Individual Mandate Beyond Congress' Ability to Tax

When the Supreme Court hears the arguments at the end of March regarding the constitutionality of the Patient Protection and Affordable Care Act, it will be ruling on three areas. One of these areas the Tax Foundation has come out to argue against in a brief it filed with the Court.

When the Court hears arguments it will be considering if the law can be challenged despite the Anti-Injunction Act, whether the individual mandate — which requires all Americans to purchase health insurance — is severable from the bill and whether the law is permitted under Congress’ power to tax.

Based on the definition of a tax, the foundation says that the individual mandate is not permissible under Congress’ power to tax because it isn’t actually a tax. In order for something to be a tax, the law must be imposed for the primary purpose of raising revenue for general spending. However, the individual mandate is not a tax, it is a penalty, which is imposed with the primary purpose of punishing the payor for an unlawful act.

“The PPACA bill itself and accompanying technical documents, as well as statements by President Obama, further show that the mandate should not be considered a tax,” according to the foundation’s site.

The Court has a lot of precedence to go on in regards to what constitutes a tax. And the Tax Foundation pointed out that the Court has repeatedly recognized a difference between taxes and penalties. Penalties are designed to deter and punish people who are engaging in illegal activities.

“No evidence exists that the primary purpose of the individual mandate is to raise revenue, and for this reason, the individual mandate cannot be considered a tax for purposes of the U.S. Constitution or the Anti-Injunction Act,” the foundation wrote in its brief.