In Parts III-C and III-D of his opinion in NFIB v. Sebelius, Chief Justice Roberts concludes that
[t]he 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. . . .
The Federal Government [has] 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.
1. Plenty of bandwidth has been consumed analyzing this conclusion. Many of the analyses quarrel over whether Section 5000a can “fairly” be interpreted to impose a tax on being uninsured rather than as a command to be insured. Others focus on whether the Chief Justice was right that Section 5000a (b)’s exaction is a “tax” rather than a penalty for purposes of Congress’s Article I power to lay and collect taxes. A subset of these commentators ask a follow up question: if Section 5000a imposes a tax, did the Chief Justice convincingly show that it is not subject to apportionment among the states?
While these questions are interesting and many of the answers proposed are thought-provoking, scoring NFIB v. Sebelius on technique does not strike me as a worthwhile endeavor. An analysis of the Chief Justice’s opinion that begins and ends with an evaluation of the quality of its reasoning strikes me as incomplete at best, regardless of its conclusion. Incomplete because it fails to address what seems so anomalous about the ruling: When it comes to issues arising under the original Constitution and the Bill of Rights, the Chief Justice so frequently votes with Justices Scalia, Kennedy, Thomas, and Alito that observers were quite literally stunned when he broke with them in NFIB v. Sebelius. If differences regarding legal doctrines alone were sufficient to explain last Thursday’s surprise, the explanation necessarily would amount to nothing more than a restatement of the question, i.e., that there was a difference of opinion.
Moreover, it seems unlikely that the explanation really could come down to nothing more than a disagreement over specific legal precepts or theories. We will never know what transpired in conference or between any of the Justices afterwards, but I doubt that it resembled an academic discussion about the niceties of statutory construction, much less a symposium on tax law. For these reasons, I would say that even the most sophisticated critique of the reasoning in NFIB v. Sebelius, if undertaken solely from the technical perspective, has the paradoxical effect of diminishing the decision’s significance.
2. Of course, not everyone in the legal blogosphere has fixated on the Chief Justice’s stated rationale for upholding the individual mandate. Progressive commentators, by and large, seem uninterested in the details of the legal reasoning underlying Parts III-C and III-D of the opinion. Similarly, among those conservatives who express doubts about that reasoning, some go on to draw conclusions about the decision based on criteria drawn from outside the purely technical perspective. Both camps place the opinion into a “big picture,” framed by “statesmanship,” “leadership,” “strategy,” and similar qualities.
Considerations like these are entirely extra-legal, at least in the sense that they could be applied equally well and without modification to virtually any case. Each functions as a preface to questions like “Is the Chief Justice a Machiavellian or a naïf?” or “As a strategist, does he more closely resembles Sun Tzu or General Custer?” These questions and answers are not wholly satisfactory. Regardless of the specific criterion adopted or the conclusion reached, virtually all commentary from the “big picture” perspective shares a common limitation: it assumes (but does not in my view prove) that the reasoning of the NFIB opinion is entirely the product of an exogenously-determined goal.
3. At this point, you might fear that a sales pitch for the Golden Mean is just around the corner. Be at ease. I am less interested in resolving the tensions between the two modes of analysis described above than I am in accounting for the virtual emptiness of gulf between them. Why won’t anyone entertain the possibility that the reasoning of the lead opinion and the “larger concerns” attributed to the Chief Justice went hand-in-hand?
I have not found a way to explain the existence of this no man’s land except one that requires a long preliminary step. That step consists of a close reading of Part III-B of the opinion. I must ask you not only to bear with me during that step, but also to keep in mind that what follows is intended as an explication, not as a critique or an endorsement.
4. The introductory paragraph of Part III of the opinion in NFIB v. Sebelius states the two bases on which the Government urged that the Eleventh Circuit erred in concluding that the individual mandate exceeded Congress’s authority.
The Government advances two theories for the proposition that Congress had constitutional authority to enact the individual mandate. First, the Government argues that Congress had the power to enact the mandate under the Commerce Clause. . . Second, the Government argues that if the commerce power does not support the mandate, we should nonetheless uphold it as an exercise of Congress’s power to tax. . .
In Part III-A of the lead opinion, the Chief Justice concludes that Congress did not have the power to enact the mandate under the Commerce Clause. Part III-B then takes up what at first appears to be merely a threshold question necessary to address the Government’s second contention. Part III-B asks whether Code Section 5000a can be interpreted as imposing a tax. At first, it seems odd to deal separately with this question. After all, if Code Section 5000a is interpreted as imposing a tax, that interpretation itself would answer the threshold question can it be interpreted as imposing a tax. Why tarry over the possibility? The answer to that question remains unclear, at least initially.
In the course of deciding whether Code Section 5000a can be interpreted as imposing a tax, Section III-B first paraphrases the Government’s argument and then improves on it.
Under the mandate, if an individual does not maintain health insurance, the only consequence is that he must make an additional payment to the IRS when he pays his taxes. See §5000A(b). That, according to the Government, means the mandate can be regarded as establishing a condition—not owning health insurance—that triggers a tax—the required payment to the IRS. Under that theory, the mandate is not a legal command to buy insurance. Rather, it makes going without insurance just another thing the Government taxes, like buying gasoline or earning income. And if the mandate is in effect just a tax hike on certain taxpayers who do not have health insurance, it may be within Congress’s constitutional power to tax.
Slip. Op. at 32 (emphases added).
