Kate Hicks
It’s Monday, March 26th, 2012, and the Supreme Court of the United States will hear the first two hours of oral arguments on the Patient Protection and Affordable Care Act (PPACA) this morning. Whether the ruling favors the Obama administration or the states and private entities suing, it’s sure to be an historic one which will define the scope of Congress’ power.

On the agenda today is one question: Is the individual mandate noncompliance penalty a tax? It may seem a trivial distinction – indeed, neither the federal government nor the states et al argue in the affirmative – but the Court’s answer will affect whether it grants a ruling on the other three questions.

What’s At Stake?

The best way to understand why this question matters is to rephrase it like this: Is it too soon for the Court to consider whether the individual mandate is constitutional? In fact, this is hardly an arcane technical debate on a term. This is the Court’s last chance to sidestep a ruling on the individual mandate.

The federal government initially defended the individual mandate at the district court level on the premise that the penalty is a tax. If it is one, then a law called the Tax Anti-Injunction Act (AIA) prevents the private respondents from suing the government over the individual mandate. The AIA prevents citizens from taking a suit against the government over taxes before they are assessed – otherwise, the courts would be inundated with tax suits, plenty of which could be bogus. Instead, the individuals must pay the tax, and then sue the government for a refund if they feel it was collected wrongly.

If the Court decides that the penalty is a tax, then it cannot issue a ruling on the individual mandate until after the government has collected the penalty. Now, bear in mind that the law doesn’t take effect until 2014. Thus, if the Court finds that the penalty is a tax, and that the AIA applies, then the respondents will have to start all over again in 2015, meaning the case wouldn’t make it to the Supremes until four years from now, in all likelihood.

Because the Obama administration abandoned this defense at the district level, they couldn’t take it up again here. Thus, the Court has assigned a “friend of the court” lawyer to argue the affirmative; the states, private respondents, and federal government are all arguing the negative.

The Affirmative: It’s a Tax

Robert Long is the court-appointed lawyer tasked with arguing that the penalty is a tax. Part of what muddies the water here is that the AIA doesn’t define “tax.” Thus, Long uses the conveniently broad Webster’s definition: “every species of imposition on persons or property.” Clearly, the mandate penalty falls well within this definition. Furthermore, Long argues, the legislative language in Obamacare calls for the penalty to be “assessed and collected in the same manner…as taxes” – recall, indeed, the penalty was to be included when filing with the IRS. It looks too much like a tax not to be one, he argues. The AIA applies, and thus, the Court must throw out the suit.

The Negative: It’s Not a Tax

For this one question, the federal government and the respondents are allies. They will attempt to prove that the mandate penalty is not a tax, with the primary argument being that the penalty was not intended as a tax. Rather, the penalty exists to induce a certain behavior – i.e., it’s only to be paid by an individual who doesn’t purchase insurance. The government levies taxes so as to collect revenue; by contrast, the penalty’s primary purpose is punitive. And, they argue, the tax code differentiates between penalties and taxes, thus Long’s broad definition doesn’t apply.

The states and respondents have one more argument as well, in the event that the Court does decide it’s a tax: the AIA doesn’t apply, because it intended to block lawsuits in protest of paying taxes. They’re not trying to avoid tax payment, they content. They’re suing because they believe the law to be unconstitutional. Long, however, refutes this argument, claiming that they’re playing with semantics. If the Court finds that the penalty is a tax, then the reason for the challengers’ suit doesn’t matter. The AIA still applies. The Court must throw out the case.

What’s the Likely Ruling?

While this is hard to predict, there’s been quite a bit of speculation that the Court will heavily consider tossing out the suit on AIA grounds as a way of avoiding a controversial ruling in such a critical election year. The fact that they picked the question up themselves – again, none of the parties bringing the case forward raised the issue – and the 90 minutes allotted for the argument certainly hint at the weight they’ve given the question. It’s entirely possible they’ll rule the penalty a tax, and if that’s the case, we’ll have to wait years for another chance at the ruling on the mandate. Meanwhile, the country will continue holding its breath and writing massive checks to fund the implementation of a law that might not last.


Kate Hicks

Kate Hicks is one of Townhall.com's web editors. You can follow her on Twitter @KateBHicks.