Obamacare and the Supreme Court

[Jacob]

There's a column on RCP talking about how John Marshall outwitted Thomas Jefferson in Marbury by ruling in favor of Jefferson's administration but had thereby made it impossible for Jefferson to directly interfere with the his use of judicial review in that case. Jefferson couldn't fight Marshall's use of judicial review because Jefferson got a positive result from the case at hand. Jefferson had won the relatively minor battled, but but Marshall had won the war by establishing judicial review.

He likens it to what Roberts just did. The lefties won on the result, but they'll lose in the future on both precedent and by virtue of the capital that Roberts has built up for himself and the Court. And if Romney wins in the fall, winning on the result will be worthless. Meanwhile if Roberts wants to scale back affirmative action and other things, the calls of him and the Court being political hacks will be significantly less persuasive.

How so? Under Robert's ruling today, couldn't the government require all business to hire in accordance with affirmative action with a substantial tax payment as a penalty? I'm starting to sound like a broken record on this, but how can Roberts' novel theory possibly help him scale back federal power--if that were his intent (I don't believe it was). Nobody has given me any response as to how this might be considered a limit on federal power.

[All-American]

I'm not seeing it. You are saying that Roberts, while saying it was not his job to fix the people's political mistakes, in fact, intended to fix the people's political mistakes. I take him at face value. He tried to be judicially modest, in his view, by creating a new analysis which allowed him to approve of the law. But why then did he bother ruling on the commerce clause? If he were acting with restraint, he would not have addressed the commerce clause argument as the legislation was saved under the taxing power. Ruling that it survived the commerce clause was an act of judicial reach. Of judicial activism when the ruling was unnecessary. Still, I hope he is not so confident in himself as to believe that his decision will lead to the outcomes that you surmise. I don't believe he had any intention of affecting the legislation one way or the other, other than to say whether it is constitutional.

That's actually not a bad point. True judicial modesty would have sought for the narrowest grounds of judgment, and thus would have upheld the law as a valid exercise of the taxing power without a word on the commerce clause. That's obviously not what Roberts did.

I guess you could look at it two ways.

First, the Court was obligated to respond to the contention that the act was an exercise of commerce clause power, because that was the primary argument which the court advanced. If it had argued in the alternative that either the tax power or the commerce clause power justified the act, then the Court could have found one power sufficient to uphold the act without analyzing the other. Because the government advanced the tax power as a secondary, albeit independent justification, the Court had to analyze the primary argument-- particularly because the government will be under different limits while exercising its tax power than under its commerce clause power.

Second, this is obiter dictum-- the kind of stuff that the Court didn't need to say, but did anyway. This brings to mind a lot of what John Marshall said in Marbury v. Madison in criticizing the conduct of President Jefferson and then Secretary of State James Madison before finding that the Court didn't have authority to hear the case anyway. By analogy, Roberts plainly took the former Lecturer at law to task for an attempt to exercise an unprecedented and unconstitutional amount of power, but upheld the law anyway. Obama keeps his law, but not without the Court dressing him down, and coming off looking good while doing it.

The more I think about it, the more impressed I am with the decision-- even if I don't agree with it.

[All-American]

How so? Under Robert's ruling today, couldn't the government require all business to hire in accordance with affirmative action with a substantial tax payment as a penalty? I'm starting to sound like a broken record on this, but how can Roberts' novel theory possibly help him scale back federal power--if that were his intent (I don't believe it was). Nobody has given me any response as to how this might be considered a limit on federal power.

A "penalty" can be a tax, but a "tax" can still be a penalty.

From the decision:

Our precedent reflects this: In 1922, we decided two challenges to the “Child Labor Tax” on the same day. In the first, we held that a suit to enjoin collection of the socalled tax was barred by the Anti-Injunction Act. George, 259 U. S., at 20. Congress knew that suits to obstruct taxes had to await payment under the Anti-Injunction Act; Congress called the child labor tax a tax; Congress therefore intended the Anti-Injunction Act to apply. In the second case, however, we held that the same exaction, although labeled a tax, was not in fact authorized by Congress’s taxing power. Drexel Furniture, 259 U. S., at 38. That constitutional question was not controlled by Congress’s choice of label. We have similarly held that exactions not labeled taxes nonetheless were authorized by Congress’s power to tax. In the License Tax Cases, for example, we held that federal licenses to sell liquor and lottery tickets—for which the licensee had to pay a fee—could be sustained as exercises of the taxing power. 5 Wall., at 471. And in New York v. United States we upheld as a tax a “surcharge” on out-ofstate nuclear waste shipments, a portion of which was paid to the Federal Treasury. 505 U. S., at 171. We thus ask whether the shared responsibility payment falls within Congress’s taxing power, “[d]isregarding the designation of the exaction, and viewing its substance and application.” United States v. Constantine, 296 U. S. 287, 294 (1935); cf. Quill Corp. v. North Dakota, 504 U. S. 298, 310 (1992) (“[M]agic words or labels” should not “disable an otherwise constitutional levy” (internal quotation marks omitted)); Nelson v. Sears, Roebuck & Co., 312 U. S. 359, 363 (1941) (“In passing on the constitutionality of a tax law, we are concerned only with its practical operation, not its definition or the precise form of descriptive words which may be applied to it” (internal quotation marks omitted)); United States v. Sotelo, 436 U. S. 268, 275 (1978) (“That the funds due are referred to as a ‘penalty’ . . . does not alter their essential character as taxes”).

