Libertarian Hawk


Congress’s Taxation Power: The New “Interstate Commerce” Clause

July 04, 2012 By: Scott Spiegel Category: Health Care

On Thursday the Supreme Court rejected the Obama administration’s justification for the Affordable Care Act’s individual mandate as being covered by the Interstate Commerce Clause, since the law as written would not regulate commerce but compel it.

The court nonetheless upheld the individual mandate, which requires people to buy health insurance from private companies and health insurance marketplaces.  The administration had characterized the penalty for not buying insurance as such, yet also asked the court to consider it a tax for the purpose of preventing the plaintiffs from suing, since under the Tax Anti-Injunction Act taxes may be challenged in court only after they have been paid.  Roberts and the majority agreed that the penalty could not be considered a tax for the question of whether the plaintiffs could bring suit now.  Yet in their view, it was perfectly acceptable for the penalty to be considered a tax for the purpose of forcing people to buy health insurance.

Roberts admitted, “Congress’s decision to label this exaction a ‘penalty’ rather than a ‘tax’ is significant because the Affordable Care Act describes many other exactions it creates as ‘taxes.’”

Yet in the majority opinion he wrote, “The Federal Government may enact a tax on an activity that it cannot authorize, forbid, or otherwise control.”

And therein lies the rub: Not purchasing health insurance is not an “activity.”  It is a non-activity.  (The hint is the word “not.”)

According to Roberts’ (correct) reasoning, “not buying healthcare” is not commercial activity the government can regulate through the Interstate Commerce Clause.  Yet somehow “not buying healthcare” is commercial activity the government can tax.  How can “not buying health insurance” be non-activity and activity at the same time?

Some conservatives hunting for a silver lining have argued that at least the ruling limited the provenance of the Commerce Clause.  Yet the ruling simultaneously expanded the purview of Congress’s taxing power in such a way as to potentially make up for almost anything the Commerce Clause doesn’t cover.  What have we gained?  What good is restriction of the Commerce Clause if, due to the expansion of other powers, it can’t protect us from abominations like Obamacare?

The ruling expanded Congress’s taxation power in at least three ways.  First, we now know that non-activity can be taxed.  When has the federal government ever taxed non-activity?  Penalized, yes—but taxed our not doing something?

Second, we know that even something that was explicitly disavowed as a tax by its creators and defenders can be considered a tax, if five Supreme Court justices feel like rewriting the law and considering it one.

Third, as spelled out by Roger Pilon, “[T]he power to tax… was designed to enable Congress to obtain the funds needed to carry out its other enumerated powers or ends.  It was not, as Madison made clear in Federalist 41, and often on the floor of Congress, an independent power to tax for any purpose at all.  Search as you will through those 18 enumerated powers and you will find no power to enact ObamaCare or anything like it.”  But thanks to Chief Justice Roberts, we now know that the federal government can levy taxes for any reason it wants, whether it needs the money for any enumerated power or not—and remember that the individual mandate, if it operated properly, would result in $0 revenue.

Also disturbing is the fact that the justices may not have even reaffirmed the limits of the Commerce Clause.  As Mark Levin wrote, “If five justices had intended for their view of the commerce clause (and necessary and proper clause) to be controlling as the majority view, they would have said so by joining or concurring in each others’ [written arguments].  They didn’t.  So, while we can cobble them together, as a formal legal matter, it is a troubling issue.  While the status quo stands re the commerce clause (and necessary and proper clause), there was no formal majority on those issues.”

Of course all this chitchat about RobertsCare will go over the heads of most liberals, for whom I want to ask, not “How is the healthcare law constitutional?” but “Do you even care whether it’s constitutional?”  This is the same group of people, after all, who consistently defended the law, not by talking about its legal soundness, but by claiming that the Heritage Foundation and Mitt Romney had instigated it.  These are the same folks who for two years eschewed discussion of Obamacare’s constitutionality for posting pictures of sad-eyed looking children on Facebook with captions like “Yolanda Rodriguez can finally get treatment for her spina bifida!”

So now we can rest assured that Congress will never mandate that we buy broccoli, drink skim milk, or do calisthenics.  It’s just going to tax us to death if we don’t, and with the imprimatur of a “conservative,” Republican-appointed Supreme Court Chief Justice.

