Really? Last week, the day after the decision, NBC went through the oral-argument transcripts and pulled out all the colloquies where Verrilli had argued for upholding the statute on tax grounds. A taste:
JUSTICE KAGAN: I suppose, though, General, one question is whether the determined efforts of Congress not to refer to this as a tax make a difference. I mean, you’re suggesting we should just look to the practical operation. We shouldn’t look at labels. And that seems right, except that here we have a case in which Congress determinedly said, this is not a tax, and the question is why should that be irrelevant?
GENERAL VERRILLI: I don’t think that that’s a fair characterization of the actions of Congress here, Justice Kagan. On the — December 23rd, a point of constitutional order was called, too, in fact, with respect to this law. The floor sponsor, Senator Baucus, defended it as an exercise of the taxing power. In his response to the point of order, the Senate voted 60 to 39 on that proposition. The legislative history is replete with members of Congress explaining that this law is constitutional as an exercise of the taxing power. It was attacked as a tax by its opponents. So I don’t think this is a situation where you can say that Congress was avoiding any mention of the tax power.
It would be one thing if Congress explicitly disavowed an exercise of the tax power. But given that it hasn’t done so, it seems to me that it’s — not only is it fair to read this as an exercise of the tax power, but this Court has got an obligation to construe it as an exercise of the tax power, if it can be upheld on that basis.
He told Scalia flat out that the mandate “is justifiable under [Congress’s] tax power,” leading Scalia to exclaim, with perfect brevity, “Okay. Extraordinary.” That argument turned up in the government’s brief too, on page 52. It would have been malpractice for them not to include it: Congress’s tax power is so broad and the politics of this case so hot that Team O had to put it on the menu as a special for one of the wavering swing justices. Who could have guessed that Roberts, not Kennedy, would be the one who ended up ordering it?
This is the only “tax” I can think of whose goal is to raise zero revenue for the government. Right? If the mandate works to absolute technocratic perfection, it won’t raise a dime because everyone who might otherwise be required to pay it will buy insurance instead and thereby exempt themselves. Sin taxes operate similarly by pairing revenue interests with a state interest in discouraging certain types of behavior, but I think sin taxes are levied in the hope that they will raise some revenue. That’s baked into the scheme of taxing especially tempting or addictive behaviors: Legislators know that not everyone will be able to quit their vice of choice even if it’s suddenly 10 percent more expensive than it used to be, and frankly they don’t care. After all, sin taxes aren’t a linchpin of some broader regulatory scheme whose efficacy depends on them. The mandate is; compliance is more important to the state than revenue raised due to noncompliance. That sounds a lot more like a fine to me than a tax. Although that gets us into the question then of why the mandate penalty isn’t much, much higher than $695 per year. If compliance is key, why make the cost of noncompliance less than the cost of insurance in certain cases? Over time, presumably, they won’t, but in the early stages, when they’re still trying to sell this clusterfark to the public, I guess they have no choice.
Update: Sean Trende counters by arguing that Roberts didn’t expand Congress’s tax power at all wondering how the mandate is any different, really, from subsidizing certain behaviors with tax credits.
(a) Two people make $100,000. There is a 25 percent flat tax imposed, with one exception: a $7,500 credit is allowed for buying a Chevy Volt. A buys a Volt, B does not. A therefore pays $17,500 in taxes, while B pays $25,000 in taxes.
(b) Two people make $100,000. There is a 17.5 percent flat tax imposed, with one exception: a $7,500 surtax is imposed for not buying a Chevy Volt. A buys a volt, B does not. A therefore pays $17,500 in taxes, while B pays $25,000 in taxes.
Don’t think of the mandate as a requirement that you pay the feds a certain sum if you refuse to buy health insurance. Think of it as creating a tax credit for people who already have.