Our cases confirm this functional approach. For example, in Drexel Furniture, we focused on three practical characteristics of the so-called tax on employing child laborers that convinced us the “tax” was actually a penalty. First, the tax imposed an exceedingly heavy burden—10 percent of a company’s net income—on those who employed children, no matter how small their infraction. Second, it imposed that exaction only on those who knowingly employed underage laborers. Such scienter requirements are typical of punitive statutes, because Congress often wishes to punish only those who intentionally break the law. Third, this “tax” was enforced in part by the Department of Labor, an agency responsible for punishing violations of labor laws, not collecting revenue. 259 U. S., at 36–37; see also, e.g., Kurth Ranch, 511 U. S., at 780–782 (considering, inter alia, the amount of the exaction, and the fact that it was imposed for violation of a separate criminal law); Constantine, supra, at 295 (same).

The last paragraph suggests what the limits are. An act will be more likely considered a tax, and not a penalty, if it 1) is not an "exceedingly heavy burden" in relationship with the infraction, 2) does not bear scienter requirements or other features typical of punitive actions, and 3) is not enforced by an agency responsible for punishing violations of law.

Obamacare passes because it is not an exceedingly heavy burden in relation to the infraction-- indeed, it is but a small percentage of the cost of insurance. It does not bear a scienter requirement; you pay whether you knew you were violating the law or not. Finally, it is enforced by the IRS through the collection of funds and by tax returns.

[Jacob]

A "penalty" can be a tax, but a "tax" can still be a penalty.

Huh? Did you mean for that "but" to be an "and"? Even so. Huh?

[All-American]

Huh? Did you mean for that "but" to be an "and"? Even so. Huh?

I tried to clarify with some edits; hopefully, they help show where the limiting principles are. The idea is that the tax/penalty distinction depends less on the label and more on the function, with a few features to guide the discretion as to which is what.

[Jacob]

I tried to clarify with some edits; hopefully, they help show where the limiting principles are. The idea is that the tax/penalty distinction depends less on the label and more on the function, with a few features to guide the discretion as to which is what.

Thanks. There may be some limits there I wasn't seeing before.

[calicoug]

Good analysis.

I frankly don't see anything groundbreaking or even new in the opinion. This was a pretty clear case I thought and I'm most surprised to see Kennedy in the column of "overturn the entire law".

The tax powers argument was the easy one. The Commerce Clause argument was tougher. That said, I disagree with those who said he limited the scope of the clause. All he said is what is already law- that it only governs activity. He then argued that requiring people to buy health insurance was inherently governing inactivity. The list of cases where that topic comes up again are going to be quite small- if existent at all (particularly given that any similar desires by Congress to regulate "inactivity" will clearly just be handled under the tax powers in any event).

I think he is wrong on his Commerce Clause analysis, but I also think it is totally irrelevant. The Commerce Clause is as broad today as it was yesterday- just no broader.

The most relevant legal point decided by the Court is also the least noticed- the limitation on Congress' ability to defund states which don't expand Medicare. That ruling could have a much more lasting and powerful effect on Congress' powers under the Spending Clause.

[Color Me Badd Fan]

I frankly don't see anything groundbreaking or even new in the opinion. This was a pretty clear case I thought and I'm most surprised to see Kennedy in the column of "overturn the entire law".

The tax powers argument was the easy one. The Commerce Clause argument was tougher. That said, I disagree with those who said he limited the scope of the clause. All he said is what is already law- that it only governs activity. He then argued that requiring people to buy health insurance was inherently governing inactivity. The list of cases where that topic comes up again are going to be quite small- if existent at all (particularly given that any similar desires by Congress to regulate "inactivity" will clearly just be handled under the tax powers in any event).

