Justice Alito asks Solicitor General Verrilli whether the government is saying that in cases where someone is "exempt" from the penalty, it means that the person is "not under the obligation to maintain minimum essential coverage." The SG says that's right. Chief Justice Roberts says those with exemptions are subject to the mandate, just enjoying an exemption from the penalty. The SG says "you cannot infer from the fact that someone is exempt from the penalty, that they are still under an obligation to have the insurance."
Justice Kagan then wants to know about a person who isn't exempt from the penalty but who chooses to pay the penalty rather than to buy the insurance. What if this person then "finds herself in a position where she is asked the question, have you ever violated any federal law, would that person have violated a federal law?"
GENERAL VERRILLI: No. Our position is that person should give the answer "no."Why "thank you"? Breyer must think he's pinned Verrilli down. This is indeed a tax?
JUSTICE KAGAN: And that's because —
GENERAL VERRILLI: That if they don't pay the tax, they violated a federal law.
JUSTICE KAGAN: But as long as they pay the penalty —
GENERAL VERRILLI: If they pay the tax, then compliance with the law.
JUSTICE BREYER: Why do you keep saying tax?
GENERAL VERRILLI: If they pay the tax penalty, they're in compliance with the law.
JUSTICE BREYER: Thank you.
GENERAL VERRILLI: Thank you, Justice Breyer.Hmm. So the SG is saying the only legal requirement is to pay the tax if you owe the tax, which you do if you haven't bought the insurance (and don't have some exemption). There's more discussion and Breyer returns at page 52 to say:
JUSTICE BREYER: The penalty.
GENERAL VERRILLI: Right. That's right.
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 [the Anti-Injunctions] 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?Roberts presses him: One purpose of the penalty is to raise revenue? Yes, says the SG, but because the ACA lacks "textural [sic] instruction in the statute that this penalty should be treated as a tax for Anti-Injunction Act purposes," it's not within the Anti-Injunction Act. Get it? Something needs to be specifically called a tax for the Anti-Injunction Act to apply, but when it comes to assessing Congress's enumerated power to tax, specific textual reference to "tax" isn't needed.
GENERAL VERRILLI: That's the essence they called it a penalty. They didn't give any other textural [sic] 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.
I think Justice Breyer was buying that argument.