The Obama administration’s argument that the individual mandate in the Affordable Care Act constitutes a "tax" was met with some skepticism during oral arguments before the Supreme Court on Monday, highlighting the difficult line the law’s defenders must toe in their effort to uphold the president’s signature legislative achievement.
"Congress has nowhere used the word tax. What it says is penalty," Justice Stephen Breyer said. "It’s collected in the same manner as a tax. But that doesn’t automatically make it a tax."
"This is not a revenue-raising measure," Justice Ruth Bader-Ginsberg said. "If it's successful, they—nobody will pay the penalty, and there will be no revenue to raise."
The tax argument is central to the administration’s defense of the new law’s constitutionality. The administration’s attorneys allege that the mandate, which requires individuals to purchase health insurance or pay a government fine, falls under the Congressional authority to levy taxes.
But the law’s defenders have struggled to argue, simultaneously, that the mandate is a constitutional exercise of congressional authority to tax, but does not constitute a tax increase. Defenders of the law have frequently argued both sides of the issue.
For instance, U.S. Solicitor General Donald Verrilli Jr. argued Monday—as did the law’s opponents—that the fee associated with the mandate was a penalty, not a tax. As a result, the Anti-Injunction Act, an 1867 law that bars the Supreme Court from ruling on legislation that raises taxes until after the tax has gone into effect, is not applicable.
On Tuesday, however, Verrilli is expected to argue that the mandate is constitutional precisely because it does function as a tax. Justice Samuel Alito pointed out the apparent contradiction in the administration’s position.
"Gen. Verrilli, today you are arguing that the penalty is not a tax," Alito said. "Tomorrow, you are going to be back and you will be arguing that the penalty is a tax."
The administration has struggled to resolve their position on the penalty-versus-tax issue, in large part because of poor political optics. During his 2008 presidential campaign, Obama pledged not to enact "any form of tax increase" on families making less than $250,000 a year.
In a testy interview with ABC’s George Stephanopoulos in September 2009, Obama refused to concede that the mandate was a tax.
STEPHANOPOULOS: Merriam Webster's Dictionary: Tax — "a charge, usually of money, imposed by authority on persons or property for public purposes."
OBAMA: George, the fact that you looked up Merriam's Dictionary, the definition of tax increase, indicates to me that you're stretching a little bit right now. Otherwise, you wouldn't have gone to the dictionary to check on the definition. I mean what…
STEPHANOPOULOS: Well, no, but…
OBAMA: …what you're saying is…
STEPHANOPOULOS: I wanted to check for myself. But your critics say it is a tax increase.
OBAMA: My critics say everything is a tax increase. My critics say that I'm taking over every sector of the economy. You know that. Look, we can have a legitimate debate about whether or not we're going to have an individual mandate or not, but…
STEPHANOPOULOS: But you reject that it’s a tax increase?
OBAMA: I absolutely reject that notion.
More recently, during a Feb. 15, 2012 hearing of the House Budget Committee, Office of Management and Budget director Jeffrey Zients similarly argued that the health care mandate was not a tax.
REP. SCOTT GARRETT (R., N.J.): So, if I’m part of a family that does not buy health insurance in violation of the president’s health care program and I have to pay [a fine] because of that, that is not a tax—that is not a tax on me?
ZIENTS: The Affordable Care Act saves money…
GARRETT: I understand that, but is that a tax on me, then, if I do not pay [for health insurance], or is that not a tax?
ZIENTS: I’m not sure I’m following the question.
GARRETT: You said there’s no tax increases on people making under $250,000. If I make under $250,000, and I do not buy health insurance as I’m required to under the Affordable Care Act, is that a tax on me or is that not a tax on me?
ZIENTS: Well, uh… this is, uh…
GARRETT: A moment ago you said there’s no tax increases.
ZIENTS: There aren’t. There would be…
GARRETT: But that’s not a tax?
GARRETT: That’s not a tax. Okay, I just want to be clear on that because that’s not the argument that the administration is making before the Supreme Court.
The Supreme Court will hear a second round of oral arguments on the health care law on Tuesday.