right of the "Type the two words:" box is a small circular arrow. Keep clicking that arrow until the word image is something legible.

Bob Ellison said...

Can't we just be honest and call it a head tax?

traditionalguy said...
This comment has been removed by the author.
Original Mike said...

Thanks, Henry. I had tried that once, but when I got the "Are you sure you want to navigate away from this page" message, I thought I'd lose my comment. Not the case, however.

AJ Lynch said...

What is that old saying "Consistency is the hobgoblin of small minds"? Nah that is not it- but I bet Prez Obama wishes it was it.

Btw - the new wv sucks bigtime.

traditionalguy said...

The Mandate is clearly an excise tax on people living on earth.

The UN is working on their version of one as we speak.

Pastafarian said...

I think you can square this circle by using quantum mechanics -- Schrodinger's cat was neither dead nor alive, and this penalty is both a tax, and not a tax.

I suspect that this guy had permission to admit that it's a tax, to tank the SCOTUS decision. Obama would rather lose this case and win the election, than win the case and lose the election.

And if Obama wins the case, Obamacare remains a viable line of attack in November; and his opponents can point out that the administration admitted, insisted even, that this was a tax, and so they have raised taxes on hundreds of thousands of Americans making less than $250K.

This is why we need a Republican candidate willing to repeal the whole thing -- we can't rely on the SCOTUS to do this, because if they do, the Republicans will probably lose the presidency, and enough parts of Obamacare will remain intact to scuttle the private insurance system -- which was the whole point of Obamacare from the beginning.

Bill, Republic of Texas said...

How is it ethical for a government lawyer to say it is a tax when the government (Congress and President) say it is not a tax?

Shouldn't the lawyer be honest (Hahahaha) and say my client says is it not a tax and I am bound by that?

WV is crap now.

Bill, Republic of Texas said...

Bob Ellison said...
Can't we just be honest and call it a head tax?

2/16/12 2:30 PM


Great a new sin tax

DaveW said...

It's amazing to me how much contempt this administration has for the intelligence of the American people.

I wonder if they're right.

OMG I can't even read this stupid WV thing - it's taking me 3 or 4 tries every time.

Original Mike said...

"It's amazing to me how much contempt this administration has for the intelligence of the American people."

I think it's more likely they are counting on the people not knowing. Lord knows, the press won't tell 'em.

Pogo said...

More bullshit from the Obama administration.

Their words have no meaning, so I don't even bother listening anymore.

It's like talking to a sociopath; everything they say is a lie, and their explanations and promises are meaningless.

Coketown said...

1) Either C-SPAN needs better lighting technicians or Zients needs to stop hiring morticians to apply his makeup.

2) This would make a fascinating question for Obama during the general election debates--but it will never be asked. Probably Romney will be asked why he put his dog on top of his station wagon but Obama will be able to evade crucial questions of policy.

3) The sleight-of-hand tactics, absurd posturing, and gross double-speak on display here will be out, as it was during Obamacare's passage, in full force this summer when the Supreme Court rules. It will remind the public of that 18-month legislative horror and will be as bruising to the Democrats as it was on initial passage. I'm curious if the left factors this into their November calculations. They seem to think Republicans are mortally wounded by each payroll tax cut debate, but Democrats escape unscathed from debates on Obamacare.

Smilin' Jack said...

Well, I suppose it depends on what the meaning of the word "tax" is.

And, of course, what the meaning of the word "is" is.

chickenlittle said...

This for 36fsfiend:)

The reason Obama deliberately kept Zients in the dark about the "tax" language is because he was channeling Matthew 6:3

But when thou doest alms, let not thy left hand know what thy right hand doeth.

Beldar said...

I liked this paragraph by our hostess a whole lot:

--------------------
Whatever the vigor of the Court's role here — and obviously much is left to Congress's political will — it is crucial for the people — exercising their political pressure on the Congress that works its political will — to see what is happening. Even in the thrall of judicial restraint, the Court should reject an argument based on fooling the people about what Congress is doing. The people are especially vigilant about new taxes, so denying that something is a tax is an important maneuver in the political arena. If that move is made to ward off public outrage, it should not be easy to turn around win the favor of judges by calling it what you did not dare tell the people it was.
---------------

Every statute passed by Congress and signed by the POTUS (or passed over his veto) must be justifiable by some provision of the United States Constitution. That is essential to the maintenance of our Republic as a government of limited powers — a government subordinate to, not the dictator over, its people.

