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Taxes and Mandates

Orrin Hatch on the constitutionality of the individual mandate:

The constitutional question is whether any of these enumerated powers authorize Congress to require that individuals purchase health insurance or pay a fine. The only potential candidates are the power to tax and the power to regulate interstate commerce. Last year, to get the legislation passed, liberals denied that the fine is a tax and made sure that the law calls it a “penalty” and exempts those failing to pay it from the punishment that applies to tax evaders. But today, to defend the legislation in court, the Obama administration argues that the penalty is a tax after all. Judge Hudson called this disingenuous argument “a transparent afterthought” and no court has agreed with it; some have declined to address it at all.

It seems to me that Hatch has inadvertently undone himself here. He says that liberals denied that the fine is a tax. And he says this was done in order to get the legislation passed. Well if they were denying, who was doing the accusing? Conservatives, it turns out. The Wall Street Journal editorialized against the stealth tax increase, Cato’s Michael Cannon explained that “Health-Care Mandates Are a Middle-Class Tax,” Greg Mankiw discussed the implicit marginal taxes involved.

Now looking at the Obama administration’s legal strategy he’s successfully identified some hypocrisy. Raising taxes is unpopular, so conservatives accused the mandate of being a de facto tax increase. Liberals pushed back against this criticism to pass the law. But now that it’s passed, they’re admitting that basically the fine is the same as a tax. He’s got Obama nailed! But what’s the legal force of this supposed to be? Political rhetoric isn’t unconstitutional. The point is that the government’s taxation powers give congress the authority to force people to pay money contingent on various kinds of behavior. If you want to buy gasoline, you need to pay the federal gas tax. If you want to not buy health insurance, you need to pay a fine. Either way, the behavior-linked collection of money is designed to (a) raise revenue and (b) assist in the regulation of the national economy.

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