Virginia v. Sebelius
Ilya Somin
isomin at gmu.edu
Tue Dec 14 19:20:57 PST 2010
Actually, the statute refers to it as a "penalty," not a "tax penalty." The Term "tax" was avoided, probably deliberately given that it was used to describe various other fines imposed in different parts of PPACA.
It is true that people with very low incomes are exempted from the fine. But that's only because they're exempted from the mandate entirely. A regulation that is imposed only on people with incomes above a certain level does not thereby become an income tax. If it did, any penalty could be converted into a tax simply by excluding from its scope people earning less than, say, $1000 per year.
Ilya Somin
Associate Professor of Law
Editor, Supreme Court Economic Review
George Mason University School of Law
3301 Fairfax Dr.
Arlington, VA 22201
ph: 703-993-8069
fax: 703-993-8124
e-mail: isomin at gmu.edu
Website: http://mason.gmu.edu/~isomin/
SSRN Page: http://ssrn.com/author=333339
----- Original Message -----
From: Ilya Somin <isomin at gmu.edu>
Date: Tuesday, December 14, 2010 10:10 pm
Subject: Re: Virginia v. Sebelius
> That section (pg. 7) states that the IRS may impose a levy on
> property based on a Notice of Federal Tax Lien (NFTL). However, it
> then goes on to say that "There is no prohibition, however, on
> establishing a statutory lien against the taxpayer’s
> property under § 6321 [of the Internal Revenue Code]." Section
> 6321 allows a "lien in favor of the United States upon ALL
> property and rights to property, whether real or personal,
> belonging to such person [who has not paid the relevant fine or
> tax]." (emphasis mine).
>
> Furthermore, the IRS also has broad authority to impose late
> payment penalties and interest on anyone who fails to comply.
>
> In sum, therefore, PPACA allows the IRS to go after ALL of the
> property of a person who fails to pay the fine imposed by the
> mandate, and also gives them the power to impose various late
> payment and interest fees.
>
> It is therefore clear that Kermit's initial claim that the fine
> "can only be collected from an unwilling payer by deduction from
> an income
> tax refund" was incorrect. Rather, the fine is enforced much the
> same way as most other civil fines are: through liens on property
> and additional fines for late payment or noncompliance.
>
> Ilya Somin
> Associate Professor of Law
> Editor, Supreme Court Economic Review
> George Mason University School of Law
> 3301 Fairfax Dr.
> Arlington, VA 22201
> ph: 703-993-8069
> fax: 703-993-8124
> e-mail: isomin at gmu.edu
> Website: http://mason.gmu.edu/~isomin/
> SSRN Page: http://ssrn.com/author=333339
>
>
> ----- Original Message -----
> From: Kermit Roosevelt <krooseve at law.upenn.edu>
> Date: Tuesday, December 14, 2010 9:57 pm
> Subject: Re: Virginia v. Sebelius
>
> > Yes, that's from the section about general IRS collection
> > procedures on page 6. Then there's a section about collection of
> > the penalty, page 7, which says the means of collection are
> > limited and, in particular, and directly contrary to the
> language
> > you quoted, the IRS may not levy any property. Do you happen to
> > know if the claim that the IRS will take your real and personal
> > property if you don't buy health insurance is a common one in
> this
> > debate? I would really like to see it corrected if it is.
> >
> > Kermit Roosevelt
> > Professor of Law
> > University of Pennsylvania Law School
> > 3400 Chestnut St.
> > Philadelphia PA 19104
> > 215.746.8775
> >
> > On Dec 14, 2010, at 9:02 PM, "Ilya Somin" <isomin at gmu.edu> wrote:
> >
> > > I did read the report. According to the CRS, the means of
> > collection include the following:
> > >
> > > "Thirty days after providing a Final Notice of Intent to Levy
> > and Notice of Your Right to Appeal, the IRS may levy the
> > taxpayer’s property, both real and personal. This means that
> wages
> > may be garnished until the tax is paid in full. All funds in a
> > bank account that are available for withdrawal on the date the
> > levy is received by the bank may be taken. In some cases, the
> IRS
> > may sell property belonging to the taxpayer after providing
> public
> > notice and advising the taxpayer of the minimum bid price." (pg. 6)
> > >
> > > The IRS is also allowed to levy interest and additional
> > penalties for late payment of the initial penalty.
