Individual mandate as a tax

Walsh, Kevin kwalsh at richmond.edu
Tue Mar 23 18:04:53 PDT 2010


As to ripeness, Paragraph 51 of the complaint alleges that the Act's provisions have immediate effects:

"The Act effectively requires that Florida immediately begin to devote funds and resources to implement the Act's sweeping reforms across multiple agencies of government. Such implementation burdens include, but are not limited to: enforcing the Act's immediately-effective terms, including new mandates regarding healthcare insurance coverage; determining gaps between current resources in state government and the Act's requirements; evaluating infrastructure to consider how new programs and substantial expansion of existing programs will be implemented (e.g., new agencies, offices, etc.); developing a strategic plan and coordinating common issues across state agencies; initiating legislative and regulatory processes, while at the same time monitoring and engaging the substantial federal regulatory processes to ensure that Florida's interests are protected; and developing a communications structure and plan to disseminate new information regarding changes brought about by the Act to the many affected persons and entities (legislators, state agencies, insurers, hospitals, doctors, community clinics, major employers, small businesses, advocacy groups, insurance brokers, legislators, the uninsured, and Floridians generally), and to achieve such dissemination in sufficient time for them to understand and adapt to the changes in accordance with federal timetables, without interruption or confusion in the provision of healthcare services."

I don't know enough about the health care bill or the changes it works to evaluate this paragraph's assertions critically, but on their face they support Florida's argument on the ripeness prong relating to the hardship to the parties of withholding judicial decision.

-----Original Message-----
From: Theodore Ruger [mailto:truger at law.upenn.edu]
Sent: Tuesday, March 23, 2010 6:42 PM
To: Ira (Chip) Lupu; Walsh, Kevin; conlawprof at lists.ucla.edu
Subject: RE: Individual mandate as a tax

Yes, almost certainly not ripe until 2014 for the mandate claims and 2017 or later for any Medicaid matching claims.  An interesting question whether the administration (via the IRS) could delay litigation over the mandate even longer by taking no enforcement action against any uninsured persons for a few more years.

-----Original Message-----
From: conlawprof-bounces at lists.ucla.edu [mailto:conlawprof-bounces at lists.ucla.edu] On Behalf Of Ira (Chip) Lupu
Sent: Tuesday, March 23, 2010 6:30 PM
To: Walsh, Kevin; conlawprof at lists.ucla.edu
Subject: RE: Individual mandate as a tax

OK, I'll go back to being a lawyer instead of being a vulgar "legal realist" (the latter is not really my style, anyway).  What's the right answer to the ripeness question re: challenges to provisions whose effective dates are still years away?
Are the challenges premature until the mandate is in effect,  or at least "imminent"?

Ira C. Lupu
F. Elwood & Eleanor Davis Professor of Law
George Washington University Law School
2000 H St., NW
Washington, DC 20052
(202)994-7053
My SSRN papers are here:
http://papers.ssrn.com/sol3/cf_dev/AbsByAuth.cfm?per_id=181272#reg


