Obamacare and Frivolous Return Penalties

[.]

Sounds like you are equating forcing me to pay for your broccoli with me paying for you to see a doctor about your cold

Well, no. Uncompensated care is a minor deal, usually estimated by those who are paying attention to be about 25% of what is usually claimed. In any case, it's not a major driver of health care costs.

the price of broccoli

has got nothing to do with anything.

I'm afraid that you have missed my point, although I'm not surprised.

[Assessor]

Suppose that I "engage in inactivity" by not purchasing housing (i.e. not renting or owning).
I am not allowed to construct a shack on public land, nor am I allowed to sleep on a park bench.
As such, I am subject to fines and/or jail for my "inactivity". Is a fine Constitutionally acceptable for inactivity, but a tax something completely different?

Certainly, I could obtain free housing (stay as a guest with someone who "engages in activity"), but it's certainly possible (if unlikely) that an insurance company could provide me with free health coverage. Even so, that would still constitute economic activity.

We compel people to purchase housing. Why can't the government compel people to purchase broccoli?

[Cpt Banjo]

The argument (and some people are making this argument) that Congress simply cannot constitutionally tax economic inactivity -- the failure to buy health insurance, in this case -- is a weak argument. If you try to make that argument in open court without anticipating and dealing with the counter-arguments that the other side will easily recognize (e.g., nothing in the Constitution says that an excise must be limited to taxing an "activity" and no court has ruled that taxing "inactivity" violates the Constitution), you're not doing your best.

The answer is that (a) historically all excises have been based upon some kind of activity, (b) the reason no court has ruled that a tax on inactivity is unconstitutional is simply because until now Congress hasn't tried to tax or impose a penalty on inactivity. The issue isn't so much that a tax on inactivity is clearly unconstitutional; rather, the point is that it's a bit much to assume that it's a slam dunk in favor of constitutionality if the mandate is called a tax, even given the overwhelming deference the Court has traditionally given to Congress on tax matters. I simply don't think the argument against constitutionality is as weak as its detractors think.

The problem that the proponents of the mandate have yet to solve is easily stated: if Congress can mandate that citizens engage in economic activity, is there any limiting principle on the commerce and taxing clauses that would prevent Congress from requiring people to do whatever it damn well pleased? It's no answer to say that the health care industry is unique -- it isn't, and the argument that the mandate addresses a unique problem smacks of "Just let me do it this once; I promise I'll never do it again." Congress is hardly known for legislative restraint.

[Famspear]

I'm guessing that the Founders sought to limit federal regulation of interstate commerce to voluntary interstate commerce and that almost everyone since has understood that simple principle.

I'm guessing that your guess is wrong.

The idea that anyone could be compelled to either buy some product or pay a penalty under the guise of regulation of "interstate commerce" under the terms of the Constitution would have been total anathema to them, no matter the exigencies of any particular market.

Maybe it would have been anathema to them. Maybe not.

If we lose that very simple, elementary principle, then we're done. Cooked.

In my opinion, your statement is probably not an elementary principle of American constitutional law.

At least, not yet. Perhaps that will change by June or July of this year.



If interstate commerce is materially affected by the existence or non-existence of a regulation that requires that every individual buy a particular product or service (or a provision imposing a monetary penalty for failure to comply), then how can a regulation that requires those individuals to do just that (or a provision imposing such a monetary penalty) not be a valid exercise of the Congressional power under the Commerce Clause? Can you show me a line of text in the Constitution that says that the power to regulate interstate commerce does not include the power to require everyone to buy a product or service?

[Cpt Banjo]

Suppose that I "engage in inactivity" by not purchasing housing (i.e. not renting or owning).
I am not allowed to construct a shack on public land, nor am I allowed to sleep on a park bench.
As such, I am subject to fines and/or jail for my "inactivity". Is a fine Constitutionally acceptable for inactivity, but a tax something completely different?

You're not being fined for not purchasing housing; you're fined for sleeping on public property, which is a form of activity.

