Chief Justice John Roberts, who wrote the opinion for the majority, shocked many across the United States by turning left on the issue of The Affordable Care Act’s constitutionality. There are those that believe that the decision is an example of judicial activism while others believe that Chief Justice Roberts illustrated judicial restraint.
Justice Anthony Kennedy wrote the dissenting opinion that stated “[t]he act is invalid in its entirety.” On the other hand, the majority opinion by Chief Justice Roberts, stated that
[t]he Affordable Care Act is constitutional in part and unconstitutional in part. The individual mandate cannot be upheld as an exercise of Congress’s power under the Commerce Clause. That Clause authorizes Congress to regulate interstate commerce, not to order individuals to engage it. In this case, however, it is reasonable to construe what Congress has done as increasing taxes on those who have a certain amount of income, but choose to go without health insurance. Such legislation is within Congress’s power to tax.
So, wait a minute, despite President Obama’s repeated assertions while campaigning in 2008, which can be seen in the following video montage, that the middle class would not be taxed in his plan.
In addition, as president, he was questioned again about this issue in an interview with George Stephanopoulos. The administration argued that the penalty on those who do not get health insurance was not a tax is actually a tax according to Chief Justice Roberts. As a result, the individual insurance mandate in The Affordable Healthcare Act is considered constitutional, because the law is an exercise of Congress’s broad taxing powers.
What is ironic about the Supreme Court’s decision is that every lower court, except for the Fourth Circuit Court of Appeals, said that The Affordable Care Act’s requirement to get health insurance was a mandate and not a tax.
However, at the end of the day, the Supreme Court has the last word on The Affordable Care Act’s constitutionality. The following is the reasoning that Chief Justice Roberts presented in favor of The Affordable Healthcare Act’s constitutionality:
The Federal Government does not have the power to order people to buy health insurance [or anything else]. Section 5000A (of the Affordable Care Act) would therefore be unconstitutional if read as a command. The Federal Government does have the power to impose a tax on those without health insurance. Section 5000A is therefore constitutional, because it can reasonably be read as a tax. … The Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.
It appears that President Obama’s own words and other legal opinions were not even considered or taken lightly as Chief Justice Roberts found a way to cast the last vote to upheld The Affordable Care Act.
Those that find themselves disturbed, angered, or both by the the way Chief Justice Roberts decision need to remember what is beneficial.
First, Chief Justice Roberts ruled against those that argued for broad congressional powers under the Commerce Clause because this particular clause of the constitution could not be stretched to compel economic activity. As a result, the mandate, in relation to the commerce clause is unconstitutional.
It is critical to remember that the Democrats got The Affordable Healthcare Act moving using the Commerce Clause as Roberts ruling ends the notion that Congress can compel citizens of the United State’s to buy anything. Thus, Chief Justice Roberts officially limited Congress’s powers under the provision. Therefore, ending the expansion and effectively limiting congressional authority to the original intent of the Commerce Clause.
The root of Chief Justice Roberts argument is that government cannot force people to engage in economic activity: “Construing the Commerce Clause to permit Congress to regulate individuals precisely because they are doing nothing would open a new and potentially vast domain to congressional authority.”
Randy Barnett, a law professor for Georgetown University and a leading opponent of The Affordable Healthcare Act, said that the most important aspect of the law was the governments use of the Commerce Clause.
The most important thing at stake in this case was whether Congress had the Commerce Clause power to make everybody go into business with a private company, and there was not a majority for that.
The Affordable Care Act’s use of the Commerce Clause is considered inappropriate use, but Chief Justice Roberts argued that Congress’s decisions under their taxing power does apply, no matter what legislators call it during political debates.
He added that the taxing power does not have the same compulsive similarities because people have the choice to either perform the action (get health insurance) or pay the extra money to the federal government.
