How Chief Justice Roberts reenvisioned the individual mandate as a tax... and how he avoided the question of congressional accountability.

After going through the Commerce Clause, the Necessary and Proper Clause, and the Spending Clause, I'm finally going to read the taxing power part of the new case — which, by the way, is called National Federation of Independent Business v. Sebelius.

This is the part where a 5-person majority upholds the individual mandate. Chief Justice Roberts writes, joined by Justice Ginsburg, Breyer, Sotomayor, and Kagan. The 4 liberal Justices did not agree with him in the Commerce Clause part of his opinion, III-A, so they also don't join III-B, which is the transition from the Commerce Clause to the taxing power discussion. In III-B, Roberts tells us that we need to shift from thinking about the individual mandate "as ordering individuals to buy insurance, but rather as imposing a tax on those who do not buy that product." The government argued for reading the statute one way — as a requirement — but that led to viewing it as unsupported by the only enumerated power that might have supported it, the commerce power. So we shift to the other alternative — the mandate as a device for identifying who owes a tax. He's choosing to read the mandate in the way that allows it to be supported by another enumerated power, the taxing power.

Now, on to part III-C, with Roberts writing for the majority.

The exaction the Affordable Care Act imposes on those without health insurance looks like a tax in many respects. The “[s]hared responsibility payment,” as the statute entitles it, is paid into the Treasury by “taxpayer[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 payment, 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, n. 4 (1953). Indeed, the payment is expected to raise about $4 billion per year by 2017....

The fact that Congress labeled it a "penalty" rather than a "tax" isn't crucial. (Nor does it matter that the Court doesn't view it as a tax within the meaning of the Anti-Injunction Act.) Roberts also distinguishes cases that say when an exaction is a "penalty," it is not a tax. So the label "tax" won't turn what is really a penalty into a tax (within the taxing power), and here, the label "penalty" won't turn what is really a tax into a penalty. The question is what is it really, and this "penalty" is really a tax for 3 reasons:

First, for most Americans the amount due will be far less than the price of insurance, and, by statute, it can never be more. It may often be a reasonable financial decision to make the payment rather than purchase insurance, unlike the “prohibitory” financial punishment in Drexel Furniture [the case that found something labeled "tax" to be a penalty]. 259 U. S., at 37. Second, the individual mandate contains no scienter requirement [unlike Drexel]. Third, the payment is collected solely by the IRS through the normal means of taxation—except that the Service is not allowed to use those means most suggestive of a punitive sanction, such as criminal prosecution [unlike Drexel, where the "tax" was enforced by the Labor Department].

It doesn't matter that this tax is supposed to get people to do something else. Taxes are often structured to motivate people to do something the government would like you to do. There are endless taxes shaping behavior, but they still get to count as taxes under the taxing power since they raise revenue. Roberts notes the obvious example of a cigarette tax. It's an incentive not to smoke, and it raises revenue. It's a tax.

In distinguishing penalties from taxes, this Court has explained that “if the concept of penalty means anything, it means punishment for an unlawful act or omission.”

In this case, what's called a "penalty" isn't really a penalty because it's not a punishment for failing to buy insurance.

While the individual mandate clearly aims to induce the purchase of health insurance, it need not be read to declare that failing to do so is unlawful. Neither the Act nor any other law attaches negative legal consequences to not buying health insurance, beyond requiring a payment to the IRS. The Government agrees with that reading, confirming that if someone chooses to pay rather than obtain health insurance, they have fully complied with the law. 

So it's just an option. You can opt not to buy the insurance and to pay the "penalty." Whichever you want. The government said exactly that to the Court. You won't have done anything wrong, so pay whichever is less. And if you are one of those healthy people whom the insurance companies need to bulk up their funds so they can pay the expenses of their unhealthy, you should hand your money to the government. Screw the insurance companies! That is the plan. The government said so. If and when you have health-care expenses that outweigh the cost of insurance, then go ahead and buy insurance. Again: screw the insurance companies. That is the plan.