Flacks for the Obama Administration, including many lefty lawyers and law professors, would love to persuade you, the people, that they're entitled to rely on one part of the Constitution, the taxing and spending clause, as a justification for Obamacare while they're arguing in the federal courts over its constitutionality, and yet to deny elsewhere that Obamacare involves any "taxes."

"This is complicated lawyer-stuff that only us high priests of penumbras and the living, breathing Constitution can possibly comprehend," they suggest. "Go back to your circuses — look, look, they're handing out more free bread! FREE BREAD!"

Democrats are the masters of cognitive dissonance. That's not in dispute and won't change. What might change — as between November 2008 and November 2012 — is the number of rubes who fall for their shameless hoax.

[PS - I can barely read any of these damned word verification puzzles. Curse their creator; and curse Blogger for using them.]

Phil 3:14 said...

The main issue with Obama Care is not the mandate, but eliminating pre-existing conditions. That is a death blow to the entire medical insurance industry.

Alex,
You don't know what you're talking about. The vast majority of private health insurance is employer based. Generally, such coverage is IN SPITE of any prior condition.

as for the "tax", Professor haven't you learned yet, taxes are only for RICH people.

Rusty said...

Ann Althouse said...
"The Legislative intent of the sponsors was that it was not a "tax". Doesnt the court look at that in its fact finding?"

That's the question under discussion, so you need to answer it. That is what I am trying to do


A good rule of thumb is if the program is mandatory and there is a penalty involved for non-participation, then you can it a tax.

Beldar said...

Ping: I've reprinted my own comment above on my own blog, along with the concluding two paragraphs of Prof. Althouse's post.

Rusty said...

can call it

Beldar said...
This comment has been removed by the author.
Fen said...

A good rule of thumb is if the program is mandatory and there is a penalty involved for non-participation, then you can it a tax.

That would make registering for the draft a tax.

[again, 3 tries to get a stupid wv I can actually see...]

Henry said...

A good rule of thumb is if the program is mandatory and there is a penalty involved for non-participation, then you can it a tax.

Automobile insurance.

The rule doesn't really work, but the exceptions are illuminating.

Automobile insurance is forced upon people who own cars.

Obamacare insurance is forced upon people who breath.

Unknown said...

If money goes to the government, it's a tax. Meandering around the basic issue is in bad taste.

bagoh20 said...

The job of the court is not the same as the responsibility of the people to know when they are being lied to.

Too different judging authorities, and only one can vote for a liar to lie to them.
The judges judge the law, but we judge our leaders.

I never saw people so accepting of liars as the supporters of this administration. My liberal friends are very upset with Obama and his lies, but won't see lies - they see weakness, and cowardice, and refuse to admit any lies. "It's really very much "Obama the boyfriend."

bagoh20 said...

I think the comparison to automobile insurance just makes that mandate look unconstitutional as well, rather than the other way around.

Eric said...

The Legislative intent of the sponsors was that it was not a "tax". Doesnt the court look at that in its fact finding?

You would think, wouldn't you? The administration wants to call the mandate a tax when it's advantageous and call it something else when it's not.

On the other hand, the court is usually pretty reluctant to delve into legislative sausage-making. My guess is they'll look at the statutes as written and ignore everything else.

Eric said...

I think the comparison to automobile insurance just makes that mandate look unconstitutional as well, rather than the other way around.

Agreed. You can easily avoid the auto insurance mandate by not driving a car. How do you avoid the health insurance mandate?

Revenant said...

I don't see it as a tax except on those few people who choose not to have health insurance right now.

I use a high-deductible plan due to be rendered illegal by ObamaCare.

So I view it as a tax on me -- I'll have to buy a plan I don't want because the plan I DO want is illegal.

Hagar said...

These people make the Clintonistas look like the Boy Scouts.

chickenlittle said...

@Revenant: I don't think Alex understands what high deductable insurance is.

But that is an excellent example of the economic perversity of Obamacare: to not just discourage, but to actually penalize personal responsibility.

Fen said...

Again, Steyn:

"...the governmentalization of health care is the fastest way to a permanent left-of-center political culture. It redefines the relationship between the citizen and the state in fundamental ways that make limited government all but impossible.

