Project 21 New Visions

Horace Cooper

Does the Tax Man Cometh?


by Horace Cooper (bio)

 

In a frustrating and disappointing blow to individual liberty, the Supreme Court's four reliable liberals and Chief Justice Roberts upheld a coercive and unprecedented federal encroachment on our freedom and our nation's health insurance industry.

Liberals are celebrating while conservatives despair.  Both are understandable, albeit knee-jerk reactions to a rather strained ObamaCare opinion.

A closer look at exactly what the Court hath wrought in the case reveals a far more limited victory for the government, and not nearly as painful or dangerous of a defeat for America as was first feared.

The true victory for the nation lies in the Court's refusal to extend Congress' authority to regulate commerce under the Constitution's Commerce Clause.  To be clear, the Court ruled that Congress could not regulate decisions to not engage in commerce simply because those decisions might affect some other commerce.  The majority held "that our Constitution protects us from federal regulation under the Commerce Clause so long as we abstain from the regulated activity."

In so ruling, the Roberts majority invoked Congress' power to tax for the general welfare to uphold the ObamaCare statute.   Essentially, they declared that ObamaCare's "penalty" for failure to purchase health insurance could be construed as a "tax" to encourage buying coverage.

It is unfortunate that Roberts essentially rewrote the statute as passed by Congress in order to save it. But, by calling the mandate a tax, the Court placed its decision and Obamacare within a constitutional context.

Congress enjoys a broad — but not unlimited — authority to tax for the general welfare.  Accordingly, the Court said, "Even if the taxing power enables Congress to impose a tax on not obtaining health insurance, any tax must still comply with other requirements in the Constitution."  Thus, any tax must still comply with existing restrictions on what and how Congress may tax.

For example, Congress cannot use the tax to directly regulate behavior.

Taxes, tax credits and tax exemptions create incentives to engage in or abstain from behavior, but don't prohibit or outlaw behavior.  Congress may tax cigarette sales, but not smoking.  Additionally, Congress may not tax us for failing to give up our constitutional rights.  Congress cannot use taxes to encouraging the forfeiture of a jury trial, right to an attorney or free assembly.  Finally, taxes themselves may not be used as a punishment or regulation.

The ObamaCare decision acknowledges these limits and does not overturn them or prior tax law cases. Nor does the Court, contrary to popular fears, expand that power or grant Congress new taxing authority.  Indeed, the majority states: "Upholding the individual mandate under the Taxing Clause thus does not recognize any new federal power."

Rather than settling ObamaCare's status, relying on taxing power only opens up the law to a series of collateral attacks.  Relying on prior precedent, many Americans can lawfully claim that some or all ObamaCare taxes were improperly imposed.

Previously, Congress enjoyed broad taxing authority to pay for government programs or encourage specific behavior.  Little has changed after this decision.   Today Congress is now free to use that power within existing constitutional boundaries, and will answer to the people on Election Day for raising or imposing taxes and the Courts should they go beyond that power.

Some worry the U.S. Supreme Court provided a roadmap for avoiding the people's political check on congressional taxing power by allowing Congress to call a tax-increasing law a "regulation."  This is unjustified.  Existing precedents restricting and limiting taxing power remain in effect.

Moreover, regardless of what Congress attempts to call any levy, it is always incumbent upon the American people to hold the legislature accountable – as is their duty in a republican system.

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Horace Cooper, a member of the national advisory council of the Project 21 black leadership network, is a legal commentator and an adjunct fellow with the National Center for Public Policy Research. Comments may be sent to [email protected].

Published by the National Center for Public Policy Research. Reprints permitted provided source is credited. New Visions Commentaries reflect the views of their author, and not necessarily those of Project 21, other Project 21 members, or the National Center for Public Policy Research, its board or staff.

 


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