[Famspear]

....The problem that the proponents of the mandate have yet to solve is easily stated: if Congress can mandate that citizens engage in economic activity, is there any limiting principle on the commerce and taxing clauses that would prevent Congress from requiring people to do whatever it damn well pleased? It's no answer to say that the health care industry is unique -- it isn't, and the argument that the mandate addresses a unique problem smacks of "Just let me do it this once; I promise I'll never do it again." Congress is hardly known for legislative restraint.

Yes, and these are the kinds of questions that the justices are probably grilling the attorneys about this week.

Part of the problem is that interstate commerce has become so much more pervasive, I guess, than it was when the Commerce Clause was drafted. So, those in favor of using the Commerce Clause to justify this section 5000A regulation, or penalty, or whatever it is, can say "Hey, we're talking about health care, which has a material effect on interstate commerce. It's not our fault that this is the case. It's not our fault that society has changed, and that commerce has changed, so much since the year 1787. If you don't want Congress to have this kind of power, then amend the Constitution to provide express, specific limits on the power to regulate interstate commerce."

The other "problem" (if it is a problem) is that the courts in the modern era have largely deferred to Congress regarding the scope of the Commerce Clause.

[Famspear]

.....The issue isn't so much that a tax on inactivity is clearly unconstitutional; rather, the point is that it's a bit much to assume that it's a slam dunk in favor of constitutionality if the mandate is called a tax, even given the overwhelming deference the Court has traditionally given to Congress on tax matters. I simply don't think the argument against constitutionality is as weak as its detractors think.....

Those are excellent points.

[.]

If interstate commerce is materially affected by the existence or non-existence of a regulation that requires that every individual buy a particular product or service (or a provision imposing a monetary penalty for failure to comply)

"Materially affected?" Since when did that become the question?

The question is and always has been is there any circumstance under which the federal government can require the purchase of anything by anyone.

But, I'm gonna buy some broccoli, just to get the jump on them, because I like broccoli.

[Famspear]

If interstate commerce is materially affected by the existence or non-existence of a regulation that requires that every individual buy a particular product or service (or a provision imposing a monetary penalty for failure to comply)

"Materially affected?" Since when did that become the question?

The question is and always has been is there any circumstance under which the federal government can require the purchase of anything by anyone.

But, I'm gonna buy some broccoli, just to get the jump on them, because I like broccoli.

Well, no. I believe that's incorrect. I would argue that the question has NEVER been "is there any circumstance under which the federal government can require the purchase of anything by anyone?" Until now. That may be a question posed in THIS case, but not in any prior federal court case that I have ever seen. It just hasn't come up.

And yes, in many federal court cases, the courts have considered the extent to which the subject economic activity implicated the Congressional regulatory power under the Commerce Clause -- which is another way of saying: Does the activity materially affect interstate commerce.

I respectfully argue that you are quite wrong on both of these points.

Getting back to Kahriger, the Supreme Court ruled that the Congressional purpose -- of penalizing interstate gambling under the guise of imposing a tax -- did not violate the Constitution by infringing the police power reserved to the states. The Court stated: "Unless there are [penalty] provisions extraneous to any tax need, courts are without authority to limit the exercise of the taxing power."

I suspect that someone might be making the argument before the Court this week that the penalty provision of section 5000A is extraneous to any "tax need."

[Mr. Mephistopheles]

The question is and always has been is there any circumstance under which the federal government can require the purchase of anything by anyone.

The answer is yes. The Second Militia Act of 1792.

[.]

Didn't a Republican senator basically ask that question of Kagan during her confirmation hearings? As in, if the federal government passed a law that you have to eat a certain number of servings of fruits and vegetables per day, would it be constitutional, under the theory that workers who are healther are more productive, and that in turn affects interstate commerce?

Kagan flatly refused to answer the question. The only sane response, of course, would have been, "Only a dictatorship presumes to tell people what they must or must not eat."

Yup. That was Coburn:

Coburn: If I wanted to sponsor a bill and it said Americans you have to eat three vegetables and three fruits every day and I got it through Congress and that’s now the law of the land, got to do it, does that violate the Commerce Clause?

Kagan: Sounds like a dumb law.

