Government Insurance Mandate and taxing power

[Volokh, Eugene]

               A 2.5% income tax with an exemption for people who get their own insurance definitely seems like a tax on incomes authorized by the Sixteenth Amendment.

From: conlawprof-bounces at lists.ucla.edu [mailto:conlawprof-bounces at lists.ucla.edu] On Behalf Of Orentlicher, David
Sent: Sunday, December 20, 2009 8:23 AM
To: conlawprof at lists.ucla.edu
Subject: RE: Government Insurance Mandate and taxing power


Does the House bill solve the direct tax problem by designing the tax as a 2.5 percent tax on income to fund health care coverage, with an exemption for people who obtain their own insurance?  (The 2.5 percent tax is applied to income above the filing threshold).



________________________________
From: conlawprof-bounces at lists.ucla.edu [conlawprof-bounces at lists.ucla.edu] On Behalf Of Volokh, Eugene [VOLOKH at law.ucla.edu]
Sent: Sunday, December 20, 2009 10:37 AM
To: Mark Tushnet; conlawprof at lists.ucla.edu
Subject: RE: Government Insurance Mandate and taxing power
               I'm by no means an expert on the original meaning of the Direct Tax Clause, and it might well be that my very tentative analysis below is mistaken.  But I would think that "a fixed amount everyone has to pay" would be a classic example of a capitation, or direct tax; and if it really is a fixed amount, it wouldn't be a tax on incomes and therefore authorized by the Sixteenth Amendment.  It may well be, though, that I'm mistaken on this.

From: Mark Tushnet [mailto:mtushnet at law.harvard.edu]
Sent: Sunday, December 20, 2009 5:45 AM
To: Volokh, Eugene; conlawprof at lists.ucla.edu
Subject: RE: Government Insurance Mandate and taxing power


Again, this isn't something I know much about, but this -- "a tax on not transfering any property at death this year, basically the opposite of an estate tax" -- sounds a lot like (a complicated way of describing) a wealth tax, or at least something like a floor on a wealth tax (that is, a fixed amount everyone has to pay, above which there's some sort of rate applied).  Even if not, my (not terribly well informed) understanding of the literature on direct taxes is that the original understanding was that the term was quite formalistic, which is why the Income Tax Cases were "wrong,:"  (I vaguely recall that from Bruce Ackerman's article in Columbia, and maybe from Calvin Johnson's book.)  If that's right, it wouldn't matter -- in originalist terms -- that something was "functionally equivalent" to a head tax, as long as it didn't take the form of a head tax.  But, yet again, the fact that we amended the Constitution to authorize a federal income tax might be taken either way -- as endorsing the view that the Income Tax Cases wrongly interpreted the "direct tax" clause, or that because they correctly1 interpreted the clause, we needed a constitutional amendment to do what we wanted to do (the burden of Ackerman's article, IIRC, is an exploration of these possibilities)..  But, again, there have to be people who know more about this than I do (and on some aspects of the question, there actually are facts to be explored, not merely arguments to be made).

Mark Tushnet
William Nelson Cromwell Professor of Law
Harvard Law School
Areeda 223
Cambridge, MA  02138

ph:  617-496-4451 (office); 202-374-9571 (mobile)



-----Original Message-----
From: conlawprof-bounces at lists.ucla.edu on behalf of Volokh, Eugene
Sent: Sun 12/20/2009 1:55 AM
To: conlawprof at lists.ucla.edu
Subject: RE: Government Insurance Mandate and taxing power

I agree with Mark that a tax on doing things is not a direct tax for constitutional purposes - as I understand it, excise taxes, including the estate tax, have been upheld on those grounds.  But does this carry over to a per-person tax on not doing things?  After all, a presumably unconstitutional capitation would be virtually identical to a per-person tax on not doing something very rare (e.g., a tax on not transfering any property at death this year, basically the opposite of an estate tax).

Eugene

From: Mark Tushnet [mailto:mtushnet at law.harvard.edu]
Sent: Saturday, December 19, 2009 1:14 PM
To: Volokh, Eugene; conlawprof at lists.ucla.edu
Subject: RE: Government Insurance Mandate and taxing power


I haven't thought much about this, but someone else I read suggested that Ware v. Hylton (upholding a federal carriage tax against a "direct tax" challenge) at least points in the direction of saying that a tax conditioned on behavior (or non-behavior?) isn't a direct tax in the constitutional sense.

Mark Tushnet
William Nelson Cromwell Professor of Law
Harvard Law School
Areeda 223
Cambridge, MA  02138

ph:  617-496-4451 (office); 202-374-9571 (mobile)



-----Original Message-----
From: conlawprof-bounces at lists.ucla.edu on behalf of Volokh, Eugene
Sent: Sat 12/19/2009 3:55 PM
To: conlawprof at lists.ucla.edu
Subject: Government Insurance Mandate and taxing power

               I'm inclined to say that the mandate qualifies as necessary and proper to the regulation of interstate commerce (and in fact I did say that at a panel at the Heritage Foundation a couple of weeks ago).  But if people seek to justify it under the taxing power instead, wouldn't they have to show that it's not a direct tax?  A flat tax of $X per head would be a classic direct tax (a capitation); can such a tax imposed only on people who don't buy insurance nonetheless qualify as either an indirect tax, or a tax on incomes authorized by the Sixteenth Amenddment?