Indeed, it is estimated that four million people each year will choose to pay the IRS rather than buy insurance. See Congressional Budget Office, supra, at 71. We would expect Congress to be troubled by that prospect if such conduct were unlawful. That Congress apparently regards such extensive failure to comply with the mandate as tolerable suggests that Congress did not think it was creating four million outlaws. It suggests instead that the shared responsibility payment merely imposes a tax citizens may lawfully choose to pay in lieu of buying health insurance.

It's the plan. Can you see the ultimate plan?

Now, this is awfully tricky. What about democratic theory? Shouldn't Congress have to reveal such a devious scheme to the people so they can react and pressure Congress about what they want and don't want? As I said back during the oral argument:

[W]hen Congress was passing the bill, the people never understood [it as a tax]. It was utterly hidden under an incomprehensible mass of text and propaganda. There was no transparency. It rankles to think that Congress could acquire this dramatic power by a monumental political deception. But will this shake the Court out of its usual position of comfy restraint? 

And here I find the place in the oral argument transcript where Justice Breyer pinned down the Solicitor General Verrilli, getting him to say "If they pay the tax penalty, they're in compliance with the law." Breyer said "Thank you." That was a big "thank you," and Verrilli responded "Thank you, Justice Breyer." Indeed! It was on that point that the case was won. Breyer later returns to the subject, and Roberts gets involved, asking the Solicitor General whether "one of the purposes of the provision is to raise revenue," which was the key issue under the taxing power. I said at the time:

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.

I think Justice Breyer was buying that argument.

And Roberts was too, in the end.

So, Congress was raising revenue, but they really didn't want to talk about that at the time, and that's enough for the taxing power. Too bad if the people didn't notice. Justices Scalia, Kennedy, Thomas, and Alito — says it matters that Congress called this a "penalty" — expressing that to fail to buy insurance is wrongdoing that is being punished. And here's where Scalia-Kennedy-Thomas-Alito talk about democratic theory and accountability:

Taxes have never been popular, see, e.g., Stamp Act of 1765, and in part for that reason, the Constitution requires tax increases to originate in the House of Representatives. See Art. I, §7, cl. 1. That is to say, they must originate in the legislative body most accountable to the people, where legislators must weigh the need for the tax against the terrible price they might pay at their next election, which is never more than two years off. The Federalist No. 58 “defend[ed] the decision to give the origination power to the House on the ground that the Chamber that is more accountable to the people should have the primary role in raising revenue.” United States v. Munoz-Flores, 495 U. S. 385, 395 (1990) . We have no doubt that Congress knew precisely what it was doing when it rejected an earlier version of this legislation that imposed a tax instead of a requirement-with-penalty. See Affordable Health Care for America Act, H. R. 3962, 111th Cong., 1st Sess., §501 (2009); America’s Healthy Future Act of 2009, S. 1796, 111th Cong., 1st Sess., §1301. Imposing a tax through judicial legislation inverts the constitutional scheme, and places the power to tax in the branch of government least accountable to the citizenry.

Roberts' only response is that congressional power doesn't depend on labeling. He offers no answer to the discussion of legislative accountability. Interestingly, he did talk about accountability in connection with the spending power issue, as noted in this earlier post. He said:

Permitting the Federal Government to force the States to implement a federal program would threaten the political accountability key to our federal system.

In that context, the idea is that people need to know whether the state or federal government is responsible for a given matter so they can know who deserves blame or credit for a given policy. I think it's a real omission for Roberts not to address the accountability theory with respect to the mandate as a tax. Justices Justices Scalia, Kennedy, Thomas, and Alito were explicit about it, and it was obvious anyway. Maybe Roberts could have said that these 2 accountability situations are different. If Congress uses deceptive labeling to keep people from getting stirred up in time to stop the legislation, that's between Congress and the electorate, and we can get mad later and vote the bums out. But if Congress employs the states to do its work and the people don't like it, the people will be confused about who's really responsible. Congress will have blurred the lines of accountability. The people will have trouble knowing who are the bums. Roberts might have said something like that. These are 2 different ways of tricking people and one matters and one didn't.

But Roberts didn't talk about it. You know, there's a such thing as judicial accountability too. That's what these opinions are for.

ADDED: I've corrected the text to reflect that Justices Scalia, Kennedy, Thomas, and Alito are writing the dissenting opinion jointly.