Tuesday, October 19, 2010

Health Care Reform, the Tax Power, and the Presumption of Constitutionality

Guest Blogger

Gillian Metzger & Trevor Morrison

The latest move in the litigation saga involving challenges to the new healthcare reform, the Affordable Care Act, is a decision by the Florida district court denying the government’s motion to dismiss. [Florida v. Health & Human Servs., 3:10-cv-91-RV/EMT.] The decision rejects certain claims that the plaintiffs in that case --- a group of 20 states, along with a couple of individuals and a business association --- had brought to the Act. But its most notable feature is its lengthy treatment and rejection of the argument that the “individual mandate provision,” more accurately described as the requirement that individuals obtain minimum health insurance coverage or face a penalty, falls within the scope of Congress’s tax power. According to the court, even if the penalty could be sustained under the tax power had Congress intended to enact it as a tax, “it is inarguably clear that Congress did not intend for the exaction to be regarded as a tax.”

The decision’s sustained attention to the tax power issue stands to its credit --- though we have to confess to some bias on the importance of this issue, having submitted (together with Jack) an amicus brief in the parallel Virginia suit, defending the Act as a constitutional exercise of Congress’s tax power. The district court’s opinion might also carry some intuitive appeal, at least if one thinks it is the job of a federal court to police not only the constitutionality of actually enacted legislation but also the content of individual legislators’ and the President’s public statements about the legislation. Yet upon more sustained analysis, there are two major problems with the court’s conclusion that Congress didn’t intend to enact a tax. First, the court’s approach imposes upon Congress a set of requirements that, if actually implemented, would threaten to overturn the longstanding presumption of constitutionality that courts owe to federal legislation. Second, even assuming some judicial examination of the issue is warranted, the district court in this case misread the record.

Start with the general point. Although the district court insisted it was not imposing a clear statement rule on Congress’s use of the tax power, the obvious lesson of its approach is that Congress should expressly invoke all possible constitutional bases for legislation or risk being found to have given some up. Whatever one thinks about that idea as a matter of political theory or legislative practice, it is not supported in the Supreme Court’s cases. Instead, the Court’s oft-repeated mantra is that courts should approach federal legislation with a presumption of constitutionality. Among other things, this presumption means that courts should uphold statutes that do not violate constitutional limits on congressional power, without Congress having to show anything further about the basis on which it acted. Or as the Court has put it: “The question of the constitutionality of action taken by Congress does not depend on recitals of the power which it undertakes to exercise.” Woods v. Cloyd W. Miller Co., 333 U.S. 138, 144 (1948).

There are three basic premises supporting the presumption of constitutionality. The first is that Congress takes seriously its independent obligation, underscored in the oath taken by every member of Congress, to uphold the Constitution. The second is that when Congress enacts legislation, it deems the legislation to be constitutional. And following from these is the third, that the presumption of constitutionality seeks to ensure appropriate judicial respect for this coordinate branch of government.

Although some legal academics would like to see the presumption of constitutionality replaced with an across-the-board “presumption of liberty,” their arguments are at total odds with decades of Supreme Court precedent. Instead, under the longstanding and well-established presumption of constitutionality, the courts should not require specific “recitals” in order to uphold legislation that otherwise plainly falls within the scope of a particular provision. True, in the Commerce Clause context the Court has looked in part to whether Congress has supported the legislation in question with findings corroborating the requisite connection to interstate commerce. See, e.g., United States v. Morrison. Yet the Court has never said that the absence of such findings means that the constitutional provision in question is not even in play.

All that said, assume for purposes of argument that it is appropriate for a court to examine evidence from the legislative record to determine what powers Congress meant to invoke. On that score, it’s worth looking at some of the evidence the court cited to conclude that Congress clearly didn’t intend to invoke its tax power. Prime among the factors it emphasized are that (1) early versions of the legislation used the “term” tax instead of “penalty,” (2) Congress provided detailed findings on the economic effects connected to the provision but nothing documenting the revenue it would raise, and (3) the provision is not grouped along with other provisions expressly deemed revenue raising. To be sure, there may well be plenty of grounds for academics and other commentators to question the process leading to passage of this Act.. And inclusion of revenue-related findings would have been a good thing, assisting transparency and adding clarity. But none of these factors comes close to supporting the court’s claim that Congress didn’t intend to invoke the tax power.

Take, for example, the fact that the earlier House Bill used the term “tax,” as did a Senate Finance Committee version. This formulation was dropped in the final legislation in favor of the term “penalty,” but it is a stretch to suggest that this reflects a collective determination not to invoke the tax power. Instead, “penalty” appears in the Act because of specific path this legislation took. That term was in the version that passed the Senate as a whole, and the decision to use the so-called reconciliation procedure meant that the Senate version replaced the House’s pretty much wholesale, with only minor revisions. From this, it simply isn’t possible to conclude that Congress intended to preclude invocation of the tax power, particularly given precedents suggesting that labeling something a “tax’ or a “penalty” isn’t determinative of its legal status.

Moreover, the fact that a measure using the term “tax” actually was adopted by one chamber calls into question the district court’s confident assertion that it was called a penalty so that members of Congress could “insulate themselves from the possible electoral ramifications of their votes.” Similarly, no one has denied that the minimum coverage provision serves a regulatory purpose in encouraging individuals to purchase insurance, so its grouping with other provisions requiring coverage rather than solely revenue raising provisions is hardly a surprise. But that regulatory purpose doesn’t disqualify it as a tax, and its inclusion with other revenue-raising provisions in the assessment the Congressional Budget Office provided before enactment---inclusion that was necessary to score the Act as revenue- neutral and allow passage under congressional procedures ---demonstrates Congress was well aware of its revenue-raising features.

Next, the lack of express congressional findings can be explained by the fact that Supreme Court precedents had intimated a need for findings in the commerce power context but had not suggested such findings would be necessary for Congress to exercise its tax power. And finally, there are the features of the provision that plainly identify it as a tax---the way it amends the Internal Revenue Code, for example, the fact that the penalty is included on annual tax returns, and the fact that the money the government receives from payment of the penalty goes into the general fisc. The district court ignored all of these features.

In short, the court’s declaration that the individual mandate cannot be deemed an exercise of Congress’s tax power is built upon a hostile reading of the record. If the presumption of constitutionality means anything, surely it is that in areas not subject to a Supreme Court-mandated clear statement requirement, courts should give Congress the benefit of the doubt.

Perhaps the clearest evidence of the mischief invited by the district court’s approach comes in its consideration of political accountability. According to the court, the absence of an express invocation of the tax power in the final version of the legislation is evidence of a deliberate congressional ploy to avoid the political heat for raising taxes. The price for such a maneuver, the court declared, was to take the tax argument off the table in the litigation now before it. But again, although political concerns likely played some role in the Act’s framing, all of the provision’s tax-connected features, plus the fact that the House happily called the provision a tax, weigh substantially against the court’s account of congressional dissembling. And even more fundamentally, the court was simply freelancing when it decided to impose its own views of appropriate political accountability on a coordinate branch. As a blanket proposition not limited to contexts where the Supreme Court has recognized that discrete constitutional concerns are in play (such as imposition of conditional spending limits on the states), the court’s approach would entail a dramatic repositioning of the judicial role vis-à-vis Congress.

Gillian Metzger and Trevor Morrison are professors of law at Columbia Law School. You can reach them by e-mail at gmetzg1 at and tmorri at

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