The D.C. Circuit ruled yesterday that the ACA is a tax, but not a “bill for raising revenue,” and therefore is exempt from the Origination Clause, which says all “bills for raising revenue” must begin in the House of Representatives instead of the Senate. The court said that the “main object or aim” of the tax isn’t to raise revenue, but to force people to buy insurance, so it’s okay that the Senate, instead of the House, originated the tax.
But the Supreme Court has never taken this “general purpose” approach. In the few cases addressing the subject, it’s taken a functional approach, instead: does the law function as a tax, or as something else? It’s never relied on such vague and subjective notions as Congress’s “main object or aim.” Consider Munoz-Flores, the 1990 case that’s the leading precedent on the Origination Clause. There, the Court said that the Origination Clause didn’t apply to a program that sequestered money in a special, earmarked fund, because that was not a tax. It was more like a fee: the money went to a particular program instead of into the general treasury. In Millard v. Roberts, the Court said the Origination Clause did not apply because the revenue was allocated to railroad companies for the express purpose of financing a railroad project. And in Twin City Bank v. Nebecker, the Court said that “an act of congress…secured by a pledge of bonds…and which, in the furtherance of that object, and also to meet the expenses attending the execution of the act, imposed a tax…is clearly not a revenue bill,” because the money was, again, earmarked for a specific purpose—it was more like a fee to be paid by particular people to meet particular expenses. That’s like the “Beef, it’s what’s for dinner” ads: ranchers are required to pay into a special fund that pays for those ads. That’s not a tax, because the money doesn’t come from everyone and doesn’t go into the general treasury.
But Obamacare taxes—and there are a lot of them—do come from every applicable individual (basically everyone), and do go into the general fund, for Congress to spend at will. It’s not a specific program, but a general tax that raises revenue. True, it may have a regulatory purpose, but as the D.C. Circuit itself acknowledged, a lot of taxes have regulatory purposes. That doesn’t mean they aren’t taxes, and bills for raising revenue.
The individual mandate tax is basically a “sin tax.” It’s paid by people who fail to do what the government wants them to do. But cigarette or alcohol taxes are certainly bills for raising revenue, because that’s how they function: the money goes into the general treasury to be spent as Congress pleases. That is the objective analysis that ought to apply.
The D.C. Circuit’s approach, by contrast, asks what Congress’s “general purpose” was when it imposed the tax. There’s no Constitutional basis for such a vague analysis—on the contrary, the Constitution’s authors rejected a proposal to include such a thing in the Constitution when they voted against wording the Clause “bills…for the purpose of raising revenue.” And the D.C. Circuit’s “main object or aim” approach gives judges extraordinarily broad power to interpret Congress’s subjective intentions. As we noted yesterday, that’s dangerous in an era of thousand-page omnibus bills that cover a wide variety of subjects. And what about other “sin taxes”? Is a tax on cigarettes a bill for raising revenue, or just to get people to stop smoking?
The Origination Clause was written to protect us against laws like Obamacare. The founders feared that the taxing power could be abused, and wanted to keep that power in the most democratic branch of the federal government: the House. Today, 57 percent of Americans are still opposed to Obamacare, and a majority of Americans have never supported it; indeed, they voted for a President who said he was opposed to an individual mandate. Had the voice of the people been heard, as the Constitution requires, Obamacare would never have become law. And courts, entrusted with enforcing the Constitution’s protections for our democratic system, should not spend their time trying to interpret vague, subjective idesa like Congress’s “general intent”—they should be looking at the text, the context, and the structure of the law itself. Otherwise, crucial constitutional protections can be eroded, and individual rights rendered vulnerable.