Chief Justice Roberts: It's Not A Tax, It Is A Tax; It's Law, But It's Not 'Unlawful' to Break It

Terence P. Jeffrey | June 28, 2012 | 7:05pm EDT
Font Size

Chief Justice John Roberts (AP Photo/Lawrence Jackson)

( - In his deciding opinion in the cases challenging the Patient Protection and Affordable Care Act (AKA Obamacare), Chief Justice John Roberts first says the mandate in the law requiring individuals to buy health insurance is not a tax.

Then he says it is a tax.

He upholds the individual mandate—as a tax, not a penalty—as the law of the land. But then says it would not be "unlawful" for Americans to violate the law's mandate that they "shall" buy health insurance--as long as they are willing to pay the "penalty" for not obeying the law.

Roberts first examines the question of whether the Anti-Injunction Act prohibits Americans from bringing suit against Obamacare at this time.

“The Anti-Injunction Act provides that ‘no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed,’” Roberts explains.

“Amicus contends that the Internal Revenue Code treats the penalty as a tax, and that the Anti-Injunction Act therefore bars this suit,” says Roberts.

“The text of the pertinent statutes suggests otherwise,” Roberts continues. "The Anti-Injunction Act applies to suits ‘for the purpose of restraining the assessment or collection of any tax.’ Congress, however, chose to describe the ‘[s]hared responsibility payment’ imposed on those who forgo health insurance not as a ‘tax,’ but as a ‘penalty.’ There is no immediate reason to think that a statute applying to ‘any tax’ would apply to a ‘penalty.’

“Congress’s 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,’” said Roberts.

Roberts thus concludes that because Congress calls the penalty for not complying with the individual mandate a “penalty” not a “tax,” the "penalty" therefore is not a "tax."

“The Affordable Care Act does not require that the penalty for failing to comply with the individual mandate be treated as a tax for purposes of the Anti-injunction Act,” writes Roberts. “The Anti-Injunction Act therefore does not apply to this suit, and we may proceed to the merits.”

Got it? The chief justice of the United States says the penalty for not obeying the individual mandate is not a tax, it's a penalty. Therefore, the court can rule on it at this time.

Remember: Roberts says, It's not a tax, it's a penalty.

Roberts then rules that the Commerce Clause, which gives Congress the power to regulate commerce among the states, cannot be used to justify a law forcing people to buy health insurance because people who are not buying health insurance are not engaging in commerce that can be regulated.

"The individual mandate forces individuals into commerce precisely because they elected to refrain from commercial activity," says Roberts. "Such a law cannot be sustained under a clause authorizing Congress to 'regulate Commerce.'"

That's pretty straightforward: Commerce is commerce. Not engaging in commerce is not commerce.

But then the chief justice turns to the question of whether the Obama Administration can use the Taxing Clause of Article 1, Section 8 of the Constitution to justify imposing the individual mandate to buy health insurance.

Now, the "penalty" which Roberts says was not a "tax" in the first part of his opinion becomes a "tax" in this part of his decision.

“The Government’s tax power argument asks us to view the statute differently than we did in considering its com­merce power theory,” writes Roberts.  “In making its Commerce Clause argument, the Government defended the mandate as a regulation requiring individuals to purchase health in­surance. The Government does not claim that the taxing power allows Congress to issue such a command. Instead, the Government asks us to read the mandate not as order­ing individuals to buy insurance, but rather as imposing a tax on those who do not buy that product.”

“The most straightforward reading of the mandate is that it commands individuals to purchase insurance,” Roberts says as he begins the process by which he transforms the “penalty” he discussed earlier into the "tax" he will discuss now.

“After all, it states that individuals ‘shall’ maintain health insurance,” Roberts continues. “Congress thought it could enact such a command under the Commerce Clause, and the Government primarily defended the law on that basis. But, for the reasons explained above, the Com­merce Clause does not give Congress that power. Under our precedent, it is therefore necessary to ask whether the Government’s alternative reading of the statute—that it only imposes a tax on those without insurance—is a rea­sonable one.

“Under the mandate, if an individual does not maintain health insurance, the only consequence is that he must make an additional payment to the IRS when he pays his taxes,” says Roberts. “That, according to the Government, means the mandate can be regarded as establishing a condition—not owning health insurance—that triggers a tax—the required payment to the IRS. Under that theory, the mandate is not a legal command to buy insurance. Rather, it makes going without insurance just another thing the Government taxes, like buying gasoline or earn­ing income. And if the mandate is in effect just a tax hike on certain taxpayers who do not have health insurance, it may be within Congress’s constitutional power to tax.”

Roberts then reflects back on the stubborn fact that the law Congress actually enacted specifically calls the “penalty” a “penalty” and not a "tax."

“It is of course true that the Act describes the payment as a ‘penalty,’ not a ‘tax,” says Roberts. “But while that label is fatal to the application of the Anti-Injunction Act, it does not determine whether the payment may be viewed as an exercise of Congress’s taxing power.”

Roberts then concludes that he while he considered the "penalty' and "penalty" in determining that his court could take up Obamcare and rule on it, he will now consider the “penalty” a “tax” for purposes of allowing Congress to force people to buy health insurance.

“The same analysis here suggests that the shared responsibility payment may for constitutional purposes be considered a tax, not a penalty,” he says.

He then further concludes that it would not be “unlawful” for Americans to disobey the law’s declaration that they “shall” buy health insurance, so long as they pay the "penalty"—or, strike that, the "tax"--for disobeying the law's unambiguous mandate.

“While the individual mandate clearly aims to induce the purchase of health insurance, it need not be read to declare that failing to do so is unlawful,” says Roberts. “Neither the Act nor any other law attaches negative legal consequences to not buying health insur­ance, beyond requiring a payment to the IRS.

In the end, then, for those who actually have to pay it for exercising their freedom in not buying the health insurance the government says they "shall" buy, it is neither a "penalty" nor a "tax," but merely a required "payment to the IRS."

Roberts graduated from Harvard College and Harvard Law School. He was appointed chief justice by President George W. Bush.

mrc merch