> > >
> > > This paragraph occurs in a section of the report entitled
> > "collection." It is true, as I noted in my last post, that there
> > is no criminal penalty for noncompliance. But there is a wide
> > range of civil penalties and collection mechanisms that go far
> > beyond reductions in tax deductions.
> > >
> > > Obviously, the means of enforcement are not completely
> > unlimited. But that, of course, is true for any penalty, even
> > those that do have criminal liability.
> > >
> > > Ilya Somin
> > > Associate Professor of Law
> > > Editor, Supreme Court Economic Review
> > > George Mason University School of Law
> > > 3301 Fairfax Dr.
> > > Arlington, VA 22201
> > > ph: 703-993-8069
> > > fax: 703-993-8124
> > > e-mail: isomin at gmu.edu
> > > Website: http://mason.gmu.edu/~isomin/
> > > SSRN Page: http://ssrn.com/author=333339
> > >
> > >
> > > ----- Original Message -----
> > > From: Kermit Roosevelt <krooseve at law.upenn.edu>
> > > Date: Tuesday, December 14, 2010 8:56 pm
> > > Subject: Re: Virginia v. Sebelius
> > >
> > >> Assessment is not the same as collection. If you read the
> > report
> > >> you will see that means of collection are limited. I hope
> your
> > >> misconception is not widespread, because it would seriously
> > >> distort public discussion of this.
> > >>
> > >> Kermit Roosevelt
> > >> Professor of Law
> > >> University of Pennsylvania Law School
> > >> 3400 Chestnut St.
> > >> Philadelphia PA 19104
> > >> 215.746.8775
> > >>
> > >> On Dec 14, 2010, at 8:46 PM, "Ilya Somin" <isomin at gmu.edu> wrote:
> > >>
> > >>> This is a distinction without a difference. Whether a
> monetary
> > >> fine is a tax or a penalty surely can't turn on what
> government
> > >> agency happens to collect the fine.
> > >>>
> > >>> Moreover, the enforcement provision is not in fact limited
> to
> > >> reduction of income tax deductions. As a Congressional
> > Research
> > >> service report points out, "Nothing in PPACA limits the IRS’s
> > >> authority or means for assessing the penalty." The report
> goes
> > on
> > >> to explain that the IRS could collect the penalty through
> > levies
> > >> on the offender's property, "both real and personal."
> > >>>
> > >>> See here for the report:
> > >>>
> > >>>
> > >>
> >
> http://coburn.senate.gov/public/index.cfm?a=Files.Serve&File_id=2ec1e180-afbf-4a48-ba12-8dea812ac30a
> > >>>
> > >>>
> > >>> Ilya Somin
> > >>> Associate Professor of Law
> > >>> Editor, Supreme Court Economic Review
> > >>> George Mason University School of Law
> > >>> 3301 Fairfax Dr.
> > >>> Arlington, VA 22201
> > >>> ph: 703-993-8069
> > >>> fax: 703-993-8124
> > >>> e-mail: isomin at gmu.edu
> > >>> Website: http://mason.gmu.edu/~isomin/
> > >>> SSRN Page: http://ssrn.com/author=333339
> > >>>
> > >>>
> > >>> ----- Original Message -----
> > >>> From: John Bickers <bickersj1 at nku.edu>
> > >>> Date: Tuesday, December 14, 2010 8:23 pm
> > >>> Subject: RE: RE: RE: Virginia v. Sebelius
> > >>>
> > >>>> "As things stand, the claim that this is a tax rests solely
> > on
> > >> the
> > >>>> basis that it imposes a monetary fine for noncompliance."
> > >>>>
> > >>>> No, not solely. It is placed in the internal revenue code;
> > it
> > >> is
> > >>>> administered by the internal revenue service; it can only
> be
> > >>>> collected from an unwilling payer by deduction from an
> income
> > >> tax
> > >>>> refund.
