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Mike Greve on the Taxing Power Argument
Mike Rappaport

At the Liberty Law Blog, my co-blogger, Mike Greve, defends Michael Paulsen against my criticism of Paulsen’s defense of Chief Justice Roberts’s tax argument in Sibelius.  While Paulsen describes himself as an originalist, and Greve is uncomfortable with orthodox originalism, it is important to recognize that Greve and Paulsen have something very much in common.  They are both strong Hamiltonians and therefore it is no surprise that Greve feels the force of Paulsen’s nationalist arguments.  It may be their affinity for Alexander Hamilton – who failed to appreciate American federalism – that leads these two Mike’s astray.

First, Greve argues as follows:

the constitutional question isn’t whether Congress was invoking  a particular power [that is, the tax power] but whether it had  the power.

Mike Rappaport tries to fight that proposition. Suppose, he says, Congress imposes a retroactive criminal penalty, which would be unconstitutional under the Ex Post Facto Clause: should the Court sustain the measure nonetheless because Congress had the power of imposing the same fine as a civil penalty and pursuant to its taxing power? Well, no. The designation (“criminal/civil”) makes a practical, operational difference:  depending on what the measure was enacted as, you either owe the money or you don’t. Not so with the mandate: call it what you will, you owe it and it operates as a tax. Because nothing hangs on the label, the only question is the power. And on that score, even the plaintiffs conceded throughout that Congress could have imposed the mandate as a tax.

I believe Greve misses my point here.  My point was that there is no difference between the penalty/tax case and criminal fine/civil penalty case.  According to Greve’s logic, one would have to argue that the criminal fine should simply be reinterpreted as a civil penalty, which would make it constitutional.  But most people would not accept that argument.  They would say that it matters that Congress said it was a criminal fine, which is a different thing than a civil penalty.  Similarly, I am arguing that it matters that Congress called its action a penalty (and not only termed  it thus, but made it substantively  the sanction for violating the obligation to purchase health insurance – remember, taxes are not imposed as penalties for violating  the law).

(Part of the problem here may be that Greve may misunderstand my argument.  My argument is not that Congress could have imposed the civil penalty “pursuant to its taxing power.”  In my example, Congress imposes the civil penalty as part of its regulatory power.  My point was not that Congress could pass the civil penalty as part its taxing power.  Instead, it was that even though Congress had the power to pass a civil penalty that would have the same effect as the criminal fine, one would not say that Congress did that because Congress did not intend to do that.  Intent matters, as it does for the tax and penalty argument.)

Second, Greve says:

On solid originalist/formalist grounds, all the “it’s not a tax” talk is beside the point because it wasn’t subject to bicameral approval, presentment, and veto. Had Congress said, in the statute, that “this penalty shall not be construed as a tax”; or had it included “findings” to that effect or even a statement of intent, the case might well have gone the other way: deference to Congress, and all that.  But Congress didn’t do that, and so there.  As for the statutory tax-versus-penalty argument: that would count in statutory  cases, where we divine the true intent of the Congress. It doesn’t count for constitutional  purposes, where the question isn’t intent but power.

Once again, I disagree.  Congress did put the penalty language in the statute and made that penalty a sanction for failing to purchase health insurance.  That was more than enough to let the world know, without any legislative history, that it was not exercising the tax power.  As for the claim that the language counts for statutory purposes, but not constitutional purposes, the question is why?  After all, the criminal fine/ civil penalty point doesn’t merely count for statutory purposes.

Mike Greve is right that the criticisms of Chief Justice Roberts that focus on his changing his vote or caving to political pressure are, in this context, beside the point.  But my criticisms of Mike Paulsen’s argument were not based on such matters.  They were based on the legal arguments.

(Cross posted at the Liberty Law Blog)

MICHAEL RAMSEY ADDS:  Mike Greve's post is worth noting as well for its skepticism about the "direct tax" point (scroll to near the end).  That is, Chief Justice Roberts' opinion only works if the mandate, construed as a tax, isn't a "direct" tax under Article I, Section 9 (because if it is a direct tax, that section requires that it be equally apportioned among the states).  But as Professor Greve says, the Chief Justice did not really engage the issue, and I've yet to hear a solid originalist defense of that aspect of the holding.

This point relates to the post by Michael Paulsen as well.  Professor Paulsen emphasizes the fearsome scope of the national government's taxing power.  But his view assumes that most taxes are not "direct" taxes.  If instead most taxes are direct taxes, the practical difficulty of apportioning them among the states means that the original national taxing power was actually much less formidable than he supposes.  While I haven't done the research necessary to have a definitive opinion here, it does strike me that there's an incongruity in Paulsen's view: if the national taxing power is truly "plenary," as he says, why were the framers so convinced that national power as a whole was defined and limited (as they repeatedly said)?  In contrast, a broader reading of "direct taxes" -- making Article I, Section 9 an important practical limit on national taxing power -- accords better with the framers' discussions of the limited scope of national authority.