Limits on the taxing power?
By Melancton Smith • Friday June 29, 2012 6:45 AM PDT • 11 Comments
Calling the individual mandate a “tax” within the power of Congress is unsettling. Roberts noted this himself in his opinion:
If it is troubling to interpret the Commerce Clause as authorizing Congress to regulate those who abstain from commerce, perhaps it should be similarly troubling to permit Congress to impose a tax for not doing something.
Roberts says this should not be a concern for three reasons: (1) If Congress can pass a head tax under the Constitution, which it surely can, and thus tax us for just existing, then we should not object to the individual mandate as a tax; (2) there are limits on the taxing power to influence conduct such as when the tax becomes so burdensome that it penalizes rather than raises revenue; and (3) Congress’ power to control the individual under the tax power is less than under the Commerce Clause because under the former, all that is required is that you pay your money to the IRS and then go about your business–the full regulatory power of the federal government is not brought into play.
I’m not fully on board with these distinctions. To raise revenue, Congress could require every American to pay $1 to the IRS. Such a head tax does not touch on conduct. Even by taxing every person who goes to the polls to vote, one can avoid this tax by not voting. Or, for example, one can avoid a tax on tobacco by choosing not to smoke, or one can avoid paying a tax on imported wine by not drinking or going with domestic varieties. Sure, we can argue about whether government should use the tax power to discourage smoking or drinking, but using power to encourage us not to do something is different than using the tax power to compel us to do something.
Roberts is correct that Congress often uses the taxing power to influence conduct, but all the examples that he gives (taxes on imported goods, cigarette taxes, etc.), focus on discouraging conduct not compelling conduct. He cites no example of where Congress taxes someone for not doing something. I realize that this is a fine distinction I am making, but in my view Congress does more violence to the dignity of the individual by taxing him for not buying insurance than taxing him for buying a pack of smokes.
Yes, the taxing power is not equal to the full regulatory power of the government brought on by use of the Commerce Clause, but I fear that the Court has given power hungry legislators a road map of how to augment federal power using the tax power.
Tags: Constitution, Healthcare, Law 
I’m not a legal scholar, but I do know something about human nature. The administration may be doing a victory dance right now, but I suspect Justice Roberts may have threaded the needle and only given Barack Obama a pyrrich victory. In November the President will wear the new taxes to be imposed like an albatross around his neck.
There is a sociological difference between mandates, regulation and taxes that I think that will come into play. When government over-taxes, which it almost surely will in this case, there will be a huge protest. After all, isn’t that what our first revolution was all about?
Phil Dillon | Jun 29, 2012 | Reply
I completely agree with Phil. The power to tax is indeed the power to destroy. The more that we begin to scrutinize how much of our freedom is being “modified/nudged” through taxation, the more we will be as vigilant about allowing the taxation for almost anything except revenue raising. This is not just an idle technicality. The tax code is replete with nudges and preferences (progressive taxation unrelated to use of value derived, estate taxation, exit taxation on emigration, capital gain taxation on investments, etc.) that can seriously compromise our ability to act (at all or to a degree) by restricting the range of positive consequences of our decisions. I suspect this is how de Tocqueville feared tyranny would sneak up in a Democracy: not by impolitic mandates, which the people would associate with the tyranny against which even a boiling frog would rebel; but by a nanny state’s ability to give (and take) because it owns a claim to the lion’s share of GDP. If this ruling makes us more vigilant about this form of tyranny, it may have been worth the short-term inconvenience.
MG | Jun 29, 2012 | Reply
I’ve started to read the full opinion for myself. It’s quite interesting. I’ve read the syllabus portion of the Medicaid ruling and am now getting into the guts of that portion.
I think Justice Roberts may have snookered the Progressives here. He actually got Justices Kagan and Breyer to agree with him that Federal coercion of the states to expand Medicaid was unconstitutional. In other words, states will only have to voluntarily comply with the new law. I think the Federal government will find that impossible. I live in Kansas and I know that the state government and popular sentiment is decidely against thbe Affordable Care Act.
RE: The Nanny state. I agree with you, MG. I grew up within the welfare system and found out early on that the intent was to make me permanently dependent on the government. I spent my teen years living in a government housing project. One summer there were job postings for jobs keeping the project clean. I went over to the office and applied. I was told I didn’t qualify, that the jobs were slated for college interns from Harvard and MIT. What was so special about the jobs? Nothing. All one needed to do was push a broom, mow grass, and pick up trash. I knew I was a welfare kid, but I was convinced I wasn’t so dumb I couldn’t do that. But they let me know I was wrong. The college interns got the jobs because they had to learn how the system worked so they could manage it when they graduated. The message to me was clear – “Don’t get uppity, kid! Just keep voting a straight Democratic ticket and shut up so we can take care of you for the rest of your life.” When I got old enough I rebelled.
Phil Dillon | Jun 29, 2012 | Reply
Does anyone notice that “coercion” of the collective (the several states) is deemed a Congressional action in contravention of the Constitution (via a judicially annunciated concept of “federalism”) whilst “coercion” (via “Tax”) of individuals to act is recognized as a power authorized by the wording of the Constitution?
