Supreme Court Ruling: So, Is It A Tax? [Guest Blog]

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Supreme Court Ruling: So, Is It A Tax? [Guest Blog]

Jun 29, 2012

Posted by Mike Beene - If I had a frequently asked question file this would be the hot new one: Did the court just hold that for some purposes the penalty for not having insurance is a tax and for some purposes not? The short answer is “yes”.

The court’s reasoning is along the following lines in my own words: The most logical reading of the ACA individual mandate is that it is empowered by the commerce clause which gives broad authority to Congress to regulate interstate commerce. However, that reading is unconstitutional because the commerce clause does not extend to requiring a person to enter commerce. Thus, the court must look for any “fairly possible” secondary reading of the statute that will render it constitutional. The court found a “fairly possible” reading of the statute by placing the authority for the penalty for non-coverage under the power of Congress to tax for the general welfare, thus saving the statute. Well, if this is a tax doesn’t the Anti-Injunction Act say that it cannot be challenged until someone actually pays the tax? The court agreed but said since the ACA and the Anti-Injunction Act were both creations of Congress giving Congress the power to call the mandate payment a penalty and by doing so remove it from Anti-Injunction Act protection. The constitution, however, trumps Congress and thus Congress cannot dictate if for constitutional purposes the penalty is really a tax. Labels now don’t control and even though the Congress may have had other ideas, the body of the law compels us to find a constitutional reading if “fairly possible” and we have. Once the court got to this point, the prior holdings which broaden the ability to tax and spend for the general welfare and not just specific enumerated powers brought a quick conclusion.

I realize those reading this blog may love or detest the ruling. There is something here for those disappointed in the final result: the scope of the commerce clause was limited for the first time in years. This may prove very significant in the time to come. Court opinions sometimes thrill and sometimes infuriate. The attacks on the Court and individual justices which come from both sides with seemingly more frequency are in my opinion a danger to our orderly if imperfect society. Elections have consequences and we would all do well, winners and losers alike, to remember, as the Chief Justice stated in the opinion, that the Court is not to consider whether the act embodies sound policies. That is for the elected officials to decide. It is not the Court’s job to protect the people from the consequences of their political choices. I hope you will join us as we fight to provide micro-business a level playing field by addressing among other things the failure of the ACA to seriously address costs to the self-employed.

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