Originalist law professor Mike Paulsen has written a short essay defending Chief Justice Roberts’s decision upholding the Health Care Law as a tax.
It might seem like a serious matter that a right wing originalist endorses Roberts’s decision. Perhaps critics of Roberts’s opinion need to rethink their criticisms. But no such rethinking is necessary, because Paulsen’s defense of the opinion is insufficient.
Paulsen’s main claim is that the dissenters concluded that the penalty for failing to have health insurance was not a tax, because the Congress used the term penalty, not tax:
Indeed, it is difficult to come up with a good, principled, fully persuasive argument that Congress lacks constitutional power to impose a tax for not having health insurance, as an incentive to get people to buy such insurance. The dissenters certainly did not come up with such an argument. They did not argue that Congress could not impose such a tax. Indeed, they conceded that Congress had the power to do so. Rather, the dissenters argued only that Congress did not impose a tax, because the legislation insisted on calling the exaction a “penalty.”
Chief Justice John Roberts’s majority opinion blew that weak argument out of the water. He cited several cases holding that Congress’s label is immaterial to the existence of the taxing power: the substance of an exaction is what matters. As Roberts pointed out, Obamacare’s financial penalty is not a punishment for wrongful conduct, like a criminal fine, but a tax incentive designed to promote private conduct to achieve a public policy purpose. Congress does this sort of thing with the tax code all the time.
Thus, according to Paulsen, the term Congress used does not matter. It is the substance that matters and the penalty is within Congress’s taxing power since it raises revenue and is not so high as to preclude it being treated as a tax.
Paulsen’s argument here is strange. In fact, I am tempted to say that he is attacking a straw man, because the dissenters did not argue that the mandate penalty was not a tax, because Congress did not use the term “tax.” Rather, the argument was that Congress had made it illegal not to purchase health insurance and that the penalty was a penalty for violating that law.
This understanding makes the penalty unambiguously not a tax. Taxes are for raising funds. They are not penalties for taking illegal action. To avoid this conclusion, Chief Justice Roberts had to rewrite the statute to conclude that the statute did not actually make it illegal not to purchase health insurance. It is hard to know whether Paulsen would defend this aspect of the decision since he is silent about it.
In my view, the dissent was correct that there is a basic distinction between penalizing illegal action and taxing. Clearly, Congress chose the former, not the latter. Paulsen might reply that Congress does not have to choose. It merely has to exercise power and Congress here had the power – the taxing power – to take the action it did.
But that is not true. Congress’s choices determine the nature of its action and the nature of its action can determine which power it is exercising. Consider the following hypothetical.
Suppose that Congress passes a monetary sanction of $10,000 for an intentional violation of a specific law. Congress calls this a criminal fine. Congress states that the sanction applies retroactively. Because this is a criminal fine and it applies retroactively, it is unconstitutional under the Ex Post Facto Clause. (Leave aside for this example issues under the Due Process Clause.)
But someone objects that this fine does not violate the Ex Post Facto Clause. Sure, Congress called it a criminal fine, but the law merely imposes a penalty and Congress could have passed a retroactive civil penalty under the Ex Post Facto Clause. Thus, Congress had the power to do so and it does not matter what Congress called it.
Yet, this counterargument will not wash. The Court cannot simply transform Congress’s criminal fine into a civil penalty. Congress had the power to pass a civil penalty, but it chose not to do so. Similarly, Congress may have had the power to pass a tax, but it did not do so.