During the 2009 debate over the Patient Protection and Affordable Care Act, President Barack Obama insisted that the law’s “shared responsibility payment,” assessed on Americans who fail to obtain government-approved medical coverage, is not a tax. “I absolutely reject that notion,” he told ABC’s George Stephanopoulos that September. “For us to say that you’ve got to take a responsibility to get health insurance is absolutely not a tax increase.”
After the law was enacted and challenged in court, the Obama administration changed its tune, arguing that the mandate is a legitimate exercise of Congress’ tax power. Although the Supreme Court may reject that argument with reference to this particular law, something very much like the mandate probably would be upheld if framed more clearly as a tax policy, rather than a regulation of interstate commerce. That possibility suggests how little may be at stake in this case when it comes to enforcing substantive limits on the federal government’s powers.
If the Supreme Court agrees with the U.S. Court of Appeals for the 11th Circuit that the Constitution’s Commerce Clause cannot be stretched to accommodate the insurance mandate, it may be “a huge symbolic victory for limited government,” as Georgetown University law professor Randy Barnett toldThe New York Times in March. But it will still leave in place an absurdly broad reading of the clause, one that has proven generous enough to allow virtually everything Congress has tried to do under this pretext since the New Deal. And if the Court overturns the mandate, enacting a revised version that could pass constitutional muster would be legally straightforward (if politically difficult), thanks to the enormous power Congress wields under its tax authority.
“Every tax is in some measure regulatory,” the Supreme Court observed in the 1937 case Sonzinsky v. U.S. As long as a tax is “productive of some revenue,” it said, courts “will not undertake, by collateral inquiry as to the measure of the regulatory effect of a tax, to ascribe to Congress an attempt, under the guise of taxation, to exercise another power denied by the Federal Constitution.”
Although the 11th Circuit nevertheless concluded that “the individual mandate as written cannot be supported by the tax power,” that was only because Congress failed to dress it up in “the guise of taxation.” The court emphasized that the Patient Protection and Affordable Care Act repeatedly calls the money owed by uninsured taxpayers a “penalty” while using the term tax for various other levies. It noted that legislators had originally called the payment a “tax” but deliberately changed the terminology, indicating that “Congress intended to impose a penalty for the failure to maintain health insurance.”
How could this problem have been avoided? The U.S. Court of Appeals for the 6th Circuit, which also rejected the tax power justification for the mandate, suggested Congress “might have raised taxes on everyone in an amount equivalent to the current penalty, then offered credits to those with minimum essential insurance.” Alternatively, “it might have imposed a lower tax rate on people with health insurance than those without it.”
Judge Brett Kavanaugh, who dissented from a decision by the U.S. Court of Appeals for the D.C. Circuit that upheld the mandate on Commerce Clause grounds, argued that “just a minor tweak to the current statutory language would definitively establish the law’s constitutionality under the Taxing Power.” All it would take, Kavanaugh said, is a clarification that Congress is merely using the tax code to “incentivize certain kinds of lawful behavior,” as it routinely does, rather than imposing an outright requirement.
In other words, Congress could accomplish exactly the same thing by wording it a little bit differently. The states challenging the insurance mandate responded to that possibility by arguing that making income tax liability hinge on the purchase of medical coverage amounts to a “direct tax,” which the Constitution says “shall be apportioned among the several States.” But the 16th Amendment specifically authorizes “taxes on income, from whatever source derived, without apportionment,” and Congress often uses the income tax to encourage politically preferred actions such as adopting children, going to college, buying a house, giving to charity, driving an electric car, and even obtaining health insurance (through tax-exempt employer-provided medical benefits).
In 1819 Chief Justice John Marshall observed that “the power to tax involves the power to destroy.” As currently interpreted, it also involves the power to manipulate us into submission.
Senior Editor Jacob Sullum is a nationally syndicated columnist.