---- Original message ----
>Date: Tue, 23 Mar 2010 18:12:26 -0400
>From: conlawprof-bounces at lists.ucla.edu (on behalf of "Walsh, Kevin" <kwalsh at richmond.edu>)
>Subject: RE: Individual mandate as a tax
>To: "conlawprof at lists.ucla.edu" <conlawprof at lists.ucla.edu>
>
>I have not finished reviewing the complaint, but I have a question about standing that I have not seen addressed elsewhere:  Does Massachusetts v. Mellon, 262 U.S. 447 (1923) foreclose the states' standing to assert count 1 (Article I and 10th amendment) and count 2 (direct tax)?
>
>Some relevant language from the decision: "It cannot be conceded that a State, as parens patriae, may institute judicial proceedings to protect citizens of the United States from the operation of the statutes thereof. While the State, under some circumstances, may sue in that capacity for the protection of its citizens (Missouri v. Illinois, 180 U. S. 208, 180 U. S. 241), it is no part of its duty or power to enforce their rights in respect of their relations with the Federal Government. In that field, it is the United States, and not the State, which represents them as parens patriae when such representation becomes appropriate, and to the former, and not to the latter, they must look for such protective measures as flow from that status." 262 U.S. at 485-86.
>
>Massachusetts v. EPA has some head-scratch-inducing language about the special solicitude owed to states in the standing analysis, but fn. 17 in the opinion for the Court keeps in place what it describes as Mellon's prohibition on allowing standing for a State "to protect her citizens from the operation of federal statutes."
>
>
>-----Original Message-----
>From: conlawprof-bounces at lists.ucla.edu [mailto:conlawprof-bounces at lists.ucla.edu] On Behalf Of Dawinder S. Sidhu
>Sent: Tuesday, March 23, 2010 3:45 PM
>To: conlawprof at lists.ucla.edu
>Subject: Re: Individual mandate as a tax
>
>For those who have not seen it, a copy of the complaint filed by
>thirteen state attorneys general challenging the constitutionality of
>the health care reform act, is available here:
>
>http://myfloridalegal.com/webfiles.nsf/WF/MRAY-83TKWB/$file/HealthCareReformLawsuit.pdf
>
>The plaintiffs' theories are:
>
>2. The ["Patient Protection and Affordable Care Act," H.R. 3590 (the
>Act)] represents an unprecedented encroachment on the liberty of
>individuals living in the Plaintiffs' respective states, by mandating
>that all citizens and legal residents of the United States have
>qualifying healthcare coverage or pay a tax penalty. The Constitution
>nowhere authorizes the United States to mandate, either directly or
>under threat of penalty, that all citizens and legal residents have
>qualifying healthcare coverage. By imposing such a mandate, the Act
>exceeds the powers of the United States under Article I of the
>Constitution and violates the Tenth Amendment to the Constitution.
>
>3. In addition, the tax penalty required under the Act, which must be
>paid by uninsured citizens and residents, constitutes an unlawful
>capitation or direct tax, in violation of Article I, sections 2 and 9
>of the Constitution of the United States.
>
>4. The Act also represents an unprecedented encroachment on the
>sovereignty of the states. For example, it requires that Florida
>vastly broaden its Medicaid eligibility standards to accommodate
>upwards of 50 percent more enrollees,many of whom must enroll or face
>a tax penalty under the Act, and imposes onerous new operating rules
>that Florida must follow. The Act requires Florida to spend billions
>of additional dollars, and shifts substantial administrative costs to
>Florida for, inter alia, hiring and training new employees, as well as
>requiring that new and existing employees devote a considerable
>portion of their time to implementing the Act. This onerous
>encroachment occurs at a time when Florida faces having to make severe
>budget cuts to offset shortfalls in its already-strained budget, which
>the state constitution requires to be balanced each fiscal year
>(unlike the federal budget), and at a time when Florida's Medicaid
>program already consumes more than a quarter of the State's financial
>outlays. Plaintiffs cannot effectively withdraw from participating in
>Medicaid, because Medicaid has, over the more than four decades of its
>existence, become customary and necessary for citizens throughout the
>United States, including the Plaintiffs' respective states; and
>because individual enrollment in Plaintiffs' respective Medicaid
>programs, which presently cover tens of millions of residents, can
>only be accomplished by their continued participation in Medicaid.
>
>5. Further, the Act converts what had been a voluntary federal-state
>partnership into a compulsory top-down federal program in which the
>discretion of the Plaintiffs and their sister states is removed, in
>derogation of the core constitutional principle of federalism upon
>which this Nation was founded. In so doing, the Act exceeds the powers
>of the United States and violates the Tenth Amendment to the
>Constitution.
>
>6. The Act contains several unfunded mandates that will cost state
>governments significantly.
>
>7. For example, no Florida government entity or infrastructure exists
>to discharge sufficiently all of the responsibilities that will be
>necessary to implement the Act, to meet requirements related to
>increases in Medicaid enrollment under the Act, and to operate
>healthcare insurance exchanges required by the Act.
>
>8. By making federal funds potentially available at the discretion of
>federal agencies, the Act acknowledges the immediate burden on