               Eugene

From: conlawprof-bounces at lists.ucla.edu [mailto:conlawprof-bounces at lists.ucla.edu] On Behalf Of Orentlicher, David
Sent: Saturday, December 19, 2009 12:34 PM
To: conlawprof at lists.ucla.edu
Subject: RE: Government Insurance Mandate

Good questions.  While at one time the Supreme Court drew a distinction between regulatory and revenue-raising taxes, that distinction was discarded by 1937.  Even if the distinction is revived, I think the Court would be comfortable upholding the individual mandate.  The mandate is an important component of the government's effort to make health care insurance more accessible and affordable for individuals by prohibiting the use of pre-existing conditions clauses.  Insurers can't be told to take all comers and not charge higher for pre-existing conditions unless everyone is required to carry insurance.  Otherwise, many people would just wait until they're sick to purchase insurance.  Under the commerce clause, Congress can regulate the health insurance industry, and the individual mandate would be part of its overall regulatory regime.  I've elaborated on these points at http://www.huffingtonpost.com/david-orentlicher/an-individual-mandate-to_b_391810.html


* * * * * * * * * * * * * * * * *
David Orentlicher, MD, JD
Samuel R. Rosen Professor of Law
Co-Director, Hall Center for Law and Health
Indiana University School of Law-Indianapolis

Adjunct Professor of Medicine
Indiana University School of Medicine

530 W. New York Street
Indianapolis, IN  46202-3225
(317) 274-4993 (phone)
(317) 274-0455 (fax)
dorentli at iupui.edu

________________________________
From: conlawprof-bounces at lists.ucla.edu [mailto:conlawprof-bounces at lists.ucla.edu] On Behalf Of Conkle, Daniel O.
Sent: Saturday, December 19, 2009 2:49 PM
To: conlawprof at lists.ucla.edu
Subject: RE: Government Insurance Mandate

I think the issues may be a bit more complicated, but in the end I agree that the taxing power probably works here.

Congress has the power to spend and, within broad limits, to impose conditions on those who accept the federal money, but that's not being attempted here, is it?

Congress also has the power to tax, but is Congress free to use its taxing power for regulatory purposes without regard to the limits of the commerce power, etc.?  E.g., suppose Congress attempted to circumvent Lopez by imposing a federal tax on anyone who possesses a gun in a school zone.   Would this be constitutional simply because Congress called the penalty a "tax" rather than a "fine"?  I haven't studied this area of federal power, so I might be well off the mark, but I wonder whether the federal taxing power is limited to situations in which the congressional objective is (mainly?) to raise revenue rather than (mainly) to regulate.

If I'm not mistaken, at one point in the complex legislative history of the health care legislation, some version of the proposed mandate imposed a "penalty" or "fine" for noncompliance.  After constitutional concerns were raised, the wording was changed to "tax."   I don't think the label should matter.

Labels aside, I assume that the "tax"/"penalty" for noncompliance fairly could be described as a provision designed (mainly) to raise revenue.  If so, then I think it could be defended as being within the congressional taxing power under the distinction I have proposed.

Again, I haven't really studied the congressional taxing power, so I stand ready to be corrrected and in any event would welcome the observations of others.

Dan Conkle
*******************************************
Daniel O. Conkle
Robert H. McKinney Professor of Law
Indiana University School of Law
Bloomington, Indiana  47405
(812) 855-4331
fax (812) 855-0555
e-mail conkle at indiana.edu
*******************************************

________________________________
From: conlawprof-bounces at lists.ucla.edu [mailto:conlawprof-bounces at lists.ucla.edu] On Behalf Of Steven Jamar
Sent: Saturday, December 19, 2009 11:16 AM
Cc: conlawprof at lists.ucla.edu
Subject: Re: Government Insurance Mandate
I think Prof. Bickers is exactly right on this in all respects except one -- I think it is a controversial use of the spending power -- many think it is wrong to do -- but it is a quite clearly constitutional use of the spending power -- and to that extent is no longer constitutionally controversial.

Steve

from Columbia, Maryland with 8 inches of snow measured in my yard -- and counting.  Not such a big deal in Buffalo, but will paralyze the mid-Atlantic for awhile.  Rather humorously so for someone from Northern Minnesota.


On Sat, Dec 19, 2009 at 11:00 AM, John Bickers <bickersj1 at nku.edu<mailto:bickersj1 at nku.edu>> wrote:
If it were a mandate in the criminal law sense, which is an impression unfortunately left by much of the U.S. media, your skepticism would be quite justified.  The provision called a "mandate," though, is really a tax measure.  In the bill that came from the finance committee, for example, a taxpayer who could not show they had health care coverage would be subject to a $950 penalty (I believe the bill from the HELP committee pegged it at $750).  This is, I think, a fairly uncontroversial use of Congress's Spending Power.

Regards,
John Bickers
Salmon P. Chase College of Law
Northern Kentucky University

________________________________
From: conlawprof-bounces at lists.ucla.edu<mailto:conlawprof-bounces at lists.ucla.edu> on behalf of Harrington Matthew P.
Sent: Fri 12/18/2009 7:52 PM
To: conlawprof at lists.ucla.edu<mailto:conlawprof at lists.ucla.edu>
Subject: Government Insurance Mandate
This question may already have been discussed on the list, so please excuse my asking it again if it has.

I'm curious about the idea that the proposed health care bill will require a government mandate, requiring individuals to buy insurance.  On what basis could one argue that the federal government can impose such a personal mandate.  I suppose it would be somewhere under the commerce clause, but is this not a bridge too far?  I understand regulating the insurance companies as obvious participants in commerce.  But how does one reach individuals?  Are individuals in commerce simply by being here?  Is the argument that individuals who refuse to have insurance are substantially affecting commerce in the aggregate (i.e., Wickard)?  If so, where does this end?

I'm sure I'm missing something obvious here and would be grateful if someone could set me straight.

Thanks.

-------------------------
Matthew P Harrington
Professeur titulaire
Faculte de droit
Universite de Montreal
-------------------------

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--
Prof. Steven Jamar
Howard University School of Law
Associate Director, Institute of Intellectual Property and Social Justice (IIPSJ) Inc.
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