I think this paragraph is crucial to the lead opinion from a rhetorical point of view. Its pivot point is the ambiguity of the word “condition.” The Government argued that the condition of being without insurance triggers Section 5000a(b), i.e., that the penalty is triggered by a state of being. But if Congress has a power to impose a tax triggered by “the state of being without insurance,” surely that is only because Congress has power to lay and collect a tax on being in any one of an infinite variety of conditions/states of being, i.e., because Congress has a power to lay and collect a tax simply on being (or, if this is too Hegelian and expression for your taste, “a tax on being alive and present in the United States”). For this reason, admitting that a given tax is imposed on an individual as the result of “being in a condition” might easily be construed as admitting that the tax is a specific kind of direct tax. That admission dooms Section 5000a because direct taxes must be apportioned among the states based on the last census, and the penalty under Section 5000a is not apportioned at all.
Thus, the paragraph quoted above appears to assume, at least provisionally, that Section 5000a cannot have been a constitutionally valid exercise of the taxing power under the scenario described in the underlined sentence if the word “condition” refers to a state of being. In the first bolded sentence, however, the reader sees that the word “condition” might mean something more like “condition precedent” rather than “having this or that quality.” The transition between those two meanings of the word “condition” is accomplished by the phrase “not owning health insurance,” used in a parallel construction that appears merely to particularize the “condition” for imposing of the penalty under Section 5000a.
Owning health insurance, after all, is not a state of being in quite the same way as “being in a standing position,” “being unaware of one’s circumstances,” or “being within the taxing jurisdiction of the United States.” Owning health insurance is the consequence of a transaction. Transactions are generally subject to an exaction in the form of an excise tax, at least insofar as they involve the creation or transfer of a right of ownership or a similar right. Best of all (again, “best” solely from a rhetorical point of view), an excise tax is not a direct tax. This may explain why, after the pivot from one meaning of “condition” to another, the first example in the italicized sentence quoted above is the federal tax on the sale of gasoline, which is used to illustrate the concept of federal taxation of the various “things” the government taxes.
But other considerations make clear that the gasoline tax example is itself merely transitional. Part III-A of the Chief Justice’s opinion demonstrated that “commerce” does not include refraining from making a purchase. Thus, a tax on not buying insurance cannot be a tax on a transaction. Even if it could, there is an additional reason that the gasoline tax is not an apt illustration of the kind of tax one might believe is imposed by Section 5000a. The same clause of the Constitution that requires direct taxes to be apportioned among the states requires “Duties, Imposts, and Excises” to be uniform throughout the United States. On its face, the penalty under Section 5000a(b) is not uniform throughout the United States because the exemption based on affordability can be triggered based on the premium for the lowest cost bronze plan in the individual market the state where the individual resides.
The transitional function of the analogy to the gasoline tax is further revealed by what comes immediately after it, namely the description of Section 5000a as a tax on “earning income” with which the bolded portion of the paragraph quoted above ends. If a writer’s stopping point is his destination, the analogy to a tax on “earning income” was the rhetorical purpose served by providing any analogies before proceeding to decide whether Section 5000a can be interpreted to impose a tax. But why not skip directly to the income tax analogy? The apparent reason is that the tax on gasoline could be described very plausibly as a tax on a “thing,” that is, a tax on something concrete. You might say that the analogy to a tax on a palpable commodity paves the way for an analogy to a tax on something which is neither a state of being nor a concrete object, but an activity, “earning income.” Earning income enables the individual to buy insurance, and so in that sense it mediates between the “condition”/state of being (specifically, being uninsured) and the “condition precedent” to the imposition of the tax (failing to have purchased insurance).
5. Two observations are in order at this point. First, the overall “movement” of the paragraph is away from the taxes described in Article I, Section 8, Cl.1 and toward the tax on income described in the Sixteenth Amendment. Second, the exaction described in Code Section 5000a(b) is not itself a tax on income, in part because it is not even a tax on “earning income.” With these observations in mind, the reader comes to the last sentence of the paragraph, where the lead opinion states, “[I]f the mandate is in effect just a tax hike on certain taxpayers who do not have health insurance, it may be within Congress’s constitutional power to tax.” By skipping ahead in the opinion, it becomes clear what scenario the Chief Justice has in mind: an increase in the rate of taxation on the income of “applicable taxpayers” under the Act (the “tax hike”), coupled with a credit against his or her personal income tax liability, contingent on having acquired minimum essential coverage. In short, an incentive tax credit.
But this realization should not distract the reader from an important point. The Government had argued that the Court should uphold the mandate “as an exercise of Congress’s power to tax.” By the end of the paragraph quoted above, the focus of attention is whether a statute having the “effect [of] a tax hike” is “within Congress’s constitutional power to tax.” I believe this shift in the characterization of the issue explains Part III-B.
6. To say the least, it is very unclear that one simply can equate legislation that has the effect of a tax hike with an exercise of the power to tax. The Founders contemplated that in order for the national government to lay and collect a tax, the members of the House of Representatives first had to place their political careers on the line. Equating legislation that has the effect of a tax hike with an exercise of the power to tax could to run counter to that goal. Members of the House are elected every two years and by the broadest cross-section of citizens. Voters might turn their Representative in Congress out of office for voting in favor of a bill that explicitly results in a tax increase. By contrast, voters might be more forgiving if they are told that their taxes increased inadvertently because of a little honest confusion over precisely what constitutes a letter of marque and reprisal.
7. To say it again, my point here is unrelated to questions about whether the conclusions reached in Sections III-C and III-D of the NFIB opinion were right or wrong, or whether the reasoning of the lead opinion was sincere or calculating. My interest is to explore the legal and political culture in which one plausibly might believe (or plausibly might expect others to be persuaded) that legislation having the effect of a tax hike is, solely by virtue of that effect, an exercise of the power to tax. That is the topic I plan to take up in my next post.