Monday, December 13, 2010

Judge Hudson's Interim Decision: "Tempest In A Teapot" -- Decision's Effect Is Stayed

Per The New York Times, just now -- here's a bit, but do go read it all:

. . . .The opinion by Judge Hudson, who has a long history in Republican politics in northern Virginia, continued a partisan pattern in the health care cases. Thus far, judges appointed by Republican presidents have ruled consistently against the Obama administration while Democratic appointees have found for it.

That has reinforced the notion — fueled by the White House — that the lawsuits are as much a political assault as a constitutional one. The Richmond case was filed by Virginia’s attorney general, Kenneth T. Cuccinelli II, a Republican, and all but one of the 20 attorneys general and governors who filed a similar case in Pensacola, Fla., are Republicans. Other lawsuits have been filed by conservative law firms and interest groups. . . .

The officials stressed that the judge’s decision to not enjoin the law would defer any actual impact for years. They noted that the insurance requirement does not even take effect until 2014, when the Supreme Court presumably will have ruled. . . .

We'll keep you posted. As I've long predicted (though the record is now 2-1, with one more to go) -- if a federal seatbelt law has been held constitutional for nearly a half-century, now -- so too (likely) the central provisions of the reform act shall be.


Anonymous said...

I can only hope you're right.

But, isn't the seatbelt analogy off the mark? The seatbelt laws are directed at the state level as, if you don't have a state law that mandates it, the Fed will pull your highway tax dollars.

That is quite different than mandating directly to an individual.

Just asking~

Condor said...

Perhaps -- however, that is exactly what the health care reform act does -- it simply imposes additional taxes upon people who do not have, or procure, health insurance by 2014 -- either public option, or privately-purchased.

Perhaps more importantly, it has always been true that a decision to avoid paying for something now -- and try to pay for it later -- has been a taxable event.

Think here of borrowing and paying, or receiving interest.

All the federal plan here does is impose an "imputed interest" cost on the failure to purchase insurance in 2014. Imputed interest rules in the tax code have existed for 65 yrars, and have always been held constitutional.

I appreciate your feedback. . . do stop back.


condor said...

I hear you.

Actually, though, it is expressed in the form of a tax.

And for a half century, the tax laws have required that a decision to hold on to income now (or defer paying for something now), will have tax consequenses, now and later.

All the health care law does is to provide that people who choose to delay paying for their health care needs (in the form of "pay as you go" insurance) will experience a tax disadvantage, in the future -- starting 2014.

In the same way, if one borrows money (say, from a relative), and the relative doesn't charge interest, the current (and plainly constitutional) tax laws force an "imputed" interest rate into the loan, between the parties.

And the IRS collects on that -- without any serious dispute.

So too, the 2014 law will force an "imputed" taxable cost onto people who chose not to pay for their health care in the form of buying insurance.

It is a pretty common feature in our existing tax laws.

But you are right -- in your second paragraph -- the seatbelt analogy is not perfect.

Do stop back by.


Anonymous said...

Thank you for the concise and cogent explanation of how the insurance mandate is to be applied. I will quote you PRN.

condor said...

Thanks. A little more, if I may:

A very well-respected GW law professor has just pointed out an obvious and indisputably fundamental error -- in Judge Hudson's opinion.

Professor Orin Kerr, writing on Professor Eugene Volokh's group law blog, noted that even the most ardent opponents of the reform law do not assert that the so-called "Commerce clause" is co-terminous with the "Necessary and proper" clause.

In making this error, Judge Hudson has essentially gutted his own opinion -- making it nearly impossible to sustain, on appeal.

So, it looks like the scorecard is more like 2.75 to 0.25, on the three decisions rendered thus far.

Only one federal case awaits, at the trial court level.

As ever, we shall see.


Anonymous said...

The problem with your argument above is that the law does not refer to it as a tax, it refers to it as a penalty. The lawyers defending it have realized this and are now trying to say that a penalty is the same as a tax.

The Commerce clause gives the government the ability to regulate commerce. This law gives the government the ability to regulate inactivity, not buying insurance. There are no other examples of this in case law.