Chief Justice Roberts contended that “[w]hether the mandate can be upheld under the Commerce Clause is a question about the scope of federal authority. Its answer depends on whether Congress can exercise what all acknowledge to be the novel course of directing people to buy insurance. Congress’ use of the Taxing Clause to encourage buying something is, by contrast, not new.”
He added that “[u]pholding the individual mandate under the Taxing Clause does not recognize any new federal power. It determines that Congress has used an existing one.”
The Supreme Split
The Supreme Courts decision came down to Chief Justice Roberts being placed in the middle as the justices being were split 4-1-4. As a result, Roberts was left in a position to strike a careful balance that would affirm Congress’s power to tax while limiting legislators ability to use the Commerce Clause.
Its contended that Roberts may of considered finding a balance to protect the image of the Supreme Courts. Do not forget that no matter the decision, he understood that the Supreme Court would be in the middle of political and public backlash.
The decision came down to four liberal-leaning justices arguing that the mandate should be upheld under the Commerce Clause and the federal taxing authority. While four justices argued that the mandate exceeded government authority no matter what constitutional authority is referenced.
It’s A Tax!
Because Congress does not have the authority for The Affordable Care Act through the Commerce Clause, it is forced to rely on its power to tax. The critical thing to remember is that the mechanism within the law is the linchpin to funding The Affordable Care Act is considered a tax.
We all remember all the past arguments over The Affordable Care Act being centered around the Democrats calling the mechanism a penalty and the Republicans calling it a tax.
The Democrats were committed to calling it a penalty as they moved it through Congress. In addition, President Obama would continue to argue that it was not a tax, but a penalty. However, the Democrats would change their wording when they made their oral arguments in front of the Supreme Court. In the end, the chief justice handed them a tax.
Despite legitimate complaints over the Democrats wordplay, The Affordable Care Act is officially funded by tax dollars. As a result, the Democrats are now faced with defending the many tax increases in justifying the law.
The Obama administration got saved by itself when the Supreme Court decided to find the law constitutional based on the taxing power. The decision occurred as some justices changed their own final decision compared to their own comments during the oral arguments in March.
During the three days of oral arguments over The Affordable Care Act, the justices prodded the administrations Solicitor General over the issue of the mechanism being a penalty or tax. Justice Elena Kagan added that “Here we have a case in which Congress determinedly said this is not a tax.” On the other hand, Justice Ruth Bader Ginsburg added that she believed the federal government could not rely upon its taxing power. Justice Ginsburg stated that, “[a] tax is to raise revenue, tax is a revenue-raising device,” [and that the]“…penalty is designed to affect conduct. The conduct is [buying] health protection, [buying] health insurance before you have a need for medical care. That’s what the penalty is designed to do, not to raise revenue.”
The legislation of the act requires most Americans to get health insurance that meets federal standards. Those Americans who fail to obtain such coverage will be imposed with an Internal Revenue penalty.
Americans will be faced with more than a tax penalty for not obtaining health insurance as the Senior Economist for the Wall Street Journal, Stephen Moore, told FOX and Friends that nearly 75% of The Affordable Care Act costs will fall upon Americans that make less than $120,000 a year.
Chief Justice Roberts Decision
Taking this into consideration, the Supreme Courts decision – although shocking to a degree – becomes understandable. However, during the debate over the constitutionality of the law, President Obama articulated that it was not a tax because its a matter of personal responsibility: ”For us to say ‘You have to take responsibility to get health insurance’ is absolutely not a tax increase.”
However, the tone on it being a tax changed when lawsuits against The Affordable Care Act began. The administration began asking the courts to uphold the laws mandate as a legitimate exercise of federal taxing power.
This argument was rejected in the lower courts and during oral arguments before the Supreme Court. Chief Justice Roberts appeared unwilling to accept the argument when he commented ”[y]ou’re telling me they thought of it as a tax, they defended it on the tax power,” and asked the Solicitor General Donald B. Verrilli Jr, “[w]hy didn’t they say it was a tax?”
