We do not consider whether the Act embodies sound policies. That judgment is entrusted to the Nation’s elected leaders. We ask only whether Congress has the power under the Constitution to enact the challenged provisions.
Hooray for John Roberts
I was very pleased with the Supreme Court decision on Obamacare. It is not so much because I think it is the perfect solution to our health care problems, as that I really think the question is something that should be a matter for the electorate to decide. John Roberts came up with a rather elegant solution. The penalty is not a tax for purposes of the anti-injunction act but Congress could enact it under the taxing power. So without stretching the Commerce Clause way beyond the breaking point, the program stays mostly intact. We can be penalized for not buying health insurance, but dammit, they still can’t make us buy broccoli.
By the way, on that thing about the electorate deciding, what I would like to hear from the Republicans is not why Obamacare is a bad idea. I would like to hear the better idea that they have that addresses the free rider problem. Just letting people die because they are too stubborn or too poor to buy health insurance does not qualify as a better idea.
A Tax Like No Other Tax
In terms of tax compliance, the penalty is actually rather ugly. It is supposed to be reported with your tax return, but the IRS is somehow going to have keep track of it separately for collection purposes. Unlike your other taxes, willfully not paying the penalty is not a crime. The IRS cannot file liens or levies to collect the tax. Presumably a lot of the people who don’t pay the penalty will be people who do not file at all. So there will be this amount that the person owes. All of it can be used to offset a refund, but only some of it can be levied. One commentator raised an interesting hypothetical. Suppose property is levied and sold. The proceeds cover more than the amount of regular tax. Does the excess get paid back in full or does it represent a refund that can offset the unpaid penalty ? A lot of people think that all our problems would be solved if we just had a simpler means of computing tax. They have not studied collection cases. In collection cases, there is rarely any question as to what the correct tax is. It still needs to be collected and the process of determining whether there is any blood in the recalcitrant stone and what means can be used to squeeze it is complicated, regardless of the complexity of the tax determination.
My “Scoop”
The decision was something of a reportorial triumph for me. I spend a lot of time on my blog, but I rarely let it interfere with my moderately demanding day job. I manage it by having no other interests. I decided to make an exception for this historic event though and took half an hour off on Thursday hovering over SCOTUSblog. I had framed a brief piece so when the news was clear, I added a single lead paragraph and a headline. I hit the publish button at 10:17. I think I was behind CNN, but I had the right answer. It was rather a silly exercise and I wasn’t going to brag about it, until I saw who noticed. Robert Flach, The Wandering Tax Pro, gave me credit for getting the news to him first. Bob is one of the senior members of the tax blogosphere, so a notice from him must be acknowledged.
Another Reason To Like John Roberts
Another personal note is that when I did a little research, I found another reason to like John Roberts. It is the result of a rather extraordinary sociological transformation. If you could go back in time and were allowed to tell the Founders only one thing and you wanted that to be something that would really astonish them, what would that be ? Try this. In 2012, there will be nine justices on the Supreme Court and none of them will be Protestants. If you just tweaked the Catholic/Jewish ratio a bit, the Supreme Court would be like a public accounting firm in Worcester, with a little more gender diversity. This makes me very well represented on the Supreme Court. I attended the same high school as Justice Scalia – Xavier High School in Manhattan. When I was there, the active duty military science faculty were just back from tours in Vietnam. I think the ones who taught Justice Scalia how to march had been fighting Spain. I was roughly contemporary with Justice Thomas at the College of the Holy Cross in Worcester. Justice Roberts, it turns out, is married to a Holy Cross graduate. Give me another Hoya and a Chu, Chu, Rah, Rah.
I opened with my favorite quote from the full text of the decision. Here is my second favorite:
The Government argues that the individual mandate can be sustained as a sort of exception to this rule, because health insurance is a unique product. According to the Government, upholding the individual mandate would not justify mandatory purchases of items such as cars or broccoli because, as the Government puts it, “ealth insurance is not purchased for its own sake like a car or broccoli; it is a means of financing health-care consumption and covering universal risks.” But cars and broccoli are no more purchased for their “own sake” than health insurance. They are purchased to cover the need for transportation and food.
You can follow me on twitter @peterreillycpa.
Originally published on Forbes.com on July 2nd, 2012