Sunday, July 1, 2012

Some Thoughts On Roberts's Taxing Power Analysis Upholding Obamacare

My to date best legal distillation of the recent health care decision with respect to Roberts's decision under the taxing power. It emerges from a brief exchange with a friend, the most able and brilliant civil litigator in Canada as far as I know. His brief comment first and then my, slightly after-edited, longer one.

 ....Shapiro does a good job of mining the seeming disconnnect in the holding that only one of the commerce power or the tax power can reach inactivity. He uses the former to raise inactivity to some government-free zone, but I still think that's wrong. There is more consistency in holding both can reach inactivity, but either can. Shapiro's distinction between a tax credit for solar panels (which he thinks is ok) and a tax debit for no solar panels (which he thinks is not) is not meaningful from a tax payers point of view. To the tax payer, under either scenario, it is solar panels--less tax, no solar panels--more tax....


 ...I've read around this issue a little including scanning pretty quickly the right wing's joint dissent on the tax issue. Their concern is bracketed by a sighing concession that the government's right to tax is not subject matter limited by its enumerated powers, which it was once:

 ...As for the constitutional power to tax and spend for the general welfare: The Court has long since expanded that beyond (what Madison thought it meant) taxing and spending for those aspects of the general welfare that were within the Federal Government’s enumerated powers...

Their concern here is principally over whether the the payment provision for failure to get health insurance is a penalty or a tax, the two being mutually exclusive for tax characterization purposes.

(Even liberal commentators have quizzically noted the "hair splitting," as it's been expressed, that the non-labeling of the payment as a tax is meaningful in holding for the purposes of the anti injunction statute argument that the provision is a penalty and therefore the case is not statute barred and holding just a tad later, that for the purposes of the taxing power analysis labeling is relatively inconsequential and it's the substance of the provision that must be addressed: if it's functionally a tax, then it's a tax.)

And it's that issue, tax versus penalty in reaction to grounding the act, that has attracted the direct, case based critical comment on the right.

Just to note it, one other case and text based criticism is what exactly is this particular tax; what precise category of tax authorized by the Constitution is it? Shapiro gives an outline of some of the issues raised by this criticism. And in their joint dissent, the four dissenters complain about throwaway and scantily briefed the issue was, not nearly enough to give serious consideration to the issues raised by holding the taxing power grounds the act.

The dissenters avert to some of the problems as well, for examples problems raised by thinking about whether the tax is a direct tax. At its broadest, their criticism is that Roberts hastily concocted this ground to rescue the health care law from unconstitutionality and is haste is evident in makeshift, thin and ill thought through his reasoning on the issue is, that a function of the scanty briefing.

The issue that I first posed seems to blend in somewhat with a different order of criticism of Roberts's reasoning, a more policy based criticism that follows more or less Shapiro's line of argument, that wants to re-raise the enumerated powers limits on the federal power to tax and that raises the policy concerns of a vast federal power to tax, including inactivity, as a serious danger to the idea of a limited government bound by enumerated powers.

One iteration of this argument is that where, taxing, the states can go the federal government should not. As put by a Rick Hills, a con law prof at Case Western Reserve, who himself rejects the activity/inactivity distinction from a commerce power perspective:

 ...But, in relying on the Taxing power, the Court has failed to offer a coherent purpose-driven reason for the result. It cannot be the case that the feds always can "encourage" people to undertake actions by taxing their inaction: Such a taxing power would render nonsense the basic idea that the enumeration presupposes something...

and: ...

How is such a taxing power consistent with any sensible notion of enumerating powers? Why would any sane framer, whether Hamilton or Luther Martin, Federalist or Anti-Federalist, ever agree to such an arrangement? The Court does not say... But Hills is offering a kind of overarching criticism not rooted in case law as far as I know.

As to what you say, I still have a niggling question in my mind. But, first, when you say this, "There is more consistency in holding both can reach inactivity, but either can," I find it a little cryptic. I agree that Shapiro wants inactivity to be a commerce power and tax free zone and gets an argumentative boost for the latter by the five judge agreement on the former. (There's an apparent debate whether that 5 judge agreement forms a binding SCOTUS precedent.)

I'd think the formulation that follows from the tax/commerce power split on inactivity is that just that: the government under the commerce power cannot reach inactivity to the extent of compelling non consumers to buy a particular product-the difference between regulating commerce and compelling commerce, as Roberts put it, but that, regardless, the government can reach inactivity through its taxing power, I.E., effectively force you to buy broccoli. So I don't know what you mean when you say, " holding both can reach inactivity..." since under the commerce power the government can't.

But my lingering question is this: take the example of the solar panels. The government can give a tax credit to those who have them. The government can, it seems clear to me now, impose a tax liability on those who, say, own houses and don't have them. (From the standpoint of the tax payer, the issue may be more than just more tax or less tax. If the tax is onerous enough, it may be the expense of the panels.) But in any event there's a difference between what Roberts held and the solar panel example.

The example does not mandate anything as such. It simply levies a tax or allows a deduction or a credit. And all that's fine, I guess. But in Roberts's holding, the government is saying you must buy health insurance or pay a tax, assuming it's a tax and not a penalty. My general understanding is that tax provisions don't speak to mandating or proscribing the activity or inactivity in question but rather provide for the tax consequences of what is or is not undertaken.

And in that light my original question resurfaces, maybe better formulated, how does the taxing power ground or legitimate the mandate itself, which it is a part of, when the government cannot otherwise compel it under any other head of the Constitution? And here the policy oriented criticisms seem to me have a real point. Just say do x--which we have no other constitutional basis for telling you to do it--or pay a tax and voila there's virtually no subject matter limit to federal power, bill of rights and procedural fairness aside. Is it just as is simple as attach a tax as an "or else" and the government is away to the races? I feel, like Rick Hills, that that cannot be right.

There is a technical answer to my question. The answer is that from the perspective of the taxing power, no one is forced to buy heath insurance. Those not exempt have a choice between buying the insurance or paying the tax. On this account the law simply taxes those not exempt who don't buy health insurance.But this answer is so artificial, particulalry when the charge has been described in the act as a penalty,that I think my question, and Hills's comment, persist.

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