Why are you so willing to let the federal government pass a law that says every American must buy a certain product? Today it's health insurance but tomorrow it could be Obama bumper stickers or Merck stock. Just because you like the current administration doesn't mean you'll like every future administration. Why would you want to give them this power to tell you what you need to buy?

condor said...

Actually, the law -- as ultimately signed by Mr. Obama -- refers to a tax in some sections, and does use the word penalty in others. Earlier versions (even in the conference committees) called the provision at issue a penalty. But the law (as signed) most often refers to it as a tax, and does so with an intent -- and intent to display deference to a century of well-settled constitutional law.

So you are simply partially misinformed about that -- but this is a sort of semantics-based diversion -- what matters is whether Congress had the power to do what it did.

And it did. It is, in any event, a bedrock notion of constitutional law (since McCulloch v. Maryland) that whatever Congress has an emumerated power to acheive, it may do so by all necessary and proper channels, viz:

. . . .Although, among the enumerated powers of Government, we do not find the word “bank” or “incorporation,” we find the great powers, to lay and collect taxes; to borrow money; to regulate commerce; to declare and conduct a war; and to raise and support armies and navies. The sword and the purse, all the external relations, and no inconsiderable portion of the industry of the nation are intrusted to its Government.

Let the end be legitimate, let it be within the scope of the Constitution, and all means which are appropriate, which are plainly adapted to that end, which are not prohibited, but consist with the letter and spirit of the Constitution, are Constitutional. . . .

-- McCulloch v. Maryland

All that need be shown, then, is that the tax is rationally related to a legitimate end Congress is seeking.

As to whether this is an undue intrusion -- into your rights to "life, liberty and the pursuit of happiness" (howsoever you see those dimensions), let me again ask:

Does it offend you that the IRS will regularly step into your carefully drafted loan documents, and -- even if you recite that "no interest shall be paid on this loan" -- and simply CHANGE those terms? That is, the IRS is plainly allowed (mandated) to "impute" interest income, to the maker of that otherwise clear on its face no-interest loan. Does that offend you?

That is the sort of very tall hurdle the Republicans must vault over, in order to win (at the SCOTUS) here.

Make no mistake, twin desires to avoid, or delay, paying (for health care -- in our case, or taxes on interest income -- in my posited example) are at the bottom of it all. And that is an "activity" -- one which Congress may plainly tax.

If you are going to be consistent, you must claim that is unconstitutional, as well. And that, my friend, puts you in Wesley Snipes land. [i.e., those wingnut tax-protester theories generally fail in the courts.]

Namaste, and do stop back by, as I savor this sort of intelligent discussion. . . .

condor said...

This connects to a Wizbang blog set of oddly misshapen comments, on the mandate and taxation, so I've posted here --since it is caught in moderation, there.


Allow me to stir the pot a bit (once again):

Two points -- this "mandate as tax" is by no means new. The section of the amended law, in the United States Code (the one that contains the mandate) is -- and always was -- an amendment to the Internal Rvenue Code. "You could look it up. . ." (but you apparently didn't).

Our 44th President taught Constitutional Law at the U. of C. -- and it shows, here. The power to tax is quite nearly a plenary power, of the federal government.

Because this is an amendment to the IRS's Code, Judge Hudson's decision is not likely to be of much moment, when it reaches the SCOTUS.

As I've said before, unless Scalia can attract five votes to rewrite 100 years of history, and get those five to adopt his concurring opinion in Raisch (just five years ago, not one other Justice would join him in his analysis in Gonzales v. Raisch). . . then the mandate -- stated as a legitimate TAX. . . will pass muster.

The latest line has (oddly enough!) Chief Justice Roberts voting to uphold the mandate -- as a legitimate exercise of the power to tax (based on his joining Breyer in Comstock last term, without any additional comment). In Comstock, Roberts might have joined the concurrence of Justice Alito, or even the dissent of Justice Thomas, at least in parts -- but he didn't. So, it seems Roberts is a believer in a "BIG" reading of the power in "Necessary & Proper" -- so, buckle up, folks.

You will have (apparently) read it here first, oh (not-so-)enlightened and sheltered people of Locker C-18, erh. . . WizBang-istan.

नमस्ते, to all of good will.