This morning, the D.C. Circuit Court of Appeals ruled against our challenge to Obamacare, holding that the individual mandate tax need not have originated in the House of Representatives because it does not qualify as a “bill for raising revenue” under the Constitution. In a relatively short opinion by Judge Judith Rogers, the court holds that the overall purpose of the individual mandate tax was to force people to buy insurance, not to raise revenue, and therefore the constitutional requirement that it originate in the House does not apply.
In our arguments before the court, we contended that this vague “overall purpose” kind of approach shouldn’t apply. No previous court decision has used it; although some language in the precedent, when read out of context, refers to the “purpose” of various laws, what the Supreme Court has actually said is that there is a category of taxes that aren’t really taxes, because they’re penalties—fines or other provisions meant to force you to comply with some other law. Those aren’t subject to the Origination Clause. But the individual mandate tax doesn’t fall into that category. Why not? Because the Supreme Court said so in NFIB v. Sebelius. It specifically held that the individual mandate tax is not a penalty—only a tax.
The D.C. Circuit says that that does not mean that there isn’t another category of taxes immune from the Origination Clause. Maybe…but the Constitution says nothing about that. And nothing in the case law holds that courts can decide for themselves what the “the main object or aim” of a tax is, and then apply whatever constitutional requirements it thinks appropriate, given that “general purpose.”
Under the approach that the D.C. Circuit takes here, a court could say that the “main object or aim” of a tax isn’t to raise money, but to fund the military, or to promote the general welfare—and therefore that the Origination Clause doesn’t apply. The “general purpose” approach—which the Supreme Court has never endorsed—gives courts too much power to decide when to apply constitutional restrictions, and when not.
The decision today is disappointing, but not very surprising. Both sides were prepared to appeal, and we will take this case to the Supreme Court if necessary.
You can view our case backgrounder, read our briefs, and learn more about the case at our case page.
Update: We expected that either side in this case would appeal, and eventually this case will likely have to go to the Supreme Court. PLF’s challenge to Obamacare involves fundamental constitutional principles and protections for all taxpayers, and for everyone who is covered by the tax and regulatory burdens of Obamacare. Americans may not be subjected to new taxes by the federal government if those taxes don’t start in the House, the chamber closest to the people. That’s the principle underlying our lawsuit, and it’s so basic to our constitutional framework that the case ultimately deserves a judgment by the nation’s highest court.
Today’s decision is disappointing, because it relied on a new and unprecedented distinction to exempt the Obamacare tax from the Constitution’s rules for enacting taxes. The judges adopted a vague “general purpose” test for deciding which taxes have to start in the House and which do not. But the Constitution makes no such distinction, and neither does Supreme Court precedent. The precedents say that the only kinds of taxes that don’t have to originate in the House are penalties or fines. But the Supreme Court itself ruled in 2012 that Obamacare’s individual mandate is not a penalty or a fine. So the Origination Clause should therefore apply. The D.C. Circuit for the first time holds that judges can decide for themselves what the “main object or aim” of a tax is, and then pick and choose whether the constitutional rules on the enactment of new taxation should apply. We think that’s wrong, and that’s what we’ll be taking to the Supreme Court if necessary.