Tuesday, July 10, 2012
More On Tax Versus Penalty
I want to make a point on tax against penalty, which I got from reading Randy Barnett on the ACA decision.
That point is this: I argue Obama and his agents are right to keep calling the payment for no insurance a penalty because it's both a penalty and a tax depending on what angle it's looked at from.
Under the ACA's clear wording and intent it's a penalty. Under the case law that obliges the court to give the law all "fairly possible" readings to try save its presumptive legality, it can be construed to be a tax, even though that's not it's most likely construction.
"Most likely" is not the issue. "Fairly possible" is the issue.
So based on obligation of the court to strive to preserve the mandate's constitutionality, the court for that precise purpose deems, or constructively, calls the payment a tax. It’s a kind of legal fiction employed for a narrow and specific purpose.
That deeming or constructive characterization does not logically need to vitiate calling the payment a penalty and Obama and his agents are right to do that for his political benefit.
That distinction is what balled up Romney for a few days before he got down to his own mug’s game of politics and started calling the payment a tax. Republicans who seize on the payment as being a tax and say Obama therefore lied when he denied it either don't know what they are talking about or do and are cynically and recklessly indifferent.