Coburn: Yeah, but I got one that’s real similar to it that I think is equally dumb. I’m not going to mention which it is.

Kagan: But I think that the question of whether it’s a dumb law is different from whether the question of whether it’s constitutional and I think that courts would be wrong to strike down laws that they think are senseless just because they’re senseless.

Coburn: I guess the question I’m asking you is do we have the power to tell people what they have to eat every day.

Kagan: Sen. Coburn….

Coburn: I mean what is the extent of the Commerce Clause? We have this wide embrace of the Commerce Clause, which these guys, who wrote this [holds up bound copy of Federalist Papers] never, ever fathomed that we would be so stupid to take our liberties away by expanding the Commerce Clause this way.

…

Coburn: I go back to my original question to you: is it within the Constitution for me to write a bill having been duly elected by the people of Oklahoma to say and get it signed by the president that you have to eat three fruits and three vegetables every day.

Kagan: First let me say about the federalist papers quote that you read that it is absolutely the case that the judiciary’s job is to you know in Marbury v. Madison the famous phrase to say what the law is and to make sure I think I’ve talked about it as policing the constitutional boundaries making sure the Congress doesn’t go further than the Constitution says it can go, doesn’t violate individual rights and also doesn’t act outside its enumerated authorities. We live in a government in which Congress’s authorities are enumerated in Article I of the Constitution and Congress can’t act except under one of those heads of authority. Now as I talked about with Sen. Cornyn the Commerce Clause has been interpreted broadly it’s been interpreted to apply to regulation of any instruments or instrumentalities or channels of commerce, but it’s also been applied to anything that would substantially affect interstate commerce. It has not been applied to non-economic activities and that’s the teaching of Lopez and Morrison that the Congress can’t regulate non-economic activities, especially to the extent that those activities have traditionally been regulated by the states and I think that that would be the question that the court would ask with respect to any case of this kind. But I do want to sort of say again that we can come up with sort of you know just ridiculous-sounding laws and the principal protector against bad laws is the political branches themselves. And I would go back I think to Oliver Wendell Holmes on this. He was this judge who lived in the early 20th Century— hated a lot of the legislation that was being enacted during those years but insisted that if the people wanted it, it was their right to go hang themselves. Now, that‘s not always the case but there is substantial deference due to political branches—

Coburn: I’m running out of time. I want to give you another condition: what if I said that if eating three fruits and three vegetables would cut health care costs 20%? Now, we’re into commerce. And since the government pays 65% of all the health care costs why isn’t that constitutional?

Kagan: Sen. Coburn, I feel as though the principles that I’ve given you are the principles that the court should apply…

Coburn: I have a little problem with that. If we’re going to hand ourselves and as our founders, three of the critical authors of our Constitution thought the judiciary had a reason to smack us down, and as Oliver Wendell Holmes—if we wanted to be doing stupid stuff we can do stupid stuff—I disagree. And that’s not activism. That’s looking at the Constitution and saying well we’re going to ignore it even if it does expand the Commerce Clause because the Commerce Clause is what has gotten us into a place where we have a $1.6 trillion deficit that our kids’ future has been mortgaged that we may never recover from. That’s not an understatement at all. In 25 years, each of our kids are going to owe $1,113,000 they pay interest on that before they do anything for themselves or their kids. So, the fact is that we have this expansive clause and we have to have some limit on it and if the courts aren’t going to limit it within the original intent, instead of continuing to rely on precedent and this vast expansion of it, the only hope is—is that we have to throw out most of the Congress. But the point is that their original intent is that you wouldn’t ignore their original intent. What we find ourselves today on the Commerce Clause is through a period of precedent-setting decisions we have allowed the federal government to become something that it was never entitled to become. And with that a diminishment of the liberties of the people of this country both financially and in terms of their own liberty.

