-- Posted by Neil H. Buchanan
In all of the discussion of the Supreme Court's ACA case, the one thing that everyone seems to agree upon is that it was all about liberty. Conservatives are pleased that there were five votes for the proposition that the Commerce Clause contains an activity/inactivity distinction, thus supposedly stopping Congress from requiring us to eat broccoli. Everyone else at least agrees that the conservatives on the Court sincerely argued -- perhaps not persuasively, but sincerely -- for a view of the Constitution that would limit federal power over people's lives. This, it turns out, is an inaccurate view, as the dissenting opinion in the case inadvertently reveals.
In my new Verdict column, I dissect the dissenting Justices' argument about the nature of the taxing power, pointing out that they elevate form over substance in defining what is a "tax" for Constiutional taxing power purposes. The Chief Justice's controlling opinion pointed out that "magic words" are not what is used to determine when something is a tax. Instead, our system has always looked to the substance of what is happening, not the form or the words used. Thus, for example, if a taxpayer says: "I didn't receive income, but simply a loan that I never paid back," then we sensibly say that the taxpayer has received income that is subject to tax.
The Chief Justice then points out that the ACA's "individual mandate" is functionally equivalent to a tax, because people have the option of paying the government more money than they otherwise would pay, or they can owe the government fewer dollars by buying private health insurance. And that, says the Chief Justice, ends the inquiry. Even though Congress called it a "penalty," it is functionally a tax, making the individual mandate well within Congress's taxing power.
As I point out in my column, economists tend to characterize nearly everything as a "price," and then to characterize anything that the government does as a "tax" that changes the prices that people face. The Chief Justice is troubled by the open-ended nature of this approach, because he sees (correctly) that every Congressional action might be recharacterized as a tax, which opens up (in his view) vast new opportunities for Congress to steal our freedom. He thus invokes a seat-of-the-pants proportionality test, suggesting that so long as Congress gives people a "real choice," then the law in question can be a tax -- but if the choice is so one-sided as to be coercive, then it is out of bounds. I find that argument unpersuasive, for reasons that I will describe below -- and for reasons that resonate with the controversy over the Commerce Clause.
But back to the dissenters. In an opinion that is notable for its vitriol (even by the standards of everything else that Justice Scalia has signed onto), four of the Court's five conservatives (Alito, Thomas, and Kennedy, along with Scalia) fairly scream that the taxing power must be limited by form, not substance. Their argument essentially says, as I discuss in my column: "There is a bright-line distinction between a 'tax' and a 'penalty,' and Congress called this a penalty. We have sometimes, in our cases, said that penalties have been mislabeled as taxes, but never the reverse. Therefore, we cannot do that here, either."
Reading the dissent, it really is astonishing how much weight they put on what Congress said, rather than what it did. One may object, however, that my column skipped over an important part of the dissenters' argument. They claim that there is a meaningful distinction between taxes and penalties, which is that penalties are imposed on people for being on the wrong side of the law, whereas taxes are imposed on people who have done nothing "wrong." The government had pointed out that it viewed the matter as a choice: If a person chooses to pay the "penalty" instead of buying insurance, then that person will be viewed as being in full compliance with the law -- just as, say, a person is in full compliance with the law when she pays more in taxes than she would have paid had she bought a house and taken the mortgage interest deduction.
The dissenters are unimpressed -- but in a way that is contradictory to their general approach. Here, they argue that substance matters, not form. It does not matter if the government says that people are not in violation of the law, because in fact they are worse off, which is the situation that people end up in when they violate the law. So the substance of the matter -- do people pay money to the government, or not -- is suddenly key to understanding what is a tax, not the words used. Ultimately, the dissenters are saying that the government has to be held to some of its words, but not all of them.
Even if one thinks that I am being unfair on the penalty/tax issue, however, the dissenters' most revealing moment is when they respond to the Chief Justice's argument that the ACA's mandate can be viewed as a tax, and thus (for purposes of determining whether to overturn the law) that it must be viewed as a tax.
The dissenters write: "The issue is not whether Congress had the power to frame the minimum-coverage provision as a tax, but whether it did so" (emphasis in original). Again, the dissenters are all about form here. Did Congress "frame" the mandate as a tax? If not, no dice.
Consider, however, the profound concession that the dissenters are making here. They are not saying that Congress lacks the power under the Constitution to do exactly what it did in the ACA. They are saying only that Congress did not do it the right way. Why is that so profoundly revealing? Because the essence of the dissenters' position -- and certainly the meme that has dominated this entire debate -- is that Congress simply cannot do what it tried to do here, because the Constitution protects our freedom from such over-reaching. Now, we are simply told that any future Congress can do this very thing, so long as it uses the right words.
In an earlier series of Verdict columns and blog posts (the last of which, with links to earlier entries in the series, is available here), Professor Dorf pointed out that much of the rhetoric surrounding the early debate sounded in federalism principles, whereas the real argument from conservatives seemed to be a libertarian objection. The dissenters' argument shows that Professor Dorf was being too generous. There is neither a federalism nor a libertarian objection underlying this case. This is just full-on politics.
Still, an anti-Obama conservative might argue that the dissenters would have struck a blow for freedom if they had gotten one more vote, because at least the ACA would have been struck down. Again, however, the debate all along has been about the extent of Congress's powers, not about the particulars of this case. This was a classic slippery-slope argument: Universal health care coverage might seem like a good idea, but we have to draw the line here, or they'll be telling us that we have to eat broccoli. The dissent's position does nothing to strike back against that supposedly horrible possibility.
The best that one could say, perhaps, is that even the Democratic-controlled Congress in 2010 would have thought twice about passing the ACA, if it had been forced to use the word "tax" instead of the word "penalty." Certainly, President Obama and the Democrats ran like scared children from the word "tax." Under current political circumstances, tax is a dirty word. That means that, if one side can describe the other side's policy as a "tax increase," then the electoral politics will turn against that policy.
If that is the argument, however, then we are really in a through-the-looking-glass world, because the dissenters' position would amount to nothing more than reliance on the political process to limit what Congress might dare to do. After all, during her confirmation hearings, now-Justice Kagan was asked about a must-eat-broccoli law. Her answer: "Sounds like a dumb law." This has been the response by liberals and Democrats all along: Even when the Constitution permits some crazy outcomes, the democratic process will do its job.
Which brings me back to Chief Justice Roberts's proportionality test. He tries to limit the taxing power, because he thinks that the word "tax" is potentially too broad. Similarly, Roberts and the other arch-conservatives argue that we must limit the commerce power because the word "commerce" is potentially too broad. With regard to the Commerce Clause, many legal scholars have said that we should simply recognize that the commerce power has broadened, as the world has become more commercialized (and as all commerce has become interstate). The same argument should be applied to the taxing power. Tax is a broad concept, and it can be (and certainly is) limited at the ballot box.
The larger point, however, is that the dissenters evidently agree that it is ultimately all about electoral politics. Their position is most definitively not that Congress lacked the power to do what it did in the ACA. They argue that Congress merely used the wrong words. At most, this amounts to a plea to give the people the ability to stop Congress from passing "dumb laws." They already possess that ability.