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July 18, 2010

Obama: It's A Tax!

No duh, says the 48%. How did we know? Well, back during the months-long fight over healthcare reform legislation the President said it wasn't a tax -- "I absolutely reject that notion" -- so anyone with a working brain knew it was.

Oh, but now it's time to defend the legislation in the courts and the Obama Administration is saying health insurance mandates come under the federal government's power to tax:

Administration officials say the tax argument is a linchpin of their legal case in defense of the health care overhaul and its individual mandate, now being challenged in court by more than 20 states and several private organizations.

Under the legislation signed by President Obama in March, most Americans will have to maintain “minimum essential coverage” starting in 2014. Many people will be eligible for federal subsidies to help them pay premiums.

In a brief defending the law, the Justice Department says the requirement for people to carry insurance or pay the penalty is “a valid exercise” of Congress’s power to impose taxes.

Congress can use its taxing power “even for purposes that would exceed its powers under other provisions” of the Constitution, the department said. For more than a century, it added, the Supreme Court has held that Congress can tax activities that it could not reach by using its power to regulate commerce.

The tax argument comes with its own special brand of hell. As anyone who has had a tax dispute knows, the law requires you to pay disputed taxes first, before you're allowed to contest them at the IRS or in the courts. The Administration is arguing that the lawsuits should be dismissed because same rules apply to ObamaCare.

On the other side, the states suing agree that the penalty for failure to purchase health insurance goes to the federal government and so takes the form of a tax. But that's only the penalty. Before you get there, ObamaCare requires individuals to buy goods and services from private (in the sense of non-public) entities: the insurers. That's something very different than a tax. That's compelled economic activity and no court has so far "discovered" constitutional authority for the federal government to compel Americans to take part in private contracts against their will.


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posted by Gabriel Malor at 11:03 AM

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