The Constitutionality of the ObamaCare Tax

It comes as a surprise that one of the Supreme Court's liberty-leaning justices sided with the authoritarians to find that ObamaCare is constitutional.  He made the expected finding that the mandate to purchase insurance was unconstitutional, but he found that the penalty for failing to meet that mandate was actually a tax, and therefore constitutional.  Considering that a tax is a levy on doing something, it seems strange to find that government can levy a tax on doing nothing, but by using the legal principle of equivalence, it becomes clear that President Obama's attempt to bring affordable health insurance to all was actually a massive, regressive income tax.

The principle of equivalence is simple; if Congress might accomplish the same thing through different wordings of the law, then the laws are the same.  Instead of charging a direct "penalty" (tax) for the failure to purchase health insurance, the ObamaCare "penalty" could have been enacted as a significant reduction in the standard deduction, along with a $2000 tax credit for purchasing health insurance.  Another way might have been to reduce the standard deduction while allowing the itemized deduction of insurance premiums.  All of these would accomplish the same thing: people who have insurance would pay less income tax than people who have no insurance.  Except for the unemployed and those who pay no income tax (half the population), this combination of regressive taxes and tax credits would have the same basic effect as assessing a direct penalty.  As additional evidence of this equivalence, the "penalty" was enacted as part of the tax code; it is to be calculated as part of your income taxes, with a line on your Form 1040.  For those with little income, the "penalty" will even be reduced, and there is no consequence beyond the tax increase. 

While the law may have called the tax a "penalty," in implementation, it was clearly a tax.  Of course, it is likely that if the Patient Protection and Affordable Care Act had been overtly worded as a tax, there would have been significant public opposition, and ObamaCare may never have passed Congress.  By calling the combination tax increase and tax credit a "penalty," Congress was able to pass something that would have otherwise been far too unpopular for passage (although it was still unpopular when passed).  We must also carry forth the lesson: just because Congress calls something by a word does not mean that thing matches the commonly understood meaning of that word, or by the old idiom, actions speak louder than words.  What a law does is more meaningful than what the law claims it does, or what Congress claims the law will do.

The Supreme Court did nothing at all surprising; it upheld our current tax code of social meddling.  It has now been firmly established that providing an income tax credit or deduction for engaging in an activity is the same as levying a "penalty" for not engaging in that activity.  The Cash for Clunkers tax credit was actually a penalty for not selling your clunker, or not having a clunker to sell.  The tax credit for buying a hybrid car was actually a penalty for not buying a hybrid car.  The Earned Income Credit is actually a penalty for not being poor.  The mortgage interest deduction is a penalty for not having a house.  The income tax code is replete with such penalties, or are they taxes?

The problem with equivalence is that it can cut both ways.  What if Congress "attacked" abortion, by levying a high income tax and providing a substantial tax credit for those who did not have an abortion in the last 7 years.  Would the leftists on the Court find that this is a tax, well within the power of Congress to levy, or would they find that this is a "penalty," which infringes on the right to choose.  Depending on the judge, it could be a constitutional tax or an unconstitutional penalty.

In this ruling, Chief Justice Roberts reminds us of something preeminently important: we, the voters, are the ultimate enforcers of the Constitution, and the ultimate protectors of our liberty and freedom.  If we want to prevent Congress from meddling in our lives, then we need to elect a Congress that will take away Congress's ability to meddle.  We need to elect representatives who think income tax credits and deductions based on non-income activities are actually unconstitutional penalties.  In turn, those representatives will appoint judges who think the same way and pass laws which reflect this belief.  If we want the Supreme Court to protect our liberty and freedom, then we need a President who will appoint liberty-loving justices, and a Senate that will confirm them.

Where will we find these representatives?  The statists and authoritarians on the Court came from the Democratic side of the isle, while the liberty defenders came from the Republican side.  The answer seems obvious.

It comes as a surprise that one of the Supreme Court's liberty-leaning justices sided with the authoritarians to find that ObamaCare is constitutional.  He made the expected finding that the mandate to purchase insurance was unconstitutional, but he found that the penalty for failing to meet that mandate was actually a tax, and therefore constitutional.  Considering that a tax is a levy on doing something, it seems strange to find that government can levy a tax on doing nothing, but by using the legal principle of equivalence, it becomes clear that President Obama's attempt to bring affordable health insurance to all was actually a massive, regressive income tax.

The principle of equivalence is simple; if Congress might accomplish the same thing through different wordings of the law, then the laws are the same.  Instead of charging a direct "penalty" (tax) for the failure to purchase health insurance, the ObamaCare "penalty" could have been enacted as a significant reduction in the standard deduction, along with a $2000 tax credit for purchasing health insurance.  Another way might have been to reduce the standard deduction while allowing the itemized deduction of insurance premiums.  All of these would accomplish the same thing: people who have insurance would pay less income tax than people who have no insurance.  Except for the unemployed and those who pay no income tax (half the population), this combination of regressive taxes and tax credits would have the same basic effect as assessing a direct penalty.  As additional evidence of this equivalence, the "penalty" was enacted as part of the tax code; it is to be calculated as part of your income taxes, with a line on your Form 1040.  For those with little income, the "penalty" will even be reduced, and there is no consequence beyond the tax increase. 

While the law may have called the tax a "penalty," in implementation, it was clearly a tax.  Of course, it is likely that if the Patient Protection and Affordable Care Act had been overtly worded as a tax, there would have been significant public opposition, and ObamaCare may never have passed Congress.  By calling the combination tax increase and tax credit a "penalty," Congress was able to pass something that would have otherwise been far too unpopular for passage (although it was still unpopular when passed).  We must also carry forth the lesson: just because Congress calls something by a word does not mean that thing matches the commonly understood meaning of that word, or by the old idiom, actions speak louder than words.  What a law does is more meaningful than what the law claims it does, or what Congress claims the law will do.

The Supreme Court did nothing at all surprising; it upheld our current tax code of social meddling.  It has now been firmly established that providing an income tax credit or deduction for engaging in an activity is the same as levying a "penalty" for not engaging in that activity.  The Cash for Clunkers tax credit was actually a penalty for not selling your clunker, or not having a clunker to sell.  The tax credit for buying a hybrid car was actually a penalty for not buying a hybrid car.  The Earned Income Credit is actually a penalty for not being poor.  The mortgage interest deduction is a penalty for not having a house.  The income tax code is replete with such penalties, or are they taxes?

The problem with equivalence is that it can cut both ways.  What if Congress "attacked" abortion, by levying a high income tax and providing a substantial tax credit for those who did not have an abortion in the last 7 years.  Would the leftists on the Court find that this is a tax, well within the power of Congress to levy, or would they find that this is a "penalty," which infringes on the right to choose.  Depending on the judge, it could be a constitutional tax or an unconstitutional penalty.

In this ruling, Chief Justice Roberts reminds us of something preeminently important: we, the voters, are the ultimate enforcers of the Constitution, and the ultimate protectors of our liberty and freedom.  If we want to prevent Congress from meddling in our lives, then we need to elect a Congress that will take away Congress's ability to meddle.  We need to elect representatives who think income tax credits and deductions based on non-income activities are actually unconstitutional penalties.  In turn, those representatives will appoint judges who think the same way and pass laws which reflect this belief.  If we want the Supreme Court to protect our liberty and freedom, then we need a President who will appoint liberty-loving justices, and a Senate that will confirm them.

Where will we find these representatives?  The statists and authoritarians on the Court came from the Democratic side of the isle, while the liberty defenders came from the Republican side.  The answer seems obvious.