That’s not an accident, it’s the whole point of it:

Government health care is not about health care, it’s about government. Once you look at it that way, what the Dems are doing makes perfect sense. For them."

http://www.nationalreview.com/corner/290878/re-nuts-mark-steyn

a psychiatrist who learned from veterans said...

Consider these two policies:

A. An employer is required to provide its employees health insurance that covers birth control.

B. An employer is required to provide its employees health insurance. The health insurance company is required to cover birth control.

I can understand someone endorsing both A and B, and I can understand someone rejecting both A and B. But I cannot understand someone rejecting A and embracing B, because they are effectively the same policy. Ultimately, all insurance costs are passed on to the purchaser, so I cannot see how policy B is different in any way from policy A, other than using slightly different words to describe it.

Yet it seems that the White House yesterday switched from A to B, and that change is being viewed by some as a significant accommodation to those who objected to policy A. The whole thing leaves me scratching my head.From Greg Mankiw. So what else is new.

The words 'tax' and 'mandate' are two words that love each other as much as any other and you are cruel to want to keep them apart.

Michael McNeil said...

BTW, if this goes through, it took me 5 tries to get past word verification on this post

And yet, weirdly, yesterday I made a posting and accidentally mistyped the wv — I typed two ‘LL’s instead of one — and yet it went through!

Michael McNeil said...

I think the comparison to automobile insurance just makes that mandate look unconstitutional as well, rather than the other way around.

I'm not sure quite why that follows. Besides the auto insurance mandate applying only to folks who drive cars, rather than everybody as with the PPACA (other than exempted e.g. religions and Indians), it's also true that states have plenary powers and can do things that are prohibited to the feds.

Bruce Hayden said...

I think that the answer here is that it really doesn't matter what some member of the Obama Administration believes here, and it may not even matter what Obama himself believed at the time. The Obama Administration member is likely not authorized to speak for the government on this subject in the first place.

The opponents are playing gotcha here, with the proponents who want their cake and to eat it too. But, I don't see this really changing the legal landscape one little bit.

The individual mandate is much easier to justify from a Constitutional point of view under the Taxing power, but then it would have to be a "tax". But a tax would have had a harder time getting through Congress than a penalty (and, it only barely passed) plus, it violated Congressional taxing rules, and a penalty has to be justified under the Commerce clause. Which gets into the Necessary and Proper clause, because there really isn't any interstate commerce involved when you don't carry or use insurance.

Nathan Alexander said...

For those who doubt Eric, I work with several people who do not own cars in the DC area. They use the Metro.
New York has hundreds of thousands who do not own a car, if not millions in the area.

Bruce Hayden said...

I don't see legislative intent being all that important either. Maybe here, where they have some Congressional fact finding to support it, but by now, we all know that is pretty bogus. Most often, there was no underlying fact finding for all the supposed facts that Congress asserts they found. No hearings of both sides of the issue. That sort of thing. Certainly not here, where the hearings were heavily stacked in favor of the legislation, and what passed was a managers' amendment that no one, not even most of the sponsors, had had a chance to read.

Members of Congress can go to extreme measures to get this sort of thing in the record as "legislative intent". Last year, a day or two after "Patent Reform" passed the Senate, Sens. Leahy and Hatch had a soliloquy that they intended to define terms in the legislation just passed. Sure, they were the Chair and Ranking Member of the Judiciary committee, but, still, only two members of the Senate, and what they were trying to establish had never been seen by the Senate itself.

I think that one problem here is that the legislative intent, outside of the wording of the legislation, is not clear. But, there are numerous uses of the word "tax" or its derivatives, in the legislation, and the individual mandate is not one of them. I think that that is why a lot more of the action seems to involve the Commerce and the Necessary and Proper clauses.

It should be interesting to see how this plays out.

Rusty said...

Fen said...
A good rule of thumb is if the program is mandatory and there is a penalty involved for non-participation, then you can it a tax.

That would make registering for the draft a tax


In a way it is. It could be considered a tax in kind.


Henry.
I should have stated -any government entity.
Whenever you have no choice but to pay any government entity a fee for a service or product you are paying a tax. No matter what they call it. It is a tax.
Some are more fair than others. Use taxes. Tolls.

Again.
The healthcare mandate is not about healthcare. Nobody, least of all anybody in Washington DC gives a damn whether you live or die. The healthcare mandate is all about control. Anybody that tells you anything else is lying.