The ObamaCare Ruling and the Danger of Taxing Inaction

J. Robert Smith
Richard A. Epstein, writing at the New York Times, nails the danger of Chief Justice Roberts' and his majorities' ruling on ObamaCare.  The danger as Epstein sees it is that Roberts and his allies on the bench attempt to separate regulation from taxing power.  In so doing, the Roberts-led judgment manages to significantly - and ominously - broaden how Congress can lay taxes; namely, for inaction - as in not purchasing health insurance.

Writes Epstein, who teaches law at New York University and serves as a senior fellow at the Hoover Institute:

In an ironic twist, the chief justice simultaneously accepted the conservative argument that Congress's power to regulate interstate commerce did not include the power to regulate economic inactivity, like a decision not to purchase health care.

Yet the Roberts' ruling permits Congress to tax Americans for inactivity (not buying health insurance).  That leads to a dilemma.  Epstein continues:

But his [Roberts'] decision is wrong. As a matter of constitutional text, legal history and logic, the power to regulate commerce and the power to tax should not be separated. It is not good for the court or the country that the chief justice's position in such an important case is confused at its core.

Professor Epstein explains why separating regulation from taxation is a false choice:

Through the early 20th century, the Supreme Court was cognizant of this tight relationship between the power to regulate an activity directly and to the power to tax it. The basic idea relies on a simple economic insight: taxation and regulation are close substitutes, so a limitation on one power matters little if the other power is still available. There is no practical difference between ordering an action, and taxing or fining people who don't do that same thing. If the Constitution limits direct federal powers, it must also limit Congress's indirect power of taxation. [Italics added]

The professor concludes smartly:

Chief Justice Roberts has ignored this fundamental principle: If direct regulation is beyond the scope of the Commerce Clause (as he held), then taxation as an indirect route to the same regulation should be off limits as well (as he failed to hold).

Practically, what Chief Justice Roberts' ruling does is offer future Congresses the now court-sanctioned right to use broadened tax powers to promote policies in lieu of regulations, which may be off-limits through a stricter reading of the Commerce Clause. 

This new taxing authority includes Congress' prerogative to tax Americans for any inactivity; in other words, for not buying health insurance, not buying vitamins, or not buying Smart Cars.

For those conservatives who argue that taxes are unpopular and, thus, future Congresses will have a tougher time passing new taxes versus regulations that are then enabled with new revenues, the point has merit. 

But future Congresses may well choose to first levy innocuous, small taxes on Americans, like those who opt to forgo utilities' controlled smart meters in their homes.  As we know about a federal tax, once it's in place, it's almost certain to never go away and to grow.

Imagine all the inactivity that future Congresses could tax in the name of the general welfare or common good?     

If some conservatives don't see an expanded federal taxing power as a potential means for determined, clever liberals to attempt to social engineer in the future, then they need to think again.




Richard A. Epstein, writing at the New York Times, nails the danger of Chief Justice Roberts' and his majorities' ruling on ObamaCare.  The danger as Epstein sees it is that Roberts and his allies on the bench attempt to separate regulation from taxing power.  In so doing, the Roberts-led judgment manages to significantly - and ominously - broaden how Congress can lay taxes; namely, for inaction - as in not purchasing health insurance.

Writes Epstein, who teaches law at New York University and serves as a senior fellow at the Hoover Institute:

In an ironic twist, the chief justice simultaneously accepted the conservative argument that Congress's power to regulate interstate commerce did not include the power to regulate economic inactivity, like a decision not to purchase health care.

Yet the Roberts' ruling permits Congress to tax Americans for inactivity (not buying health insurance).  That leads to a dilemma.  Epstein continues:

But his [Roberts'] decision is wrong. As a matter of constitutional text, legal history and logic, the power to regulate commerce and the power to tax should not be separated. It is not good for the court or the country that the chief justice's position in such an important case is confused at its core.

Professor Epstein explains why separating regulation from taxation is a false choice:

Through the early 20th century, the Supreme Court was cognizant of this tight relationship between the power to regulate an activity directly and to the power to tax it. The basic idea relies on a simple economic insight: taxation and regulation are close substitutes, so a limitation on one power matters little if the other power is still available. There is no practical difference between ordering an action, and taxing or fining people who don't do that same thing. If the Constitution limits direct federal powers, it must also limit Congress's indirect power of taxation. [Italics added]

The professor concludes smartly:

Chief Justice Roberts has ignored this fundamental principle: If direct regulation is beyond the scope of the Commerce Clause (as he held), then taxation as an indirect route to the same regulation should be off limits as well (as he failed to hold).

Practically, what Chief Justice Roberts' ruling does is offer future Congresses the now court-sanctioned right to use broadened tax powers to promote policies in lieu of regulations, which may be off-limits through a stricter reading of the Commerce Clause. 

This new taxing authority includes Congress' prerogative to tax Americans for any inactivity; in other words, for not buying health insurance, not buying vitamins, or not buying Smart Cars.

For those conservatives who argue that taxes are unpopular and, thus, future Congresses will have a tougher time passing new taxes versus regulations that are then enabled with new revenues, the point has merit. 

But future Congresses may well choose to first levy innocuous, small taxes on Americans, like those who opt to forgo utilities' controlled smart meters in their homes.  As we know about a federal tax, once it's in place, it's almost certain to never go away and to grow.

Imagine all the inactivity that future Congresses could tax in the name of the general welfare or common good?     

If some conservatives don't see an expanded federal taxing power as a potential means for determined, clever liberals to attempt to social engineer in the future, then they need to think again.