In my prior post, I outlined why I think current law tilts heavily against the states in their claim that the minimum coverage requirement falls outside Congress’s taxing power. Congress has placed ACA §1501 in the Internal Revenue Code; it is enforceable only through the typical means of tax collection; it will raise more than “negligible” amounts of revenue; and Congress had a reasonable (and arguably a strong) basis for concluding that §1501 will promote the “general welfare.” Under governing precedent, and under normal circumstances, that should be enough.
But these cases are anything but garden variety. They are the types of cases, with strong ideological and partisan undercurrents, in which doctrine tends to hold less sway. Stated differently, this is the sort of issue where a judge’s deeply held beliefs are more apt than usual to shade his reading of doctrine. Cf. Lawrence v. Texas and Bush v. Gore.
As a result, I think as important as the best reading of precedent—indeed, more important—are all the plausible readings of precedent. More concretely, is current law sufficiently ambiguous or flexible that five justices of the Supreme Court could hold that the minimum coverage provision exceeds Congress’s taxing power, and is thus unconstitutional (assuming, of course, it also exceeds the commerce power)?
I think the answer is yes.
Let’s start, as the Court did in United States v. Lopez, with first principles. If the Court’s spate of federalism decisions over the past 20 years stand for any one principle (and, perhaps after Raich, they do not), it is that there must be some limit on the scope of Congress’s regulatory authority. That is, there must be some sphere of activity that is regulable exclusively by the states, which the national government cannot touch. (It was Solicitor General Drew Days’s inability to identify any such sphere at oral argument in Lopez that essentially determined the outcome in that case.) Thus, a reading of the taxing power that effectively means that the federal government can reach any and all activity in the United States is constitutionally out of bounds.
Building on this, one could plausibly advance the principle that Congress cannot pretextually stuff a regulatory sanction into the Internal Revenue Code—and thus call it a “tax”—when the provision is not actually intended to raise revenue but instead to regulate conduct. For if Congress could do this, and the only limit on such “taxes” were that they promote the general welfare (which the Court has all but admitted is not a judicially enforceable constraint), then there would effectively be no limit on the breadth of Congress’s regulatory authority. So long as Congress remembers to place the sanction for failing to adhere to a regulation in the tax code, anything goes. Under our system of enumerated national powers, so the argument would go, this is unacceptable.
The United States has a relatively easy counter-argument to this line of attack: The Constitution itself places no real limit on the taxing power. (And the Court has effectively said as much, on several occasions.) The real limit on the taxing power is political: Congress must take the political heat for imposing a tax if it wants to achieve its regulatory ends in this fashion—just as it must expend the scarce resource of federal appropriations if it wishes to achieve its regulatory ends through conditional spending legislation. Moreover, the federal government could argue that, so long as the “mandate” has no legal force except as a means of determining the charge due—and is not enforceable through an injunction, a declaratory judgment, or the like—then it is not a coercive “regulation” of behavior, even if Congress intended the provision to have a regulatory effect on conduct.
But the Supreme Court’s precedents leave just enough room, I think, for the Court to hold that some “taxes” that Congress has packaged as revenue-raising provisions might actually be, for constitutional purposes, “regulations” that must be justified by one of Congress’s other enumerated powers. In other words, the Court could hold that just placing a provision in the Internal Revenue Code and showing that it will raise some revenue is not enough to make a law a “tax” for constitutional purposes. Indeed, the Court might say that, under certain circumstances, courts should be skeptical that what Congress (or government litigators after-the-fact) has called a tax is indeed a tax, precisely because the failure of courts to look behind such measures would create a convenient way for Congress to evade any meaningful limit on its enumerated powers.
Now, I’m not saying such judicial skepticism is endorsed by precedent. Indeed, the Court’s decisions seem to run the other way, to say that courts generally should not look behind such measures to determine whether Congress intended that they function more as regulations than as “true” taxes. But there are four important points to keep in mind in evaluating that precedent:
* None of the taxing power cases on which the United States relies were remotely similar to these cases in terms of their political salience.
* Many of those decisions come from the 1940s and 1950s, perhaps the high watermark for deference to Congress as to breadth of its enumerated powers.
* The web of precedent concerning the taxing power is not very thick. If the Court were to change course a bit on the details of the taxing power—and hold that courts should, under limited circumstances, examine Congress’s true intent behind a given provision—it would not be upsetting fundamental principles on which significant reliance interests have formed. Even if some of these cases are old (venerable?), they do not form a critical piece of our constitutional fabric. A tweak to the doctrine, even if arguably inconsistent with some past decisions (or passages in those decisions), would not effect a seismic shift. The roots of this precedent are not deep.
* Perhaps most importantly, these decisions have left the door slightly ajar for the Court to look behind a provision to determine whether it is genuinely a tax (whatever that means, exactly). In particular, the Court in United States v. Kahriger, 345 U.S. 22 (1953)—a case on which the United States and its amici rely heavily, stated as follows: “Penalty provisions in tax statutes added for breach of a regulation concerning activities in themselves subject only to state regulation have caused this Court to declare the enactments invalid.” Id. at 31. (The Court has also said other things clearly in tension with this passage. But the uncertainty pregnant in this inconsistency is enough, by itself, to give the Court the room to resolve that tension one way or the other.)
So, one could make at least a halfway decent argument that, based on existing precedent, a court has some obligation to examine whether a penalty-like provision packaged by Congress as a tax is truly tax in the constitutional sense, and not merely a pretext. The taxing power, the Court might say, is generally unlimited, but the provision in question must be a genuine tax. If it is not, then it must be justified under some other enumerated power, a power more limited than that granted by the General Welfare Clause. (I’m in no way saying that is the best reading of precedent, but the materials are there to construct a plausible argument.)
And if the Supreme Court decided that such an inquiry into pretext was warranted, there is plenty in the record surrounding the ACA to bolster the idea that Congress intended §1501 to be a sanction for the failure to adhere to a regulation rather than a true tax. To name only a few bits of evidence, (1) the ACA itself refers to the provision in several places as a “penalty”; (2) the provision was not included in various tables in the Act listing its revenue-raising provisions; and (3) the President quite vocally defended the minimum coverage requirement as a “penalty,” and expressly denied that it constituted a “tax,” while the legislation was under consideration in Congress.
All of which is to say that, if the justices were determined to so hold (and by this I do not mean intentionally ignoring the law, but simply primed subconsciously to go in a certain direction), I think there is enough room in the doctrine for the Court to hold that §1501 is really a regulation, and not genuinely a tax, and thus unconstitutional (if it exceeds Congress’s commerce power).
Which is why, to me, this is all so interesting. There remains some real doubt as to the ultimate outcome—or at least more doubt than I thought there was about whether a judicially ordered recount of votes in a presidential election, seemingly governed exclusively by state law, could violate the Equal Protection Clause of the Fourteenth Amendment. In that case, I thought, there was no conceivably plausible claim . . . .