I think he is wrong on his Commerce Clause analysis, but I also think it is totally irrelevant. The Commerce Clause is as broad today as it was yesterday- just no broader.

The most relevant legal point decided by the Court is also the least noticed- the limitation on Congress' ability to defund states which don't expand Medicare. That ruling could have a much more lasting and powerful effect on Congress' powers under the Spending Clause.

lol, yes everyone. Calicoug saw all this coming. Sure dude.

[venkman]

I think the tax argument is bullshit. Just because he calls it a tax doesn't mean it is one. It's unlike other taxes, as Krauthammer says, it's punitive, regulatory, and intended to compel. It's a fine or a penalty, not a tax. Roberts knows it, and every conservative leaning lawyer here knows it, but we just can't admit it because he's the chief justice for crying out loud and an honorable man.

For some reason he decided he was going to find a way to let this law stand, so rather than blow open the commerce clause he used this flimsy tax argument.

Whatever his motivation, he has dealt a severe blow to individual liberty and limited government. He is no friend of the constitution. Which is sad. But he now has the love of the mainstream media and the adulation of the Washington elite. I hope he enjoys his new friends.

[calicoug]

lol, yes everyone. Calicoug saw all this coming. Sure dude.

Not sure what you mean by "saw it coming." I guessed it would be 6-3 to uphold with Roberts and Kennedy siding with the liberals on the tax argument (oral arguments made it clear they weren't going to accept the Commerce Clause argument). So I was close. Of course, there aren't that many vote outcomes that are likely on an issue like this. The 4 liberals are predictable and so are three of the conservatives. That leaves just two justices as wild cards. Kennedy voting to kill the whole bill is shocking to me. I never would have guessed that. I thought 6-3 because even if the Court wanted to hold it unconstitutional I didn't think they would have a good resolution on the severabilty issue and I suspected that would push them to find a way to uphold. I thought the tax argument would win but I also thought there was a strong chance they would dismiss on lack of standing.

I've made the tax argument on here and on CB. I think this is exactly like a tax. I dare anyone to show me the economic difference between this and the mortgage deduction.

[Uncle Ted]

Not sure what you mean by "saw it coming." I guessed it would be 6-3 to uphold with Roberts and Kennedy siding with the liberals on the tax argument (oral arguments made it clear they weren't going to accept the Commerce Clause argument). So I was close. Of course, there aren't that many vote outcomes that are likely on an issue like this. The 4 liberals are predictable and so are three of the conservatives. That leaves just two justices as wild cards. Kennedy voting to kill the whole bill is shocking to me. I never would have guessed that. I thought 6-3 because even if the Court wanted to hold it unconstitutional I didn't think they would have a good resolution on the severabilty issue and I suspected that would push them to find a way to uphold. I thought the tax argument would win but I also thought there was a strong chance they would dismiss on lack of standing.

I guessing Obama is no longer on Kennedy's christmas card list but who can blame him after things like the scolding Obama gave the supreme court in the state of the union to their faces...

[YOUTUBE]k92SerxLWtc[/YOUTUBE]

I take Kennedy's actions as a clear FU message to Obama from the supreme court as a whole along with some of the comments Roberts made, especially the one I added to my signature.

I've made the tax argument on here and on CB. I think this is exactly like a tax. I dare anyone to show me the economic difference between this and the mortgage deduction.

Well there are slight differences but both try to influence different actions by people for different reasons. IMO, both should be eliminated.

[Moliere]

My TEA party friends, after drinking themselves to sleep last night, have now found the reasoning behind Roberts motives:

Apparently Roberts wants the GOP to retake the WH and senate so he had to find a way to motivate the GOP base to throw out the current lawmakers. Allowing Obamacare to stand and essentially changing it to Obamatax was a devious and sinister plot to make this happen. Now the GOP base is motivated to replace Obama and Reid and since it's now called Obamatax the senate only needs 51 votes.

Yes, that is their theme. I'd say it would have just been easier for Roberts to vote no and strike dwon the law instead of setting of this Rube Goldberg machine of events. The GOP controlled House has neutered Obama enough.

[Moliere]

I've made the tax argument on here and on CB. I think this is exactly like a tax. I dare anyone to show me the economic difference between this and the mortgage deduction.

I think it's clear that it's a tax, but if you can't think of any economic difference between the two examples above then I feel sorry for you.

[calicoug]

I think it's clear that it's a tax, but if you can't think of any economic difference between the two examples above then I feel sorry for you.

What is the difference?

[Moliere]

What is the difference?

I pray for your soul...