Tax vs. Penalty is More Than a “Mere” Argument About Semantics

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I’ve now read about a hundred blog posts claiming that the question of whether the individual mandate is a tax or a penalty is “just a question of semantics.” But it’s not.

I know this seems obvious, but it is, in fact, also a legal question. And there’s all sorts of past precedent that judges can use to guide them on this question. In last week’s Obamacare decision, Chief Justice John Roberts basically said that it doesn’t matter what Congress calls the mandate; what matters is how it operates. His conclusion, based on a variety of precedent, is that the mandate is a tax because (a) it raises revenue, (b) it’s administered through the tax code, and (c) it’s fairly modest, meant to nudge rather than punish. And, as Roberts says, “taxes that seek to influence conduct are nothing new.”

In the dissent, Scalia1 says this is horseshit. The law itself repeatedly calls it a penalty, it’s not primarily designed to raise revenue, and it is plainly designed to punish people who decline to buy insurance. “We cannot rewrite the statute to be what it is not,” Scalia says. “We have never held—never—that a penalty imposed for violation of the law was so trivial as to be in effect a tax. We have never held that any exaction imposed for violation of the law is an exercise of Congress’ taxing power—even when the statute calls it a tax, much less when (as here) the statute repeatedly calls it a penalty.”

I don’t have any big point to make here, and I don’t have a strong opinion on the merits of this argument, which is based on legal precedent I’m unfamiliar with. (Though I’m sympathetic to Roberts’s view that the court should always bend over backwards to adopt legal readings that allow Congress to work its will if there’s any reasonable way to do it.) I just want to point out that there actually is a legal argument about this that was carried out in the pages of the Obamacare decision. This isn’t purely a matter of dictionary games.

1Technically, we don’t know who wrote the dissent. But the tax section sure sounds like Scalia, doesn’t it?

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THE BIG PICTURE

You expect the big picture, and it's our job at Mother Jones to give it to you. And right now, so many of the troubles we face are the making not of a virus, but of the quest for profit, political or economic (and not just from the man in the White House who could have offered leadership and comfort but instead gave us bleach).

In "News Is Just Like Waste Management," we unpack what the coronavirus crisis has meant for journalism, including Mother Jones’, and how we can rise to the challenge. If you're able to, this is a critical moment to support our nonprofit journalism with a donation: We've scoured our budget and made the cuts we can without impairing our mission, and we hope to raise $400,000 from our community of online readers to help keep our big reporting projects going because this extraordinary pandemic-plus-election year is no time to pull back.

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