Despite the appearance of unwilling to accept the argument, the chief justice surely shocked many people when he concurred with the argument in his majority decision.
In the majority decision, Chief Justice Roberts wrote that “The Affordable Care Act’s requirement that certain people pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.”
The Supreme Courts decision to uphold The Affordable Care Act ensured that the laws that its 20 new or higher taxes on American families and small businesses will continue to be implemented.
Taxpayers are reminded that the president’s healthcare law is one of the largest tax increases in American history.
Due to The Affordable Care Act being upheld, the following $500 billion or more in tax increases to be implemented over the next ten years. The list is organized in the following manner: the taxes are arranged by their effective dates, where they can be found in the law, and how much personal taxes are scheduled to increase.
Taxes that took effect in 2010:
1. Excise Tax on Charitable Hospitals (Min$/immediate): $50,000 per hospital if they fail to meet new “community health assessment needs,” “financial assistance,” and “billing and collection” rules set by HHS. Bill: PPACA; Page: 1,961-1,971.
2. Codification of the “economic substance doctrine” (Tax hike of $4.5 billion). This provision allows the IRS to disallow completely-legal tax deductions and other legal tax-minimizing plans just because the IRS deems that the action lacks “substance” and is merely intended to reduce taxes owed. Bill: Reconciliation Act; Page: 108-113.
3. “Black liquor” tax hike (Tax hike of $23.6 billion). This is a tax increase on a type of bio-fuel. Bill: Reconciliation Act; Page: 105.
4. Tax on Innovator Drug Companies ($22.2 bil/Jan 2010): $2.3 billion annual tax on the industry imposed relative to share of sales made that year. Bill: PPACA; Page: 1,971-1,980.
5. Blue Cross/Blue Shield Tax Hike ($0.4 bil/Jan 2010): The special tax deduction in current law for Blue Cross/Blue Shield companies would only be allowed if 85 percent or more of premium revenues are spent on clinical services. Bill: PPACA; Page: 2,004.
6. Tax on Indoor Tanning Services ($2.7 billion/July 1, 2010): New 10 percent excise tax on Americans using indoor tanning salons. Bill: PPACA; Page: 2,397-2,399.
Taxes that took effect in 2011:
7. Medicine Cabinet Tax ($5 bil/Jan 2011): Americans no longer able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin). Bill: PPACA; Page: 1,957-1,959.
8. HSA Withdrawal Tax Hike ($1.4 bil/Jan 2011): Increases additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent. Bill: PPACA; Page: 1,959.
Taxes that took effect in 2012:
9. Employer Reporting of Insurance on W-2 (Min$/Jan 2012): Preamble to taxing health benefits on individual tax returns. Bill: PPACA; Page: 1,957.
Taxes that take effect in 2013:
10. Surtax on Investment Income ($123 billion/Jan. 2013): Creation of a new, 3.8 percent surtax on investment income earned in households making at least $250,000 ($200,000 single). This would result in the following top tax rates on investment income: Bill: Reconciliation Act; Page: 87-93.
*Other unearned income includes (for surtax purposes) gross income from interest, annuities, royalties, net rents, and passive income in partnerships and Subchapter-S corporations. It does not include municipal bond interest or life insurance proceeds, since those do not add to gross income. It does not include active trade or business income, fair market value sales of ownership in pass-through entities, or distributions from retirement plans. The 3.8% surtax does not apply to non-resident aliens.