And, is this simply because of the differences in the mechanisms of coercions used?
In the case of coercion of the states, it is via spending (which has heretofore seemed an almost unlimited and beyond judicially constrainable power). In the case of the individuals it is via a form of taxation (direct) which is subject to specific Constitutional constraints (cl4;Art I; Sect 9).
This is indeed “Upside Down!”
R Richard Schweitzer | Jun 30, 2012 | Reply
Richard
I’ve read the ruling through page 66. The rest of the 193 pages cover dissent, bibliography, etc.
As I said before, I’m not a lawyer, but I think the istincion being made is that the tax to be levied for those who decide not to purchase health insurance carries no criminal penalties. That may be a fine line, but that was, I think, the decision.
Only time will tell whether or not Roberts succeeded, but I think he did a pretty good job of boxing the Federal government in. The states cannot be penalized for refusing to buy in to the act – “As a practical matter, that means the State may now choose to reject the expansion; that is the whole point.” (page 66)
I think this takes it back to the individual citizen. The government cannot compel anyone to purchase a policy. An uninsured person can choose to pay a tax or purchase a policy. Suppose, for example, the tax would amount to less than the cost of a policy. Or, does the act mean that the tax can only applied one time? If so, a person could decide that premiums over the long term would cost far more?
At any rate, Roberts concluded his portion of the ruling by saying, “The Framers created a Federal Government of limited powers, and assigned to this Court the duty of enforcing those limits. The Court does so today. But the Court does not express any opinion on the wisdom of the Affordable Care Act. Under the Constitution, that judgment is reserved to the people.”
I think Roberts was expressing a legal judgment in part and a person opinion, sort of with a wink and a nod. He knows that Obamacare was an unwise venture. He’s saying to the people, keep this in mind when you vote in November.
Phil Dillon | Jun 30, 2012 | Reply
“... but in my view Congress does more violence to the dignity of the individual by taxing him for not buying insurance than taxing him for buying a pack of smokes.”
I completely agree with your entire article! Honestly, I have never seen it this way, but thanks to my Macro Economics class, I was brought here to read an article and after browsing for ones I may be able to understand, I stumbled upon this well-written article.
I, myself, smoke but I have no problem with the tobacco tax as long as it’s within reason. Before, it used to be much lower, but there are still ways around it, such as cheaper brands or the location in which you purchase the tobacco (to keep the cost down, but tax remains the same). In the end, it is my choice to pay the tax because I choose to smoke, so I cannot complain even if they hiked it up 300% because I could simply quit an unhealthy habit.
On the other hand, taxing me for something I am compelled to do is wrong and in my opinion, overstepping their boundaries. They can tax me on unhealthy choices such as alcohol, tobacco, junk food, or anything else that is my choice to indulge myself with or not, but that’s where I would draw the line.
Daniel Kim | Jun 30, 2012 | Reply
Daniel Kim,
Also remember that our tax system taxes you for indulging on things like working harder. longer or smarter (thus earning more), saving for a rainy days (interest and dividends), saving for a rainy day and being good at it (capital gains), and wanting to leave your children money (death tax). Funny how all these ways of controlling our behavior are deemed more legitimate.
MG | Jul 1, 2012 | Reply
What is next? A tax for not owning a Government Motors’ Volt? One for not having solar panels on one’s house? One for not watching Obama’s speeches? Roberts opened a dangerous can of worms with his ruling. If Obama gets reelected, perhaps Congress will pass a tax on Justices who don’t attend Obama’s state of the union address.
John | Jul 2, 2012 | Reply
I’m afraid that most people are missing the point. Congress has the power to regulate commerce and other specific areas enumerated in the Constitution. Roberts said the Constitution sets limits and the Commerce Clause will not be stretched to include not engaging in commerce. Congress also has the power to spend and tax and Roberts says the mandate was an exercise of the power to tax. But spend and tax for what? The original intent was spend and tax in exercising enumerated powers. In other words, it mattered what the purpose of the spending and taxing was. Congress has long spent for thousands of purposes outside their enumerated powers and the Supreme Court has improperly allowed that. Now Roberts says they can tax for purposes outside their enumerated powers, including for purposes of regulating decisions not to enagage in commerce. So the last outside limit on the taxing power is now gone. If something is a tax, then in Roberts’ view it’s permissible regardless of the purpose of the tax, who’s subject to it, whether it taxes doing something or not doing something and whether the revenue raised is merely incidental to the purpose of the tax. So the very regulation of inactivity that Roberts says is not permitted by the Commerce Clause is permitted by the taxing power. Since the taxing power can applied even where there is no commerce, Roberts has just opened up the floodgates for unlimited power. The one flimsy limit is that the punishment for not doing what the king wants you to do must be monetary and not jail and the tax must not be so high as to become a penalty. Bet that makes you feel secure in your liberty!
Paul Fisher | Jul 3, 2012 | Reply
Hopefully some smart player, like Rand Paul, can grab the ball Roberts gave us with the Commerce Clause limitation and make some strides to returning us to Constitutional government, including following the 10th Amendment.
Bob | Jul 20, 2012 | Reply