Does the Supreme Court have the authority to rule on PPACA before 2015?
The Anti-Injunction Act, the central focus of today's arguments, prevents people from challenging a tax law in court until they have paid the tax. PPACA
imposes a tax penalty on individuals who don’t obtain insurance coverage by 2014. However, they will not begin paying these penalties until 2015, after the law has taken full effect. At issue is whether the penalty is a tax.
Court-appointed amicus Robert A. Long, Jr., opened today, arguing the AIA does prohibit the court from ruling on the case until 2015:
There are three reasons to conclude that the Anti-Injunction Act applies here. First, Congress directed that the section 5000A penalty shall be assessed and collected in the same manner as taxes. Second, Congress provided that penalties are included in taxes for assessment purposes. And third, the section 5000A penalty bears the key indicia of a tax.
Congress directed that the section 5000A penalty shall be assessed and collected in the same manner as taxes. The derivative triggers the Anti-Injunction Act which provides that ‘no suit for the purpose of restraining the assessment or collection of any tax may be maintained in any court by any person.
In general, the justices seemed unconvinced, according to witnesses. Florida Attorney General Pam Bondi, whose state is heading up the PPACA challenge, told Politico, “I felt very confident that they do not believe this is a tax. This is a penalty.”
Bondi is likely right. Justice Ginsburg told Long:
“…The Tax Injunction Act is modeled on the AIA, and, under the Tax Injunction Act, what can’t be enjoined is an assessment for the purpose of raising revenue. The TIA does not apply to penalties that are designed to induce compliance with the law rather than to raise revenue. And this is not a revenue-raising measure, because, if it’s successful, they won’t — nobody will pay the penalty and there will be no revenue to raise.”
Next up, arguing for the Obama administration, was Solicitor General Donald Verrilli. Verrilli argued the penalty is not a tax, so the court can rule on the issue now.
Congress has authority under the taxing power to enact a measure not labeled as a tax, and it did so when it put section 5000A into the Internal Revenue Code.
Some awkwardness occurred when Justice Alito pointed out to Verrilli that while today he argued the penalty is not a tax, tomorrow he will argue it is a tax.
Today you are arguing that the penalty is not a tax. Tomorrow you are going to be back and you will be arguing that the penalty is a tax. Has the Court ever held that something is a tax for purposes of the taxing power under the Constitution is not a tax under the AIA?
Justice Kagan, formerly Solicitor General for the Obama administration, addressed the question of whether those who choose to not purchase insurance and pay the penalty would also be breaking a federal law.
Suppose a person does not purchase insurance, a person who is obligated to do so under the statute doesn’t do it, pays the penalty instead, and that person finds herself in a position where she is asked the question, have you ever violated any federal law, would that person have violated a federal law?
Verrilli said the administration’s position is the person should answer "no" because they would only violate the law if they did’t pay the “tax,” generating a scolding from Justice Breyer for using the term “tax” when Verrilli was arguing it is a penalty.
Finally, Greg Katsas made his argument on behalf of the challengers.
The purpose of this lawsuit is to challenge a requirement — a federal requirement to buy health insurance. That requirement itself is not a tax. And for that reason alone, we think the Anti-Injunction Act doesn’t apply.
What the amicus effectively seeks to do is extend the AIA , not just to taxes which is how the statue is written, but to free-standing nontax legal duties.
Chief Justice Roberts clarifies that the whole point of the case is to prevent the “collection of penalties,” to which Katsas said, “Of taxes, Mr. Chief Justice.”
Chief Justice Roberts responded:
But the idea that the mandate is something separate from whether you want to call it a penalty or tax just doesn’t seem to make much sense … it seems very artificial to separate the punishment from the crime.
Katsas had several examples of how Congress separated the two deliberately, he said.
This statute was very deliberately written to separate mandate from penalty in several different ways. They are put in separate sections. The mandate is described as a legal requirement no fewer than 20 times ... It’s imposed through use of a mandatory verb “shall.” The requirement is very well defined in the statute, so it can’t be sloughed off as a general exhortation, and it’s backed up by a penalty.
Audio of Monday's arguments and a full transcript
Congress then separated out mandate exceptions from penalty exceptions. It defined a category of people not subject to the mandate. Once would think those are the category of people as to whom Congress is saying: You need not follow this law. It then defined a separate category of people not subject to the penalty, but subject to the mandate.
Check back tomorrow for day two, when the court hears arguments on the individual mandate.