> > >>>> Fines, it seems to me, are assessed by courts, or at least
> by
> > >>>> administrative quasi-judicial agencies. This is assessed
> by
> > >> the
> > >>>> IRS, on their own, automatically, if the taxpayer doesn't
> a)
> > >> show
> > >>>> that they have qualifying insurance, b) claim a religious
> > >>>> exception, or c) pay little or no income tax (as you note).
>
> > If
> > >> my
> > >>>> child suddenly received a full scholarship at college, my
> > taxes
> > >>>> would go up, automatically, and without any court
> > proceedings.
> > >> I
> > >>>> don't believe that is a fine, and I don't see the PPACA as
> > any
> > >>>> different.
> > >>>> Had Congress passed the law frequently described in the
> press-
> > -
> > >> in
> > >>>> which we are compelled to buy insurance or find ourselves
> > being
> > >>>> declared outlaw and subject to the full weight of federal
> > power-
> > >> -I
> > >>>> could understand your position. In the law they actually
> > >> passed,
> > >>>> I wonder not about authority, but about efficacy: it seems
> to
> > >> me
> > >>>> still worth my while, if I were a young, (over-) confident
> > >> person,
> > >>>> to simply ignore this "compulsion" and pay the extra seven
> > >> hundred
> > >>>> dollars.
> > >>>>
> > >>>> John Bickers
> > >>>> Salmon P. Chase College of Law
> > >>>> Northern Kentucky University
> > >>>>
> > >>>>
> > >>>> -----Original Message-----
> > >>>> From: Ilya Somin [mailto:isomin at gmu.edu]
> > >>>> Sent: Tue 12/14/2010 7:24 PM
> > >>>> To: John Bickers
> > >>>> Cc: Malla Pollack; CONLAWPROFS professors
> > >>>> Subject: Re: RE: RE: Virginia v. Sebelius
> > >>>>
> > >>>> Absolutely they could. If there was a deduction from a
> > >> preexisting
> > >>>> tax that is otherwise permitted by the Constitution, such
> as
> > >> the
> > >>>> income tax or an excise tax. But this law does not do any
> > such
> > >>>> thing. It imposes a free-standing regulatory penalty that
> is
> > >> not a
> > >>>> deduction from any other tax.
> > >>>>
> > >>>> If Congress had structured this as an income tax deduction,
> > it
> > >>>> would have given little or no incentive to the many people
> > who
> > >> pay
> > >>>> little or no income tax.
> > >>>>
> > >>>> Alternatively, congress could have simply raised income
> taxes
> > >> on
> > >>>> everyone and then offered a deduction to those who purchase
> > >> health
> > >>>> insurance. But that would have required admitting that the
> > law
> > >>>> increases taxes (something that the president and
> > congressional
> > >>>> leaders repeatedly denied), and would therefore have been
> > >>>> politically infeasible.
> > >>>>
> > >>>> As things stand, the claim that this is a tax rests solely
> on
> > >> the
> > >>>> basis that it imposes a monetary fine for noncompliance. By
> > >> that
> > >>>> standard, any fine for violation of any law counts as a
> tax.
> > If
> > >>>> people are fined for not exercising every day, not buying a
> > GM
> > >>>> car, etc., that would be a tax too. This goes against both
> > >> Supreme
> > >>>> Court precedent (which repeatedly distinguishes between
> taxes
> > >> and
> > >>>> regulatory penalties, most recently in a 1996 decision
> > written
> > >> by
> > >>>> that evil reactionary Justice Souter), and also common sense.
> > >>>>
> > >>>> Ilya Somin
> > >>>> Associate Professor of Law
> > >>>> Editor, Supreme Court Economic Review
> > >>>> George Mason University School of Law
> > >>>> 3301 Fairfax Dr.
> > >>>> Arlington, VA 22201
> > >>>> ph: 703-993-8069
> > >>>> fax: 703-993-8124
> > >>>> e-mail: isomin at gmu.edu
> > >>>> Website: http://mason.gmu.edu/~isomin/
> > >>>> SSRN Page: http://ssrn.com/author=333339
> > >>>>
> > >>>>
> > >>>>
> > >>> _______________________________________________
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