Kagan: Well, Sen. Coburn, I guess a few points. The first: I think there are limits on the Commerce Clause, which are the ones that are articulated by the Court that were articulated by the Court in Morrison and in Lopez. Which are primarily about non-economic activity and Congress not being able to regulate non-economic activity. I guess the second point I would make is I do think that very early in our history and especially I would look to Gibbons v. Ogden, where Chief Justice Marshall did, in the first case about these issues, essentially read that clause broadly and provide real deference to legislatures and provide real deference to Congress about the scope of that clause, not that that clause doesn’t have any limits, but that deference should be provided to Congress with respect to matters that affect interstate commerce. And I guess the third point is just to say that I think that $1.6 trillion deficit may be an enormous problem—it may be an enormous problem. But I don’t think it’s a problem for courts to solve. I think it’s a problem for the political process to solve.

Coburn: You missed my whole point. We’re here because the courts didn’t do their job in limiting our ability to go outside of original intent on what the Commerce Clause was supposed to be. You can’t solve the problem now but you helped create it as a court because you allowed something other than what our original fathers thought was a legitimate role for the federal government.

http://www.politico.com/blogs/joshgerst ... s_law.html

Kagan never did give Coburn a straight answer, even given multiple opportunities to do so. Lots of blather and hemming and hawing around, but no answer to the obvious.

Which perfectly illustrates the divide between those of us who think the federal government should go the hell away (to the limited extent that that's possible) and those who think the federal government is omnipotent, or close to it.

I note for those who think that they're in the "middle" and "moderate" that the hard left never considers any battle won until everyone, to include you, has been totally subjugated to whatever they think is "best" for you, and, of course, only they know what that might be, even if they won't state it flat-out in no uncertain terms because that would upset you at least as much as it upsets most people.

Kagan is a good example of that precept. If the left wins this round, you're going to have to buy (and pay for) a lot more than some broccoli.

[.]

It just hasn't come up.

Exactly. Case of first impression and all that. Most important case in the last 50 years.

And, never mind the blah, materially, blah, affect, blah, blah, blah, the issue remains REQUIRING activity, which has never happened, not even to Filburn 70 years ago.

We're gonna find out whether we are free under a government of enumerated powers, the enumeration of which actually means something, or whether we're just sort of another bunch of Europeans under the thumb of an always-growing and ever-more-encompassing government, a nanny-state which buys the votes of the ignorant until it does a back-flip into the pool of bankruptcy, a la Greece.

We'll see.

[Dr. Caligari]

Mods:
This thread did start out talking about the Frivolous Return Penalty, but has long since veered off into a debate about Obamacare. Can we move this thread to Tax Policy? (If not to Ranting & Raving.)

[.]

Mods:
This thread did start out talking about the Frivolous Return Penalty, but has long since veered off into a debate about Obamacare. Can we move this thread to Tax Policy? (If not to Ranting & Raving.)

In 35 posts, "Obamacare" has only been mentioned 11 times, including once in the Dr.'s post.

It's been a discussion of constitutionality (or the lack thereof) and possible consequences. Nobody seems to much care about whether TPs might try to free-ride on the almost-certain loss of the anti-injunction argument, nuances of waiver notwithstanding.

To me, at least, this has nothing to do with "Obamacare," it has to do with the reach of the federal government, so "Tax Policy" might be appropriate.

[Burzmali]

How is any of this a commerce clause issue instead of a 16th amendment issue?

If Congress chose to, they could raise our income taxes and then provide an offsetting tax credit for purchasing broccoli.

[Burzmali]

How is any of this a commerce clause issue instead of a 16th amendment issue?

If Congress chose to, they could raise our income taxes and then provide an offsetting tax credit for purchasing broccoli.

Depends on the day of the week, literally. Yesterday, the Solicitor General argued that the penalties detailed in the legislation are not a tax and today the same Solicitor General will be arguing that the penalties detailed in the legislation are a tax. So, yesterday it was not a 16th Amendment issue and today it is.

I hope that clears things up.

It is truly amazing, because it is so rare that you get to actually see a person and/or administration talk out of both sides of their mouth. Or "speak with forked tongue" as it were.

For all I know the tax code includes parts where "person" includes jelly dough-nuts. As such, I have no idea if a tax isn't a tax when the government is talking about TPS reports required by section 21B of the tax code.