Previously published in modified form at Red Alert Politics

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Federal Judge to ObamaCare Defenders: Nope!

December 15, 2010 By: Scott Spiegel Category: Health Care


On Monday a Virginia federal district court judge ruled that the primary enforcement mechanism of ObamaCare, the Minimum Essential Coverage Provision—also known as the individual mandate—was unconstitutional.

Justice Henry E. Hudson’s summary judgment did not rule on any other aspect of the Patient Protection and Affordable Care Act, and the Obama Justice Department will likely appeal the decision, but the individual mandate is key to making ObamaCare work, since requiring the purchase of health insurance by virtually all U.S. citizens is the only way the rest of the bill can be paid for.  Hudson’s ruling provides ammunition to those who argue that requiring people to purchase a product or service against their will is unconstitutional.

Health and Human Services Secretary Kathleen Sebelius took two primary lines of defense against the Commonwealth of Virginia, whose Attorney General Ken Cuccinelli filed the suit.

First, she argued that the purchase of health care insurance is an activity that affects interstate commerce, which the Constitution gives the federal government the power to regulate per the Commerce Clause and via the Necessary and Proper Clause.  She cited the cases of Wickard v. Filburn, which upheld the government’s ability to regulate farmers’ growing and consumption of wheat on their farms, and Gonzales v. Raich, which upheld the government’s ability to do the same for marijuana for medicinal purposes, as evidence that the government can regulate private individual economic activity due to its effect on interstate commerce.

Sebelius stated that the power to force people to buy health insurance “is well within the traditional bounds of Congress’s Article I power,” by which she meant of course that it’s not remotely within those bounds, but she’d throw in “well” to hedge against any doubt the court may have on that matter.

Hudson tore Sebelius’ argument apart by noting that, for starters, Wickard and Gonzales were widely recognized as being at the very outer limits of interpretation of the Commerce Clause, and that the individual mandate provision goes even further than these cases.  Hudson also pointed out a crucial difference between these two cases and the case of the individual mandate.  Namely, in Wickard and Gonzales, the federal government was regulating private economic decisions citizens had made, including purchasing a plot of land and growing wheat on it, and cultivating marijuana.

The individual mandate, in contrast, would be the first case in U.S. history in which the government was targeting a non-decision or non-action—not purchasing health insurance—as interstate “economic activity” subject to regulation.  As Justice Hudson writes, “Neither the Supreme Court nor any federal circuit court of appeals has extended Commerce Clause powers to compel an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market.”

Second, Sebelius argued that, even if the individual mandate couldn’t be regulated under the Commerce Clause, the Constitution gives the federal government broad power to tax citizens under the General Welfare Clause.  The penalty to be paid for noncompliance with the individual mandate could simply be considered a tax.

Not so fast, wrote Justice Hudson.  Taxes and penalties are different things, and calling a penalty a tax for convenience’s sake doesn’t make it one.  Taxes are used to generate revenue; penalties are used to enforce regulations.

When they were trying to sell their plan to the public, President Obama and Democratic legislators insisted to reporters that the fine was not a tax but a penalty.  An early version of the bill used the word “penalty” to refer to the fine, later versions used the word “tax,” and the final version reverted to “penalty.”  Hudson called the rebranding of the fine as a “tax” a “transparent afterthought.”

There are other revenue-generating mechanisms in the 2,700-page bill that are referred to as taxes, such as the tax on “Cadillac” insurance plans, so clearly the bill’s authors meant for there to be a distinction between its taxes and its penalties.  Finally, Hudson notes that the purpose of the fine couldn’t be primarily to generate revenue, because if the enforcement mechanism worked perfectly, the revenue collected from the fine would be zero dollars.

So kudos to Justice Hudson for yanking out the linchpin of ObamaCare, without which it cannot properly run and will fall to pieces.  Though two Democratic-appointed federal justices in unrelated lawsuits in Virginia and Michigan have found the bill constitutional, and further rulings on the bills will be handed down from the 4th U.S. Circuit Court of Appeals and the Supreme Court, this is an important victory in stopping the ObamaCare Express, even if we couldn’t catch it before it left the station.

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