Monday, July 2, 2012

Taxation without representation: Why Roberts was wrong

John_RobertsChief Justice John Roberts was wrong in his ruling on Obamacare. The ruling, which left the majority of the Patient Protection and Affordable Care Act in place, was based on Robert’s view that the much maligned individual mandate was a tax. His reasoning regarding the mandate is assailed by the conservative wing of the Court, but, even if he were correct on this issue, the entire law still should have been ruled unconstitutional.

If the mandate is actually a tax, then the Anti-Injunction Act should apply. This 1793 law provides that no one has standing to sue over a tax until they have actually paid the tax. Yet Chief Justice Roberts’ ruling holds that the Act does not apply because “Congress did not intend the payment to be treated as a ‘tax….’”

Roberts explicitly states that Congress did not intend for the individual mandate to be a tax, yet he found that it was constitutional because it was a tax. If Congress had passed a tax law, it would have been constitutional, but this is not what Congress did. Chief Justice Roberts had to rewrite the law, transforming a “penalty” into a “tax,” to find it constitutional. The ruling is an example of judicial activism.

Roberts explains his ruling by saying that the mandate does provide revenue for the government. He then explains that while Congress’ choice of wording, “penalty” vs. “tax,” controls the applicability of the Anti-Injunction Act, it does not affect the constitutional question of whether Congress may mandate the payment. In Roberts’ view, because the only consequence of failing to buy health insurance is a payment to the IRS, the payment is a tax regardless of how Congress labeled it.

Roberts did better on other points of the ruling. Liberals had pointed to Congress’ power to regulate interstate commerce as authority to regulate inactivity that affects commerce as well. The majority rejected this view: “The language of the Constitution reflects the natu­ral understanding that the power to regulate assumes there is already something to be regulated.”

Roberts continues, “The individual mandate, however, does not regulate existing commercial activity. It instead compels individ­uals to become active in commerce by purchasing a product, on the ground that their failure to do so affects interstate commerce. Construing the Commerce Clause to permit Con­gress to regulate individuals precisely because they are doing nothing would open a new and potentially vast do­main to congressional authority.”

Similarly, the Necessary and Proper Clause did not justify the mandate because it was not “consistent with the letter and spirit of the Constitution.” Congress must use means that are within its enumerated powers.

Finally, the majority also put the brakes on Congress’ use of federal money to coerce the states. The ruling notes that, “The Constitution simply does not give Congress the authority to require the States to regulate.” Congress must give the states a real choice without threatening to cut off other funding. Congress can attach conditions to funds, but not threaten to suspend other payments to states as a “means of pressuring the States to accept policy changes.” Roberts specifically states, “What Congress is not free to do is to penalize States that choose not to participate in that new program by taking away their existing Medicaid funding.”

Roberts took flack from both wings of the Court over his opinion. Justice Ginsburg’s dissenting concurrence is strongly worded. Her opinion boils down to one line: “Whatever one thinks of the policy decision Congress made, it was Congress’ prerogative to make it.” Unsurprisingly, Ginsburg (as well as the other three liberals on the Court) would have affirmed the law under the Commerce and Necessary and Proper Clauses. She writes, “We presume the statute under review is constitutional and may strike it down only on a ‘plain showing’ that Congress acted irrationally.” This view sets a very low standard by looking at not whether the law is allowed by the Constitution, she presumes it is, but whether Congress’ actions were reasonable in her eyes.

Ginsburg is particularly vehement in her rebuttal to the majority opinion that Congress may not regulate inactivity as a form of commerce. She explicitly states her support for “[t]he proposition that Congress may dictate the conduct of an individual today because of prophesied future activity” and that “Nothing in this language [the Commerce Clause] implies that Congress’ commerce power is limited to regulating those actively engaged in commercial transactions.” To Ginsburg and the liberals, the Commerce Clause is a blank check for Congress.

The four conservative justices, Anthony Kennedy, Clarence Thomas, Samuel Alito, and Antonin Scalia , jointly dissented against Roberts’ ruling. The four agreed that Congress could not mandate the creation of commerce in order to regulate it under the Commerce Clause. They also agreed that “the scope of the Necessary and Proper Clause is exceeded not only when the congressional action directly violates the sovereignty of the States but also when it violates the background principle of enumerated (and hence limited) federal power.” They agreed that the Medicare mandate was unconstitutionally coercive as well.

On the tax argument, however, the four disagree with Roberts, stating, “In all our cases the two [taxes and penalties] are mutually exclusive. The provi­sion challenged under the Constitution is either a penalty or else a tax.” The dissent continues, “We know of no case, and the Government cites none, in which the imposition was, for constitutional purposes, both.” According to the dissent, case law defines both terms: “A tax is an enforced contribution to provide for the support of government; a penalty . . . is an exaction imposed by statute as punishment for an unlawful act.”

Taking a strident tone, the dissent says, “We have never held—never—that a penalty imposed for violation of the law was so trivial as to be in effect a tax. We have never held that any exaction imposed for violation of the law is an exercise of Congress’ taxing power—even when the statute calls it a tax, much less when (as here) the statute repeatedly calls it a penalty.” The most damning piece of evidence that the dissenters present, “the nail in the coffin,” is that the “mandate and pen­alty are located in Title I of the Act, its operative core, rather than where a tax would be found—in Title IX, containing the Act’s ‘Revenue Provisions.’”

Quoting more case law, the dissenters say, “’Although this Court will often strain to construe legislation so as to save it against constitutional attack, it must not and will not carry this to the point of perverting the purpose of a statute . . .’ or judicially rewriting it.” Yet the dissenters note that this is exactly what the Court does in the majority opinion:


The Court today decides to save a statute Congress did not write. It rules that what the statute declares to be a requirement with a penalty is instead an option subject to a tax. And it changes the intentionally coercive sanc­tion of a total cut-off of Medicaid funds to a supposedly noncoercive cut-off of only the incremental funds that the Act makes available.

The Court regards its strained statutory interpretation as judicial modesty. It is not. It amounts instead to a vast judicial overreaching. It creates a debilitated, inoperable version of health-care regulation that Congress did not enact and the public does not expect. It makes enactment of sensible health-care regulation more difficult, since Congress cannot start afresh but must take as its point of departure a jumble of now senseless provisions….

In the view of the four dissenters, since Congress did not write a severability clause into the law, the correct ruling would have been to strike down the entire law. This would be true even if the majority had only agreed that the coercive nature of the Medicare mandate to the states was unconstitutional. Severability clauses are usually inserted into legislation to stipulate that if one part of the law is found unconstitutional, the rest should remain in force.

Essentially Chief Justice Roberts has turned back the clock to 1765 and the Stamp Act. Our forefathers rejected this tax with the cry of “No taxation without representation!” Ironically, in 2012 we are again faced with taxation without representation. Chief Justice John Roberts, an appointed judge, has created a new tax that contravenes the will of Congress and the people. He also sets the disturbing precedent that under the taxing power of Congress almost anything, including inactivity, is subject to coercive taxes.

The Wall Street Journal quotes Justice Benjamin Cardozo who once said of judicial rulings that, “What is good in it endures. What is erroneous is pretty sure to perish.” In this week’s ruling, the new limits on federal power deserve to endure. The opinion of Justices Roberts and Ginsburg that Congress has the power to coerce its citizens through taxing practically anything, including inactivity, should perish. So should Obamacare.


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