11. Hike in Medicare Payroll Tax ($86.8 bil/Jan 2013): Current law and changes:
|All Remaining Wages
|Obamacare Tax Hike||1.45%/1.45%
Bill: PPACA, Reconciliation Act; Page: 2000-2003; 87-93
12. Tax on Medical Device Manufacturers ($20 bil/Jan 2013): Medical device manufacturers employ 360,000 people in 6000 plants across the country. This law imposes a new 2.3% excise tax. Exempts items retailing for <$100. Bill: PPACA; Page: 1,980-1,986
13. Raise “Haircut” for Medical Itemized Deduction from 7.5% to 10% of AGI ($15.2 bil/Jan 2013): Currently, those facing high medical expenses are allowed a deduction for medical expenses to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI). The new provision imposes a threshold of 10 percent of AGI. Waived for 65+ taxpayers in 2013-2016 only. Bill: PPACA; Page: 1,994-1,995
14. Flexible Spending Account Cap – aka “Special Needs Kids Tax” ($13 bil/Jan 2013): Imposes cap on FSAs of $2500 (now unlimited). Indexed to inflation after 2013. There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. Bill: PPACA; Page: 2,388-2,389
15. Elimination of tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D ($4.5 bil/Jan 2013) Bill: PPACA; Page: 1,994
16. $500,000 Annual Executive Compensation Limit for Health Insurance Executives ($0.6 bil/Jan 2013). Bill: PPACA; Page: 1,995-2,000
Taxes that take effect in 2014:
17. Individual Mandate Excise Tax (Jan 2014): Starting in 2014, anyone not buying “qualifying” health insurance must pay an income surtax according to the higher of the following
|1 Adult||2 Adults||3+ Adults|
|2014||1% AGI/$95||1% AGI/$190||1% AGI/$285|
|2015||2% AGI/$325||2% AGI/$650||2% AGI/$975|
|2016 +||2.5% AGI/$695||2.5% AGI/$1390||2.5% AGI/$2085|
Exemptions for religious objectors, undocumented immigrants, prisoners, those earning less than the poverty line, members of Indian tribes, and hardship cases (determined by HHS).Bill: PPACA; Page: 317-337
18. Employer Mandate Tax (Jan 2014): If an employer does not offer health coverage, and at least one employee qualifies for a health tax credit, the employer must pay an additional non-deductible tax of $2000 for all full-time employees. Applies to all employers with 50 or more employees. If any employee actually receives coverage through the exchange, the penalty on the employer for that employee rises to $3000. If the employer requires a waiting period to enroll in coverage of 30-60 days, there is a $400 tax per employee ($600 if the period is 60 days or longer).Bill: PPACA; Page: 345-346
Combined score of individual and employer mandate tax penalty: $65 billion/10 years
19. Tax on Health Insurers ($60.1 bil/Jan 2014): Annual tax on the industry imposed relative to health insurance premiums collected that year. Phases in gradually until 2018. Fully-imposed on firms with $50 million in profits. Bill: PPACA; Page: 1,986-1,993
Taxes that take effect in 2018:
20. Excise Tax on Comprehensive Health Insurance Plans ($32 bil/Jan 2018): Starting in 2018, new 40 percent excise tax on “Cadillac” health insurance plans ($10,200 single/$27,500 family). Higher threshold ($11,500 single/$29,450 family) for early retirees and high-risk professions. CPI +1 percentage point indexed. Bill: PPACA; Page: 1,941-1,956
- Chief Justice Roberts Is A Genius (whitehouse12.com)
- An Important New Limit on the Commerce Clause (thecaucus.blogs.nytimes.com)
- Roberts switched views to uphold health care law – CBS News (cbsnews.com)
- When Is A Penalty A Tax? Sorting Through The SCOTUS Health Care Decision. (forbes.com)
- Is Chief Justice Roberts’ View of Health Insurance Penalties as Taxes a Disguised Attack on Congressional Power? (allgov.com)
- A Vast New Taxing Power (johnmalcolm.me)
- Chief Justice Roberts Gutted Congressional Power and May Still Have Invalidated Obamacare (sgtreport.com)
- Congress’s taxation power: The new Interstate Commerce Clause (redalertpolitics.com)
- Actually, Justice Roberts Demolished Obama In His Supreme Court Ruling (businessinsider.com)
- Roberts’ Rules (talkingpointsmemo.com)