>Plaintiffs to invest and implement the Act, but provides no guarantee
>that they will receive such funds or that the Act's implementation
>costs will be met.
>
>9. Plaintiffs seek declaratory and injunctive relief against the Act's
>operation to preserve their respective sovereignty and solvency, and
>to protect the individual freedom, public health, and welfare of their
>citizens and residents.
>
>The complaint presses four counts:
>
>1. UNCONSTITUTIONAL EXERCISE OF FEDERAL POWER AND VIOLATION OF THE
>TENTH AMENDMENT (Const. art. I & amend. X)
>
>2. VIOLATION OF CONSTITUTIONAL PROHIBITION OF UNAPPORTIONED CAPITATION
>OR DIRECT TAX (Const. art. I, §§ 2, 9)
>
>3. UNCONSTITUTIONAL MANDATE THAT ALL INDIVIDUALS HAVE HEALTH INSURANCE
>COVERAGE OR PAY TAX PENALTY (Const. art. I & amend. X)
>
>4. COUNT FOUR DECLARATORY JUDGMENT (28 U.S.C. § 2201)
>
>I hope this is helpful,
>Dave
>
>--
>Dawinder "Dave" S. Sidhu
>* Co-author, Civil Rights in Wartime: the Post-9/11 Sikh Experience
>http://www.civilrightsinwartime.com
>* Selected research http://www.ssrn.com/Author_id=688955
>
>"[T]o serve mankind . . . should indeed be the great aim and end of
>all learning."
>- Benjamin Franklin
>
>
>>
>> From: Theodore Ruger [mailto:truger at law.upenn.edu]
>> Sent: Tuesday, March 23, 2010 11:32 AM
>> To: Volokh, Eugene; CONLAWPROFS professors
>> Subject: RE: Individual mandate as a tax
>>
>>
>>
>> Eugene,
>>
>>
>>
>> The Act contains special disabilities on the IRS in enforcing the mandate,
>> it may not "file notice of a lien with respect to any property of a taxpayer
>> by reason of any failure to pay the penalty imposed", nor may it "levy on
>> any such property with respect to such failure," nor may it bring a criminal
>> prosecution.
>>
>>
>>
>> Ted
>>
>>
>>
>> From: conlawprof-bounces at lists.ucla.edu
>> [mailto:conlawprof-bounces at lists.ucla.edu] On Behalf Of Volokh, Eugene
>> Sent: Tuesday, March 23, 2010 2:09 PM
>> To: CONLAWPROFS professors
>> Subject: RE: Individual mandate as a tax
>>
>>
>>
>>                My apologies if I'm mistaken on this, but I had assumed that
>> this wasn't structured as an income tax surcharge, but as a tax that in
>> principle could be enforced through normal tax collection proceedings, such
>> as seizure of assets and the like.  Or am I in error on this?  Thanks,
>>
>>
>>
>>                Eugene
>>
>>
>>
>> From: John Bickers [mailto:bickersj1 at nku.edu]
>> Sent: Tuesday, March 23, 2010 10:20 AM
>> To: Volokh, Eugene; CONLAWPROFS professors
>> Subject: RE: Individual mandate as a tax
>>
>>
>>
>> Isn't this because of the fact that the act gives up any pretense that this
>> tax can be enforced through the criminal law?  By doing so, it means that
>> the only way it can ever be collected by the government is through the
>> reduction of an income tax refund.  In short, it is not different from any
>> unused deduction (which may help me avoid Prof. Solum's baselines problem,
>> but perhaps not).
>>
>>
>>
>> This is also, by the way, why Prof. Barnett's "calling a fine a tax" seems
>> problematic to me.  If it doesn't take a jury of twelve good and true
>> delivering a verdict according to conscience to impose it, how can it
>> possibly be a fine?
>>
>>
>>
>> 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 Volokh, Eugene
>> Sent: Tuesday, March 23, 2010 1:06 PM
>> To: CONLAWPROFS professors
>> Subject: Individual mandate as a tax
>>
>>
>>
>>                Any thoughts on whether the mandate - if seen as a tax - is a
>> "direct tax" prohibited by the Constitution, and not rescued by the
>> Sixteenth Amendment because it isn't a tax on income?
>>
>>
>>
>>                Eugene
>>
>>
>>
>> From: conlawprof-bounces at lists.ucla.edu
>> [mailto:conlawprof-bounces at lists.ucla.edu] On Behalf Of John Bickers
>> Sent: Tuesday, March 23, 2010 7:54 AM
>> To: Humbach, Prof. John A.; Pohlman, Harold; Christopher Green; CONLAWPROFS
>> professors
>> Subject: RE: Question about the alleged health insurance "mandate
>>
>>
>>
>> As has been noted a couple of times on this list, the "individual mandate"
>> is merely a tax matter.  People are required to maintain "minimum essential
>> coverage" (which includes both current public and private plans).  The
>> penalty for not doing so is $750 a year (per person, for a taxpayer with
>> multiple dependents, but not more than three times the annual penalty).  The
>> penalty escalates to the $750 level over time, beginning at $95 a year in
>> 2014.  Inability to pay is an exception, as are incarceration, certain
>> collaborative health care sharing ministries, other religious exemptions,
>> and so on.  The penalty is a conventional tax penalty, administered by the
>> IRS like any other, and not subject to a trial.  This last distinguishes it
>> from cases like Lopez and Raich, where the government must prove beyond a
>> reasonable doubt that one brought a gun near a school or possessed
>> marijuana.  In fact, the health care reform act specifically eschews any
>> criminal prosecution for failure to pay this increased tax.
>>
>>
>>
>> This still seems to me an ordinary bit of the arcane wonderland that is the
>> tax code, and I fail to see how any attempt to overturn it would not have to
>> start from the premise that the federal government's attempt to shape
>> American society through tax incentives, surtaxes, and penalties, was
>> forbidden by the Constitution.  And I thought we gave up that idea a long
>> time ago.
>>
>>
>>
>> John Bickers
>>
>> Salmon P. Chase College of Law
>>
>> Northern Kentucky University
>>
>> _______________________________________________
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