Administration Now Says Individual Mandate Is a “Tax”

Jonathan H. Adler • July 18, 2010

During the debate over health care reform, the Obama Administration steadfastly denied that a statutory penalty for failing to purchase a government-approved health insurance policy would constitute a “tax.”  The President himself categorically rejected the argument that the mandate is a tax in an ABC interview.  Now, however, the Administration is relying upon the federal taxing power to defend the constitutionality of the health care law.  As the NYT reports:

Administration officials say the tax argument is a linchpin of their legal case in defense of the health care overhaul and its individual mandate, now being challenged in court by more than 20 states and several private organizations. . . .

In a brief defending the law, the Justice Department says the requirement for people to carry insurance or pay the penalty is “a valid exercise” of Congress’s power to impose taxes.

Congress can use its taxing power “even for purposes that would exceed its powers under other provisions” of the Constitution, the department said. For more than a century, it added, the Supreme Court has held that Congress can tax activities that it could not reach by using its power to regulate commerce.

While that is the government’s argument now, it is not the argument Congress anticipated.  More from the NYT:

Congress anticipated a constitutional challenge to the individual mandate. Accordingly, the law includes 10 detailed findings meant to show that the mandate regulates commercial activity important to the nation’s economy. Nowhere does Congress cite its taxing power as a source of authority. . . .

The law describes the levy on the uninsured as a “penalty” rather than a tax. The Justice Department brushes aside the distinction, saying “the statutory label” does not matter. The constitutionality of a tax law depends on “its practical operation,” not the precise form of words used to describe it, the department says, citing a long line of Supreme Court cases. . . .

The argument that the mandate is a tax, and not a regulation of commerce, is also key to the Administration’s effort to delay legal challenges to the mandate, as taxpayers must first pay a tax and then seek a refund before challenging its constitutionality.

UPDATE: Speaking of the legal challenges to health care reform, law professor Brad Joondeph of Santa Clara has launched the new ACA Litigation Blog: “A place to find news updates, legal analysis, and all official documents related to the states’ constitutional challenges to the Patient Protection and Affordable Care Act (as amended by the Health Care and Education Reconciliation Act of 2010).”

This story & comments are found here: http://volokh.com/2010/07/18/administration-now-says-individual-mandate-is-a-tax/