If the mandate is a tax, it becomes constitutional. The politically inconvenient argument could provide a way out for the Supreme Court.

In a recent blog post, I attempted to summarize the legal arguments behind the debate about the constitutionality of the health care reform law — as well as I can without the benefit of having any legal education.

Reading the transcript of the testimony to the Supreme Court, and reading some of the news coverage of that testimony, I focused on what appeared to be the main issue: whether the mandate that people buy health insurance represented a violation of the constitutional limits on the enumerated powers of the federal government to regulate interstate commerce.

That focus is grounded on the assumption that this mandate is a type of a penalty, rather than a tax.  This seemed obvious to me for a number of reasons.  First, on the face of it, it seems that its primary purpose is to change behavior, rather than to generate revenue.  Second, the law itself uses the word “penalty” rather than the word “tax.”  Third, President Obama, himself a constitutional law professor and someone who wants his signature achievement to be upheld, repeatedly and explicitly said it was not a tax.  And, finally, all those smart lawyers on both sides of the Supreme Court bench seemed to be taking it for granted that it was not a tax.

But, this week I read an interesting commentary in the Atlantic by another constitutional law professor, Jack Balkin, from Yale.  He argues that the mandate is a tax, and therefore the health care reform law is constitutional.  He joined others making the same argument in one of the zillions of amicus briefs filed in the case.

Balkin argued that, even if the primary purpose of a tax is to regulate behavior, it can still be considered to be a tax.  He pointed out that taxes on polluters are in that category.  In 1950, the Court ruled on this issue in the context of a law taxing marijuana.  That law was designed to keep people from buying or selling the drug. The Court explained that “a tax does not cease to be valid merely because it regulates, discourages, or even definitely deters the activities taxed. The principle applies even though the revenue obtained is obviously negligible . . . or the revenue purpose of the tax may be secondary.”

So, why would all those smart lawyers not focus on the tax argument?

Balkin provided a number of answers.  First, the political optics.  Democrats may have been OK with the idea of taxing rich people to pay for decent health insurance for all.  But, Democrats are getting hammered by Republicans for high taxes and large deficits.  Democrats knew they could not pass health care reform if they admitted it would increase taxes.  So, they took the low road that both Democrats and Republicans seem to prefer.  They purposely designed the law to avoid having to admit they raised taxes.  And, once the health care reform law passed, the Republican opponents of the law did not want to argue it was a tax because that would be admitting that the law was constitutional.

Secondly, the Democrats wanted a quick ruling by the Supreme Court.  The Obama administration was worried that states would delay their preparations for implementation of the law until the constitutional questions were settled.  But, if the mandate was considered to be a tax, then the Tax Anti-Injunction Act would apply.  That Act says that people cannot ask the courts for an injunction against taxes, but must instead pay the tax and then sue the government for a refund.  The law is designed to protect the federal government from being starved of revenue while lots of court cases are pending.  So, if the mandate was a tax, the Supreme court may not be able to take up the case until 2014, when the mandate kicks in. Balkin argues that the Court could assert that the Tax Anti-Injunction Act is merely a protection, but should not be considered as a bar to their jurisdiction.

Balkin seemed to be selling the Supreme Court justices on the idea that upholding the reform law on the grounds that it is a tax would be a good way to avoid the appearance of politicizing the Court through a party-line decision to strike down the law.  And, upholding the law as a tax would also avoid setting a precedent for expanded government powers under the commerce clause.  And, ironically, it could even establish a precedent that Congress would be forced to admit when things are really taxes and face the consequences with voters, thereby serving the interest of limiting the size of government.

An interesting scenario.  We’ll know within a couple of months whether it plays out that way.

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