However, if the government wants to create the situation where person A pay more in taxes than they do today while person B pays the same, Congress pretty much has a free hand with the tax rate and the marginal rates, and they also have a pretty free hand with deductions and credits. So it is hard to imagine why the end game that Obamacare creates would be inherently unconstitutional without invalidating large chunks of the tax code.

[.]

I neglected this, earlier:

The question is and always has been is there any circumstance under which the federal government can require the purchase of anything by anyone.

The answer is yes. The Second Militia Act of 1792.

OK. Good one. I formulated the proposition inartfully. Let's put it this way: OTHER than what is already provided for in the Constitution (Article I, Section 8, clause 16,) is there any circumstance under which the federal government can require the purchase of anything by anyone.

That remains the question.

The feds may regulate and tax the hell out of you if you decide to enter this or that business, but they can't require you to hire lobbyists or accountants or lawyers or to buy anything. If you don't, you may go down in flames, but that's your decision based upon the facts and circumstances as you see them, not some constitutional, legal requirement.

[Famspear]

I have been going over the transcripts from the oral arguments in the health care cases from yesterday (Monday, March 26) and today (Tuesday, March 27). At the risk of appearing to pat myself on the back (sound effects: pat, pat, pat, pat), I discovered that Justice Scalia raised (more or less) the same point about a possible interplay (or lack of an interplay) between section 5000A and the Anti-Injunction Act that I had raised earlier in this thread.

Robert A. Long, counsel for Court-appointed amicus curiae, stated:

Congress directed that the section 5000A penalty shall be assessed and collected in the same manner as taxes. That directive triggers the Anti-Injunction Act, which provides that "no suit for the purpose of restraining the assessment or collection of any tax may be maintained in any court by any person."

Justice Antonin Scalia responded:

Well, that depends, as -as the government points out, on whether that directive [in section 5000A] is a directive to the Secretary of the Treasury as to how he goes about getting this penalty, or rather a directive to him and to the courts. All of the other directives there seem to me to be addressed to the Secretary. Why should this one be directed to the courts? When you say "in the same manner," he [the Secretary] goes about doing it in the same manner, but the courts simply accept that -- that manner of proceeding but nonetheless adjudicate the cases.

--from pages 3 and 4 of the transcript of the oral arguments in Department of Health and Human Services v. Florida, case no. 11-398 (March 26, 2012) (italics added).

The issue over the extent of the power of Congress to require everyone to purchase health insurance -- which is much of what was covered in today's arguments -- seems a lot more interesting, though.

[.]

C'mon, Fam, we all know better than to infer anything from either the tone or content of the questions or statements of any particular Justice. Except for Thomas, who never says anything.

In any case, if I was going to start something new in Texas, you'd be the guy I'd call first if I wanted to be certain that my sorry butt was covered from a legal and accounting standpoint.

I would worry a bit about whether you might get off into the weeds now and then, but I'd chalk it up to your obsession with always being exhaustively thorough. A good thing. If your butt is covered, mine can't be far behind, so to speak.

Meanwhile, we'll get back to this in what, maybe June or July when they finally cough up a decision?

[Famspear]

C'mon, Fam, we all know better than to infer anything from either the tone or content of the questions or statements of any particular Justice. Except for Thomas, who never says anything.

Yep.

In any case, if I was going to start something new in Texas, you'd be the guy I'd call first if I wanted to be certain that my sorry butt was covered from a legal and accounting standpoint.

Yeah, but remember that I do just tax stuff 99% of the time.

I would worry a bit about whether you might get off into the weeds now and then, but I'd chalk it up to your obsession with always being exhaustively thorough. A good thing. If your butt is covered, mine can't be far behind, so to speak.

You might want to worry a lot - especially around the time that you'd be expecting the bill for my time for all that legal research I'd be doing out there -- obsessively whacking those weeds....

Meanwhile, we'll get back to this in what, maybe June or July when they finally cough up a decision?

Yeah, that's what the news reports are saying. At least we will (hopefully) have some more certainty about Obamacare after this summer (unless the Court decides that the Anti-Injunction Act applies, which is possible, but I don't expect them to do that).