July 4, 2012
(Revised June 9, 2013)

Taxing The Constitution's Patience

The long-awaited Supreme Court ruling on the Patient Protection and Affordable Care Act (PPACA)1 was handed down last Thursday as anticipated. Not anticipated however was Chief Justice John Roberts' siding with the liberal wing of the court, thereby providing the swing vote that upheld, by 5-4, the overall constitutionality of the act, including the much debated mandate section, which encourages those without health insurance to purchase health insurance or face a penalty. 

The court's finding that the mandate was constitutional centered on whether Congress could apply a penalty for those who choose to go without health insurance. Writing for the majority, Justice Roberts wrote, "In this case, however,  it is reasonable to construe what Congress has done as increasing taxes on those who have a certain amount of income, but choose to go without insurance. Such legislation is within Congress’ power to tax."2

Justice Roberts' majority opinion therefore equates the mandate's penalty with Congress' taxing power.  A penalty tax, so to speak. 

In the dissenting opinion, Justices Scalia, Kennedy, Thomas, and Alito observe, "The Act before us here exceeds federal power both in mandating the purchase of health insurance and in denying nonconsenting States all Medicaid funding. These parts of the Act are central to its design and operation, and all the Act’s other provisions would not have been enacted without them. In our view it must follow that the entire statute is inoperative."3

In both the majority and dissenting opinions, analysis of the nature of the payments that individuals would make in purchasing health insurance to avoid the penalty tax is neglected. So, what are those payments that otherwise wouldn't be made without the penalty tax? Since such payments are made in response to the government's penalty tax, and the penalty tax is now declared a tax, then the monies spent to purchase health insurance to avoid the penalty tax must themselves be considered a proxy tax where, unlike the penalty tax which goes to the government, those health insurance purchase taxes go directly to public/private insurance companies.  

Such an arrangement, however, is unconstitutional, because according to Article 1, Section 8 of the Constitution only, "...Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States..."4  Under PPACA taxes to health insurance companies are unconstitutional, unless the taxes were first collected by the government, and then advanced to health insurance companies. 

The PPACA also runs afoul of the Constitution's Necessary and Proper clause,5  where monies going towards the actual purchase of heath insurance would be unnecessary because the Constitution already provides a means for the funding of the PPACA (or any other Federal program)...taxes. As such then, the overall framework of the Constitution on this issue, taking both relevant Constitutional clauses into account, permits the payment of government programs via the collection of taxes, duties, imposts and excises only. In addition, violating this Constitutional arrangement would doubly violate the Necessary and Proper clause (the 'Proper' portion), since the proxy tax collector (a health insurance company) is improperly not the government. 

The Framers of the Constitution placed the word 'Necessary' into the Necessary and Proper clause of the Constitution for a purpose. That one word restricts the arbitrary use of power by the Federal government, securing greater liberties for the People and States.

In fact, we can also say that the PPACA violates the Ninth Amendment to the Constitution, "The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people."6 Liberty is one of the objectives of the Constitution...

Preamble to the United States Constitution

"We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty [emphasis: mine] to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America."7

As such the Constitution may only allow negative laws, some of which will have penalties. To be Constitutional, breaking the law should require action on the part of the individual, not inaction. The person has the liberty to comply or break the law, and suffer the consequences, if any, if action is taken to break the law. On the other hand, positive laws, such as PPACA (or compulsory military duty) leave the individual no liberty of choice to comply or disobey. The individual is compelled by force to act. This is not liberty, it is despotism.

It would seem we have an elephant standing in the middle of the room and everyone is ignoring it! Why would that be?

3. Ibid.

5. Ibid.