The Supreme Court just delivered its landmark opinion in National Federation of Independent Business v. Sebelius (aka, the Obamacare case). The Court’s opinion—penned by Chief Justice John Roberts—found that the Commerce Clause does not validate the individual mandate, and that it is a penalty for purposes of standing…but it is constitutional as a tax (rather than a penalty) under the Taxation Clause.
The Court’s decision is based on shaky logic, and here’s a quick explanation why:
(1) Roberts initially provides compelling reasons why the individual mandate is actually a penalty, rather than a tax:
Congress’ decision to label this exaction a ‘penalty’ rather than a ‘tax’ is significant because the Affordable Care Act describes many other exactions it creates as ‘taxes.’ Where Congress uses certain language in one part of a statute and different language in another, it is generally presumed that Congress acted intentionally.
The Court drew this distinction because the Anti-Injunction Act would not have allowed the suit to proceed if its purpose were to challenge a tax prior to its implementation. Therefore, the Court initially concluded that the individual mandate represents a penalty, rather than a tax, under the Anti-Injunction Act.
(2) Roberts therefore had to stretch to call the individual mandate a tax under its Taxation Clause inquiry.
(3) Roberts referenced the prior case of Bailey v. Drexel Furniture Co...and totally ignored its substantive meaning.
The Court acknowledged Drexel‘s distinction between taxes and penalties for purposes of the Taxation Clause, but decided that it didn’t apply here because the individual mandate “tax” isn’t punitive in nature. However, this completely misinterprets Drexel, which held:
[T]he so-called tax is a penalty to coerce people of a State to act as Congress wishes them to act in respect of a matter completely the business of the state government under the Federal Constitution.
In other words, Drexel held that the federal government cannot indirectly accomplish a goal through the Taxation Clause that it cannot legally accomplish through the Commerce Clause. And the Court recognized that the individual mandate is “plainly designed to expand health insurance coverage,” but found that the Commerce Clause was not a legal grounds for doing so.
I cannot explain what went through the Chief Justice’s mind when he reached this decision, but I can predict that it may someday enjoy the same ignominious treatment that we now provide the Dred Scott decision—that is, a legal abomination.
Ryan T. Darby practices civil law in San Diego.